Thursday, December 3, 2009
Uganda: Place Your Bets -- Oil Prosperity or "Resource Curse"
Yep, energy companies found 700m barrels of commercially viable oil in the pristine Albertine Graben region, of Uganda, "representing the first major petroleum strike in east Africa." Using Paul Collier's "Resource Curse" analysis... (6.17 mins in)
...Anne Perkins rates Uganda's chances of getting out of the oil trap alive:
The underlying factor is invariably low income. In that context, the prospect of the vast proceeds of globally scarce natural resources greatly sharpens competition for control over them. But natural resources do not only corrupt the political process in the obvious sense of illicit financial gain for a few (often abetted by global corporate greed), they also profoundly affect the relationship between politicians and voters.As Collier points out, the opposite of the cry of American independence, no taxation without representation, is also true. There is no representation without taxation. Where a government's income comes from oil rather than the people, it becomes all too easy to ignore the people.
The final destabilising element in Collier's analysis is a question of geography: often the source of this new wealth is concentrated in one area, usually remote. In countries with an uneasy balance of ethnicities, it is easy to skew a fragile co-existence with what Collier calls the "romantic propaganda of identity politics". And secessionists with access to revenue from the disputed natural resource can all too easily arm themselves.
Uganda fits all perilously neatly into this mould. So the challenge is on to make oil pay for society as a whole, to turn curse into blessing.
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MONDAY, JANUARY 4, 2010
Ghana: "Unlike Many of its Neighbours, Ghana has Struck Oil Under Democracy"
Unlike many of its neighbours, Ghana has struck oil under democracy. Its officials entrusted with drawing up legislation have been scrutinising oil-revenue laws from Norway to Trinidad and Timor-Leste. A draft bill proposes that part of the oil money should go directly into the national budget, with the rest split between a “stabilisation fund” to support the budget if oil prices drop and a “heritage fund” to be spent only when the oil starts to run out. Putting the money into ring-fenced funds should prevent a free-for-all among politicians and the corruption that could ensue.However, there is the temptation democracy may be undermined if:
After an austere year the government may yet be tempted to blow its early oil revenues on restoring popularity. That would set a dangerous precedent; it would also be a lot easier if the government was not restricted by laws to stop it. For all the fine talk of heritage funds, the oil bills are behind schedule; none has yet been put to Parliament. “If you get the revenues before the laws, it will be very grey,” warns Moses Asaga, a member of the ruling National Democratic Congress who chairs Parliament’s energy and mining subcommittee. “Everybody will be struggling for the money.”