Why Uganda needs CSR policy guidelines in Oil and Gas sector

By Daniel Abowe

As Uganda prepares to extract its oil, experts have warned stakeholders to follow proper planning and implementation processes so that the country benefits from its resources

Corporate Social Responsibility (CSR) is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders during project implementation.

It also refers to the corporation's initiatives to assess and take responsibility for the company's effects on environmental and social wellbeing.

Oil companies operating in Uganda have been and are still making social investments in the Albertine Graben as a way of obtaining social license to operate in communities.

However, there is no detailed legal framework to regulate the social investment of oil companies. As such, this is likely to undermine the intended positive impacts and sustainability of the social investments in communities. The impact of oil companies on local communities in the Albertine Graben is both negative and positive.

This should compel Ugandans to take the notion of corporate responsibility seriously. In all communities, where multinational and local corporations have set up businesses, human rights abuses and violations have been noted.

In Uganda, where oil exploration and developments are taking place, there are several environmental, social, economic and cultural issues emerging from the petroleum sector activities.

Amidst the aforementioned issues, oil companies have carried out CSR projects in different areas, but they are often scattered and not planned with the communities where they are implemented.

In addition, the main principles of governing CSR, such as transparency, accountability, participation, and equity are often neglected by the joint venture partners in the planning and execution of CSR projects.

For instance, on August 19, last year, a football game was stopped just 20 minutes into the game in Nwoya by the district chairperson after discovering that Total E&P had not put local content into consideration.

The joint venture partners have implemented CSR in the Albertine rift, however, according to a recent report on Ugandan perspectives on oil and gas by Maendeleo Ya Jamii (MYJ), there is a great mismatch between community needs and aspirations and what the oil companies have actually provided in form of CSR in the major oil districts in Uganda.

Successful CSR implementation starts with a common, but strategic understanding of what CSR means to the company.

CSR implementation should yield benefits that are tangible and have a sustainable development impact.

The two aspects form CSR implementation benchmarks. Additionally, company top management should be involved in CSR implementation, but with clear reasons, means and policy guidelines.

Currently, Uganda does not have a policy specifically regulating and guiding CSR implementation. Instead, there are several legal provisions relating to CSR scattered in different statutes.

There is no regulation of CSR and most interventions are voluntarily done without considering the main principles of good CSR governance.

The provisions related to CSR exist in the 1995 Constitution of Uganda and the National Oil and Gas Policy (NOGP) of Uganda (2008).

For instance, objective 10 of the policy is; to ensure mutually beneficial relationships between all stakeholders in the development of a desirable oil and gas sector for the country and strategy.

Under this objective is to encourage the implementation of CSR by oil companies. The Petroleum (Exploration and Production) Act, 2013, and the Petroleum (refining, conversion, transmission, and midstream storage) Act, 2013 also have scattered provisions on CSR.

Other oil and gas sector relevant policy guidelines and Acts, such as Public Finance Management Act, 2015, Uganda's Model Production Sharing Agreement and individual petroleum agreements do not have clear provisions to guide CSR implementation.

Regarding joint venture partners' integration of CSR projects in development planning, there is no evidence of integration of CSR in the national development plan or district development plans for the sustainability of CSR projects in Uganda.

For this reason, a health facility in Buliisa constructed by Tullow did not operate for some time because it was constructed without considering district development priorities.

CSR activities are determined by the specific oil company and they depend on the level of business the company operates in a given place.

That is why some CSR interventions have been stopped in the major oil districts. In Hoima district, CNOOC stopped awarding the best candidates at all levels in 2019 due to low activity.

Therefore, I believe that Uganda should develop CSR policy guidelines incorporating good governance principles.

All CSR project interventions should feed into NDP, DDPs, lower local government, and community-driven development priorities depending on the size and scale of operation of the company.

This will compel petroleum companies to engage in sustainable CSR activities. Uganda should benchmark on oil-producing countries with good CSR policies like Norway and Botswana as the country prepares for oil production projected for 2023. 

The writer is a researcher at CSCO/ACODE