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Editorial
How to avoid the oil curse
Written by Administrator
Tuesday, 15 July 2008
THE BUSINESS WEEK
For many African nations, the discovery of natural resources has turned out to be more of a curse than a blessing. In Nigeria, for example, the discovery of oil in the 1950s contributed not to better living standards for its citizens but to ethnic conflict, corruption, wild fiscal spending swings and wasteful projects.
With the discovery of oil in the Ugandan Albertine Basin, the country has a unique chance to create the foundations of a prosperous, dynamic economy for generations to come.
While exploration is ongoing, the indications are that there are enough reserves to meet Uganda's energy needs and maybe even turn the country into a net exporter. The country must not waste this opportunity.
The early indications are that it will not. This week, an impressive number of Ugandas political class gathered at a seminar in Kampala to hear from an impressive selection of international economists, civil servants and scientists speak about best practice in managing petroleum resources.
The government has shown excellent foresight in preparing the National Oil and Gas Policy, a year before the first oil is due to be extracted. It has promised that petroleum revenue will be separated from other revenue and placed in a fund controlled by the central bank.
It will be spent solely and selectively in strategic areas that will boost the productive capacity of the economy - never on consumption. Spending will be phased in and macroeconomic stability will be paramount. Communities close to Lake Albert and the environment will be looked after.
All noble aims, but the road to oblivion is paved with good intentions. It is far easier to draft sound policies than to implement them.
In the next few years, the Ugandan government will come under enormous political pressure to spend its oil windfall recklessly on wasteful projects and, in the Presidents own words, imported wine and perfume.
How faithfully it sticks to the National Oil and Gas Policy in the face of such demands will be a measure of the quality of the countrys leadership.
In recent years, Nigeria has learnt from its past mistakes and improved the management of its oil revenues to the benefit of its people. Uganda must learn the lessons of others mistakes without repeating them.
How to avoid the oil curse
Written by Administrator
Tuesday, 15 July 2008
THE BUSINESS WEEK
For many African nations, the discovery of natural resources has turned out to be more of a curse than a blessing. In Nigeria, for example, the discovery of oil in the 1950s contributed not to better living standards for its citizens but to ethnic conflict, corruption, wild fiscal spending swings and wasteful projects.
With the discovery of oil in the Ugandan Albertine Basin, the country has a unique chance to create the foundations of a prosperous, dynamic economy for generations to come.
While exploration is ongoing, the indications are that there are enough reserves to meet Uganda's energy needs and maybe even turn the country into a net exporter. The country must not waste this opportunity.
The early indications are that it will not. This week, an impressive number of Ugandas political class gathered at a seminar in Kampala to hear from an impressive selection of international economists, civil servants and scientists speak about best practice in managing petroleum resources.
The government has shown excellent foresight in preparing the National Oil and Gas Policy, a year before the first oil is due to be extracted. It has promised that petroleum revenue will be separated from other revenue and placed in a fund controlled by the central bank.
It will be spent solely and selectively in strategic areas that will boost the productive capacity of the economy - never on consumption. Spending will be phased in and macroeconomic stability will be paramount. Communities close to Lake Albert and the environment will be looked after.
All noble aims, but the road to oblivion is paved with good intentions. It is far easier to draft sound policies than to implement them.
In the next few years, the Ugandan government will come under enormous political pressure to spend its oil windfall recklessly on wasteful projects and, in the Presidents own words, imported wine and perfume.
How faithfully it sticks to the National Oil and Gas Policy in the face of such demands will be a measure of the quality of the countrys leadership.
In recent years, Nigeria has learnt from its past mistakes and improved the management of its oil revenues to the benefit of its people. Uganda must learn the lessons of others mistakes without repeating them.
