Don Bwesigye is the executive director of the African Centre for Energy and Mineral Policy in Uganda. He has over eight years of civil society experience in Uganda. He worked in the Albertine Graben region for over five years creating awareness about potential socioeconomic externalities of the oil and gas industry in Uganda.
In April, Don traveled to Budapest, Hungary, to take part in the NRGI-SPP advanced course “Reversing the Resource Curse,” hosted at the Central European University. Here he writes about how his experiences on the course have had an impact on the work he does.
The NRGI-SPP course enabled me to piece together several strands of what I know about resource exploitation and the proverbial resource curse. But what stood out for me was the fact that data analysis is key to appreciating the difference between natural resource contribution to a country's gross domestic product (GDP), gross national product (GNP) and net national product (NNP). The takeaway from this lesson was that mutually advantageous exploitation of natural resources requires indicators measuring equity: the balance of financial, socio-economic and environmental benefits and costs shared between transnational companies, host governments and communities. Public officials are better equipped to make progressive policy decisions when they possess well collected, validated and interpreted data.
I also learned a lot from participants from other countries. The most useful lesson came from the case studies on Nigeria's oil and gas industry, and how analysis of the political economy and environment of a resource-rich country is critical to understanding the development of its extractive industries. For all Nigeria's oil and gas riches, the political elite have failed to pass an oil and gas law for the last 10 years, due to a lack of consensus between the federal government and regional states, not to mention other issues such as corruption.
The lessons from the Nigerian participants in Budapest seem to emphasize the importance of an efficient and clear policy and legal setting; a well-coordinated government institutional framework charged with oversight responsibilities over the sector; and a way to harmonize the interests of a federal government and regional states. This can only be achieved if all federal and state institutions are focused on the common good of the citizenry.
But Uganda is in some ways unique compared to the other countries represented in Budapest. Our oil and gas industry is in its infancy. From a policy perspective, the government delayed issuance of petroleum production licenses to oil companies in an attempt to buy time to build a competent human resource base for the oil and gas industry, earning the wrath of oil and gas companies. But government has been able to plug policy loopholes in the legal framework by creating a new set of upstream, mid-stream and downstream laws for the good governance of our oil and gas sector. The government of Uganda was forced to undertake this cautious approach after international oil companies attempted to “farm out” without paying capital gains tax, leading to a costly protracted litigation process in the UK in 2012.
Ironically, participants from other countries such as Ghana, which was initially applauded by the West for its early oil production progression and was held in high esteem by civil society in Uganda, seemed to approve of Uganda's cautious approach to the development of the resource sector in the country. However, it is still too early for Ugandans to celebrate, for we are a country with a high corruption index rating, with well documented corruption scandals costing us billions of dollars. The governance of the extractive industries sector and the relatively good policy and legal setting currently in place remain to be tested once production commences and resource revenues start trickling in.
Perhaps, Uganda's mining sector, which has been our worst-performing economic sector since the glory years of the 1960s, when the extraction of copper, cobalt and gold enabled the sector to contribute to over 30 percent to the country's GDP, gives us an insight into governance pitfalls in the country's extractive sector. For the last 30 years, the sector has averaged less than 0.4 percent contribution to GDP, not for lack of commercially viable reserves and projects, but due to governance challenges. These challenges include speculators, elite capture, regulatory capture, underfunding, understaffing, tax evasion, mineral smuggling and generally weak administrative frameworks.
It is my hope that lessons from our own history and the histories of other countries can help us better govern our resources in the future.