Great Expectations: Uganda’s mineral and oil fever

Managing wealth is managing expectations, and managing expectations is not downplaying them

Usually a journalist should do a story and not involve in it, get overwhelmed or despise it, I almost burst out in laughter when a man brought a jerrycan to an oil-exploration site expecting to get some crude as jaribu— vernacular jargon for a free sample of a product that a seller gives a prospective customer.  It was two years ago, during a stakeholders’ tour of the exploration areas and proposed site for setting up a mini oil refinery, when the resident of Kaiso-Tonya village in Hoima district appeared with his jerrycan to the amusement of tourists who included legislators, local leaders and journalists.

Until recently, people in that place still ask what happened to the promise of fuel and electricity which the now abandoned early production system, was to deliver.  This shows how far expectations from the discovery of oil deposits have reached across all levels of Ugandans from national planners to the middleclass, investors, politicians, cultural leaders, and now country people.  The concern about allowing expectations ride higher than realities is that it is the other factor that has been found to cause the so-called oil curse, besides secrecy and excluding locals residing in oil-rich areas from actively participating in the program of developing the resource.

‘Ignorant Expectations?”

Many Ugandans are expecting that the price of fuel will at least halve, when the country begins refining petroleum products locally, not considering that fuel is an international product whose price is determined at that level and not domestically.  Government planners are expecting more room in planning because the national budget could for the first time be fully financed using local resources not subject to conditions known to be imposed by donors, but Uganda is part of the global economy including institutions like the International Monetary Fund and others that pressure for democratic and economically rational budgeting. Cultural institutions such as Bunyoro where some oil fields are, are expecting special treatment in developing social services, yet other folks from West Nile have been heard saying that oil flows from there and deposits in Bunyoro, literally suggesting that the resource should be fully treated as a national asset and proceeds distributed equally.

Individual land owners are expecting to make a kill when explorers confirm presence of high-value resources on their plots, not knowing that the government valuing officer has parameters that take into a constitutional considerations that resources at a certain depth on any land in Uganda belong to the State and are therefore not part of the compensation package on top of the surface area.  Support sector entrepreneurs in areas like insurance, health, foods and beverages, logistics and other industrialists, are expecting a frenzy of business, not knowing that they must push for government policy that positions them to gain and limit on outsourcing, such as allowing for establishment of a re-insurance company for that sector.  People have been promised that the oil industry will create thousands of jobs.  But it seems it has not been thought of how the majority of indigenous employees will react when they find that almost all jobs that pay much higher wages in comparison to what they have been appointed to do, are occupied by expatriates as the reality is that Uganda will be short of technical skills needed in the new industry for some time.  Government is still considering whether to establish a new institution for higher learning for petroleum and mineral studies only, or begin with a faculty at Makerere University, but which ever path it takes, it will still take a couple of years before Ugandans can fully manage their mines and petroleum assets across all disciplines.

Generally many Ugandans expect life to become a bed of roses whenever the oil begins to flow.  But once reality strikes, and it begins to occur to people that the resource only catalyses economic transformation, and that they need to work even harder to gain from oil, life could already be a bed of thorns for many, and analysts say that this is often the beginning of social unrest.

Managing expectations is everyone’s role

I interviewed Prof. Venansius Barya Baryamureeba, Vice Chancellor Makerere University for a magazine published by the newly established Chamber of Mines and Petroleum.  I understand this Chamber will among other things, engage various stakeholders including the Executive, legislators, local leaders and companies to manage expectations, by helping beneficiaries understand what is realistically accrued to them., following a philosophy that; communication of truths about issues at hand to all stakeholders in a uniform manner, transparency and participatory management is arguably the best shot at managing expectations.

Barya like he is popular called uses previous well-intended government programs to illustrate a scenario of Uganda’s social welfare in the event that expectations and indeed the actual resource are not managed well.  For instance people got overly excited for the Universal Primary Education, and sat back because they did not have to work hard to pay for education, and instead bore more children.  “The government has good intentions, but to what extent do we communicate them to the people? Beginning with Parliament, there are people in Parliament who do not even know about these issues, and they are the ones supposed to go to the constituencies and talk to the people.  most people in political parties do not really understand these issues, so who is going to communicate them because they are the ones going to look for votes, you should be able to communicate some facts at least as part of your services to the people.”

Barya advised that the political leadership should borrow a leaf from faith institutions. “We have churches and different denominations, but there are things they communicate that are the same across the board, like values, how to bring up children, etc.  But what is common in this country among our parties? What message can we all go to a rally and say we want this message for every body? But because you want to be different as a party, you communicate the other message.”

He warned that as things stand in Uganda, political parties could use oil and minerals to divide the country.  “For instance someone will go to Bunyoro and say with federalism, this is your resource, so you should not let the government take even more than 50 per cent, and try to make sure that those resist, then another goes to Karamoja and says that you have a lot of gold, people should not rob you of your wealth.  So at the end of the day, you have a country where the leader is not in control of anything,” Barya said, “Even when you are supposed to educate people on a program like UPE, another party will be more interested in seeing it fail, they call it byoya bya nswa (empty promises), they are not interested in saying that as long as this government is in power let us help to make UPE a better program, and do an oversight role to ensure that the money is not stolen. So to me I see parties using this issue of oil to divide the people.”

Some critics argue that Barya’s appeal is insensitive of the fact that political parties must point out and capitalize on weaknesses of implementing a program by the ruling regime to gain political mileage, rather than do the work while incumbents claim all credit given the level of inadequate communication among the electorate.   They indeed argue that to curb corruption, the pressure groups find it more strategic to focus on the bad practices, rather than throw flowers in faces of the corrupt and poor managers.

But Barya insists that many people act out of selfish rather than national interest and it shows in failure to table convincing alternative policies.

I called up city lawyer Ely Karuhanga, President of the new Chamber. This guy who, I am told owns the Barbeque Lounge, a bar I visit down at the centenary park is also the Chairman of Tullow Uganda. He told me; “We need to work with the government to reach people and tell them the advantages of mining and petroleum projects, explaining what is accrued to them.  For instance for compensation, people must understand that it is the government valuer who puts a value to the land, and tells them what they benefit.”  It has happened before that investors find themselves stranded, when land owners demand outrageous compensation packages.

“We also need participation of legislators to ensure that laws affecting this sector are implemented, also on the part of investors because it is a high-risk business involving huge capital investments.  So we must ensure a conducive investment environment that respects the sanctity of contracts,” Karuhanga further told me.

To a significant extent expectations are legitimate because minerals are capable of giving huge economic benefits to a country when managed well, but if people do not understand how they can turn this mineral capital into the improved welfare they seek, they will inevitably become frustrated.

Financial analysts explain that managing wealth means managing expectation, and that managing expectations is not down playing them.  The first step usually is to anticipate proceeds and then agree on the strategic plan of how revenue is going to be used.  Secondly, communicate to all the leaders who matter at all levels whether in government or not including politicians, civil society, cultural and religious leaders, academicians, planners, the private sector, etc, and get them to partly own the process.  This group should decide on a single policy on the matter and communicate only that to masses regardless of political, religious, tribal or any other orientation, and let it be illegal to communicate otherwise.

Some people have advised that the strategic plan of economic transformation based on oil revenue should feature plans on things like investing in value addition so that farmers know that they will not drop their hoes for oil tankers, but sharpen them and gain from where the country has had an international economic comparative advantage for so long.

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