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Why Uganda’s development will greatly depend on extractives governance

By Admin

Added 13th February 2018 11:34 AM

Uganda’s economy has historically been based on agriculture employing close to 80% of the national population.

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Brian K Katabazi is the Associate Director of the Centre for Energy Governance

Uganda’s economy has historically been based on agriculture employing close to 80% of the national population.

By Brian K Katabazi

With the discovery of oil and gas resource, Uganda’s anticipations in the extractives sector have since significantly grown. Records from the ministry of energy and mineral development show that from 2012, 726 licences  both in mineral mining and development have been issued to operators against the hundred licences issued in the previous ten years. 

With increase in the issuance of mining and development licences, Uganda’s prospective bases pointed positive which expanded the extractives sector as well as enhanced finances in terms of revenue collection from the issued licences. The discovery of 3.5 billion oil barrels and revenue collection from the industry is expected to add on the value to the sector. For example $2.5b that has been generated as foreign direct investment from the oil and gas industry greatly shows how the industry has added value to the extractives sector.

Uganda’s economy has historically been based on agriculture employing close to 80% of the national population.  But recently, we have witnessed quite a big number of Ugandans shift to the extractives sector both directly and indirectly. 

The most recent scenario is the example of large numbers of people from Mubnde district involved in gold mining on a small scale using traditional techniques. When you move around the country, the story one finds, is the same especially in the districts of Eastern and kalamoja regions. According to Natural Resource Governance Institute (NRGI), Uganda’s vermiculite production accounts for one percent of the world production capacity and is an ongoing source of revenue.

NRGI farther clarifies that Uganda has sufficient reserves to continue its 2007 production level of 3,500 metric tons for the next 100 years.  The 14% and 8% growth in the mining sector i.e. from 2006-2007 and from 2005-2006 respectively showed that Uganda’s extractives sector was sharply and steadily growing.  In the year 2005, 9% of Uganda’s exports comprised of gold alone and amounted to $122m in 2006 in terms of revenue collection. This should remind us of how critical the extractives are to us as a country.

First world countries like Australia developed to a level of first class states through proper management of their extractives sector.  Through efficiency and transparency, they were able collect revenue, manage and put it to right use of developing their states.  Revenues collected from extractives have high potential to spur economic and social development. 

Besides the above, lack of transparency, proper management and accountability in the sector ascends to poor governance which adds more fire to the cycles of corruption, poverty and more likely instability/conflict. These stampedes development and results into stagnation and more likely of setbacks.   

To avoid this, there is need and urgency of coming up with strict and well streamlined policies, implement them without fear or favour and allow laws to work against those who violate policies and embezzle the resources’ revenues. This will increase accountability and fiscal transparency in the extractives rich countries in specific Uganda.

I have realized that there is an information gap among the general public. This requires sensitization of the masses on how they can play part in the governance of extractives’ revenue.  This is best done through availing the public with information that is aimed at empowering them to hold whoever is involved in the management of the natural resources accountable.  Since most people have access to media platforms, both local and international, I find it appropriate to also avail information to media houses to be aired out for public consumption. The general public will be kept alert in terms of knowing whatever transpires in the sector.

As a country, we need closely follow the footsteps of other nations especially Norway, Canada, Chile and United Kingdom that have exhibited excellent forms of governing their natural resources before we meet a curse from what has potential to deliver us to a first world economy state.

The writer is the Associate Director of the Centre for Energy Governance

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