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Uganda’s Oil and Gas in the Pipeline: Managing Expectations Steve Kayizzi-Mugerwa, PhD Director, Development Research Department African Development Bank. Outline of Presentation. Introduction: Oil and Gas in the Pipeline Rags to Riches? The Political Economy of Expectations

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Outline of Presentation

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  1. Uganda’s Oil and Gas in the Pipeline: Managing ExpectationsSteve Kayizzi-Mugerwa, PhDDirector, Development Research DepartmentAfrican Development Bank

  2. Outline of Presentation • Introduction: Oil and Gas in the Pipeline • Rags to Riches? The Political Economy of Expectations • Managing Expectations • Looking Ahead • Conclusion

  3. Introduction: Oil and Gas in the Pipeline • Oil in Uganda suspected already by the 1920s. • New prospectors came in 1990s. • Discovery of oil (and gas) not announced until 2006, during 44th Independence Anniversary. • In 2008, AfDB held a Seminar in Kampala on Managing Oil Revenue on request of President Museveni. • But by 2013, Uganda was not producing any oil or gas—things are still in the pipeline.

  4. Political Economy of Expectations (I): Local Reassessments • Kabarega and Oil Discovery in Uganda—”Everything has its time”. • Recapture Old Glory: Bunyoro-Kitara as “African Emirate with African Sheikhs” • Queen Elizabeth National Park—lions for oil. • Lake Albert fishermen—vanishing rural livelihoods? • Hoima: economic capital of Uganda? • Technology hub and gateway to DRC?

  5. Political Economy of Expectations (II): National Level • Rapid Prosperity—better service provision/jobs • Middle income economy/quality of life • Reduce donor dependence • Fear of oil curse (corruption and civil war associated to oil wealth in other countries). • Not too worried about environmental effects • Go west young person • Perfume from Dubai

  6. Political Economy of Expectations (III): Macro side effects • Dutch Disease: Rising cost of doing business (decline of the non-mineral sector). • Demonstration Effects—”My future Mercedes will be bigger than yours” • Living off the future/Corruption/Weak Governance? Fly-by night consultants. • Revenue/Subsidy Effects–food, heating, housing, transport. • Encashment effects–pipelines, satellite cities • Resource movement effects—speculation, rapid urbanization but failed industrialization? Resources to abroad?

  7. Political Economy of Expectations (IV): Institutions • Local centre-relations will not hold? Legacy of neglected region(s). What local share of revenue? • The rise of “local” oil nationalism (foreigners go home). • Training for the future—petroleum engineering at Makerere University • Oil and gas legislation—re-reading the small print • The national development plan—planning a future of relative affluence under uncertainty. • Oil and gas as basis for broader economic transformation?

  8. Managing Expectations (I) • Identify stakeholders (consult, involve and ensure fair deal) • Ensure adequate consultation (planned, not ad hoc or under pressure) • Involve stakeholders at all stages • Monitor expectations (not a once-off event). • Legislate transparently (cf oil and gas law in Uganda) • Ensure a fair deal for all • Provide reliable and timely information • Transparency and accountability (Fiscal Responsibility Act in Nigeria)

  9. Looking Ahead • Secrecy (in the name of national interest) breeds suspicion and conflict • Develop an outreach/communication strategy • Make all information public • Ensure meaningful citizenship participation (civil society and media) • Consider the credibility of democratic processes

  10. Conclusion • Hope and expectations are what drive human imagination • If harnessed well, they can lead to higher productivity and returns • They can be exaggerated/difficult to manage/self-enhancing/destructive • They can be exploited by politicians to disastrous ends • Avoid misinformation—it is much easier than the alternatives

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