Oil Discovery in Uganda Managing Expectations

1. Oil Discovery in UgandaManaging Expectations Godber Tumushabe Executive Director/Policy Analyst Advocates Coalition for Development and Environment (ACODE) www.acode-u.org Discussion Points on the Paper Presented at an EPRC Workshop EPRC Offices, Kampala: March 2, 2010

2. Strength of the Paper • Good theoretical foundation – particularly the discussion on the concept of expectations management. • Extremely useful analysis of the case of Norway in relation to the oil curse. • A fairly alternative argument about the oil curse – that the curse is not actually about the natural resources but rather, economic and political mismanagement –although this argument is not pursued in a more rigorous manner. • and could have been enriched by the discussion on other traps: conflict, landlockedness with bad neighbors and bad governance in small country (Paul Collier: The Bottom Billion, 2007)

3. Methodological issues with the paper • Methodology- the reference to primary data is not evidenced in the paper • A more detailed description of the number of people interviewed, their categories and how there responses relate to each could strengthen the empirical basis of the paper. • The data on economic management & export performance is fairly out of date.

4. Substantive Issues with the paper • A number of “casual” conclusions- in the event that the democratic process does not get derailed, Uganda is likely to witness increased political competition and exaggerated promises to the electorate (ref 4.4) • The stakeholder analysis section (4.5) – in addition to Bunyoro, there are also Ugandans in general.

5. Substantive Issues with the paper • There are laws governing the exploration of oil which give legal effect to the oil and gas policy – although these do not address a range of key issues including revenue sharing and revenue management. • The GoR-DRC agreement could be cited as a useful source of authority- or even key elements of the agreement and their implications discussed.

6. The political economy discussion is deficient as it does not address issues of governance • State Capacity – related to a states’ power and ability to enforce rules that are consistent and predictable. • Rule of law – that establishes among other things property rights and limits the states’ discretion in manipulating those rules. • Democratic institutions – that further limit exercise of state discretion by holding governments accountable to their citizens. • An active citizenry - devoid of fear and manipulation that acts as front line defenders of democracy [modified from Francis Fukuyama]

7. Causes of Governance Failures Bad Laws Low Public Sector Capacity Political Market Imperfections Uninformed Citizenry Polarization Political Credibility

8. Four specific issues • Responsibility and accountability • Transparency and access to information • Revenue sharing and balance of power – centralized revenue management with a distorted budget allocation archiecture will strengthen central authority while undermining alternative power centres at the local level. • Environmental and livelihood security and sustainability need to be co-drivers in the exploration and exploitation process.

9. BIG PICTURE SYSTEMIC FAILURES4 Political-Economic Issues Relevant to Managing Expectations

10. 1. Breakdown of Trust in Government ----eroded by endemic corruption

11. 1. Breakdown of Trust in Government ----eroded by vested interest in land

12. 2. Growing Ethnic Nationalism – increasingly seen as a threat to central authority

13. 3. The Character of the State of Uganda • Uganda increasingly seen as a failing State

14. 4. Regime Survival Politics • Public policy and decision-making in the petro-political era will increasing be defined by regime survival politics: • not by public opinion and • and public expectations do not matter.