Page 4 - AfrOil Week 09 2020

AfrOil COMMENTARY AfrOil
Fuel shortages have spurred protests across Sudan (Photo: Radio Dabanga)
How to escape the resource curse?
Ugandan newspaper faults President Museveni and his team for taking
an overly rigid approach to revenue division and getting itself mired in tax disputes
WHAT:
Officials in Kampala
are having a hard time attracting investors’ interests in the country’s oil assets.
WHY:
Uganda may be gaining the reputation of being a difficult negotiating partner.
WHAT NEXT:
If world crude oil prices remain low, conditions are not likely to improve.
COUNTRIES that have just discovered new hydrocarbon reserves are often told, as they pre- pare to make the transition from non-producer to producer, that they should work hard to avoid Dutch disease.
This malady, also known as the resource curse, arises when newly discovered com- modities draw such a large share of the new investments flowing into the country that the economy as a whole suffers.
It is easy to see why new crude oil or natural gas producers are keen to avoid such an out- come. After all, why would they want their most valuable natural resources to lead, paradoxically, to the deterioration on the country’s economy?
Naturally, then, they have good reasons to listen closely when experts tout the value of economic diversification initiatives and call for using oil and gas revenues to boost other sectors of the economy.
But is there such a thing as trying too hard to
escape Dutch disease? Uganda’s example indi- cates that there may be.
A long wait
Andrew Mwenda, the founder of the Inde- pendent, a Kampala-based newspaper, made this point in an article published earlier this week. He noted that Uganda had already spent nearly 14 years trying to bring its untapped oil resources on stream and pointed out that this was a longer wait than average.
“There is a global standard [for] the average time it takes from discovery to production of oil,” he wrote. “For offshore [fields], it is four years, [and for] onshore, it is seven years. Uganda first discovered oil in 2006 [and] 14 years later we are seven to 10 years away from production.”
According to Mwenda, these delays are
an unintended consequence of the Ugan-
dan government’s approach to hydrocarbon investments. 
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w w w . N E W S B A S E . c o m Week 09 04•March•2020