New York Times ~ Uganda’s Oil Could Be Gift That Becomes a Curse

Posted November 26, 2011 by Ugandan Diaspora News Team in Economy ~ 3,582 views


By JOSH KRON, New York Times ~ Despite Ugandans’ dreams of industrialization, the country’s most lucrative export is coffee, and fish is second. Nearly 40 percent of the population survives on less than $1.25 a day, according to the World Bank. But when oil starts pumping within the next several years, the expected revenue of up to $2 billion a year could propel Uganda into the strata of middle-income countries, where few sub-Saharan African countries rank. A refinery will be built; infrastructure is promised.

Yet there are growing worries that the oil may prove to be more of a curse than a gift, similar to the fates of other countries in sub-Saharan Africa that have joined the petroleum bonanza. Uganda is considered by international experts to be among the most corrupt nations in the world, and even before oil production has begun, several senior government officials, including the prime minister, have been accused of pocketing millions of dollars in bribes from oil companies, forcing at least one of the politicians to resign.

The web of scandals may delay the much-anticipated starting date of oil production, adding to the already volatile politics in Uganda, which has recently been the scene of one of the most active protest movements in sub-Saharan Africa. Uganda’s Parliament voted in an emergency session in mid-October to freeze all oil contracts and begin investigations of the country’s prime minister, internal affairs minister and foreign minister, all of whom are close to the president and have been accused of taking money from Tullow Oil, a British company in Uganda that was scheduled to complete a $2.9 billion deal with the Ugandan government and two other companies to produce Uganda’s oil. Tullow has denied the accusations.

Despite governing for nearly 26 years and handily winning re-election again this year, President Yoweri Museveni now finds that his popularity seems to be waning, along with his grip on the economy and his own party. Many here say that the bribery allegations are part of a campaign by some politicians to determine who comes next.

“Most obviously, the jockeying is for positions,” said Mahmood Mamdani, an anthropology professor at Columbia and Makerere University in Uganda, “especially given the expectation that Museveni will not run the next time.”

Mr. Museveni’s rise, from rebel to leader of a regional power, has paralleled Uganda’s. In the capital, Kampala, vendors sell posters of the president’s image edited into Terminator outfits, next to dictionaries and Bibles. He is prickly about criticism and refers to himself at times in the third person.

“Museveni can never be given money by anybody,” the president said at an impromptu news conference he held last month in Kampala, lashing out when the bribery allegations were publicized. “General Yoweri Museveni. To get money from a Muzungu, or anybody, for my personal use, is contempt of the highest order,” he said, using Ugandan slang for Westerner.

What could happen in Uganda has happened before in Angola, Gabon and Nigeria, all countries with deep corruption where oil intensified class disparities.

“The next generation of Ugandans could grow up in a very different country to that of their parents and grandparents,” the advocacy organization Global Witness said in a 2010 report. “But the risk of the resource curse phenomenon taking hold in Uganda cannot be ignored.”

Uganda has been rocked by a series of demonstrations over surging commodity prices — particularly petroleum — as inflation has hit 30 percent. Protesters say they are inspired by the Arab Spring revolts.

It is not just the decreasing value of Uganda’s currency that critics are complaining about; it is the way the money is being spent. The government was criticized in April for buying fighter jets from Russia for approximately $740 million, which some analysts saw as being costly status symbols rather than useful weaponry. According to the director of the Bank of Uganda, Mr. Museveni ordered the bank to release millions of dollars to pay for the fighter jets, which Mr. Museveni promised would be reimbursed with oil money, a prominent Ugandan newspaper reported.

Uganda’s oil lies underneath the forests and lakes lining the border with its troubled neighbor Congo. Oil industry and government officials estimate that Uganda will be able to pump about 200,000 barrels a day. But Uganda’s oil is waxy, difficult to pump and expensive to refine.

Still, the country has stated its intention to build a pipeline through Kenya to the port of Mombasa, and lawmakers have already accused Mr. Museveni of secretly selling off some crude oil to foreign nations.

As private investors come and go from Uganda, there are worries that hundreds of millions of dollars are up for grabs in kickbacks and secret deals.

According to American diplomatic cables published by WikiLeaks, Tullow Oil accused the Italian company ENI of trying to bribe Ugandan politicians, including Mr. Museveni and the prime minister, with more than $200 million to secure oil rights held by Tullow’s onetime partner, Heritage Oil, a British company. One cable cites a Ugandan intelligence report given to the American Embassy by Tullow. But Tullow Oil itself helped write the intelligence report, the cable said.

As for the new bribery allegations, there are questions about their veracity, and some analysts believe that the politicians singled out — all close to Mr. Museveni (the foreign minister is an in-law) — are victims of a smear campaign to hurt their chances of succeeding Mr. Museveni.

“I have never let Uganda down,” Mr. Museveni said during the news conference. “Uganda will not lose, and cannot lose under my leadership. O.K.?”

A version of this article appeared in print on November 26, 2011, on page A6 of the New York edition with the headline: Uganda’s Oil Could Be Gift That Becomes a Curse.

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Ugandan Diaspora News Team

Ugandan Diaspora News Online is an independent, non political news portal primarily aimed at serving Ugandans who work and reside outside Uganda. Our aim is to be a one stop shop for everything Ugandan and the celebration of our Ugandan heritage.


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