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New Actors Vulnerable to Oil Curse

Kampala -New players in the oil production sector in Africa are exposed to what has been termed the oil curse, because of the selfish interest of some long-serving African leaders, a Ugandan policy analyst has said.

Godber Tushabe, executive director of the anti-corruption NGO Advocates Coalition for Development and Environment (ACODE), warned that most African countries with newly discovered oil resources are unlikely to experience the improvement in wellbeing that those minerals represent because most presidents will not want to cede control of that wealth to a successor.

“Only countries with political and economic freedom are going to maximize benefits from these mineral resources without proper governance systems, that money is not only worthless, it is dangerous,” Tushabe said on Thursday, June 13, while speaking to a group of African journalists in Kampala, Uganda, at an event organized by Thomson Reuters.

“It is really two things – democracy and leadership – that determine how a country may use mineral resources, and to avoid oil curse,” Tushabe said.
Pointing at Uganda, a new actor in the oil industry that expects to start oil production in 2016 is “vulnerable to the oil curse because of President Museveni’s regime survival system of rule”.

“The Presidents will focus on how to stay in power and when populations demand for freedom and accountability, they will opt to be as ruthless as possible,” Tushabe said, arguing that the prospect of controlling massive oil revenues will tempt many leaders to hold onto power.

The oil curse, or Dutch disease, is a phenomenon where a country, after discovering oil resources, abandons all other sectors of the economy, including governance, accountability and environmental protection, with the result that the benefits of increased revenue do not transform into improved wellbeing for citizens. The term was coined in 1977 by a London publication, The Economist, to describe the decline of manufacturing in the Netherlands after the discovery of natural gas in 1959.

Tushabe cited Equatorial Guinea as an example of how badly oil wealth might go for African countries. An oil-producing country ranked as “middle income” due to its high GDP, half of Equatorial Guinea’s 700,000 people live below the poverty line.
Describing Cameroon’s head of state, Paul Biya as an “absentee President”, Tushabe told journalists that Congo is the victim of its undemocratic neighbours – notably Uganda and Rwanda – and so is susceptible to the curse.

“Rwandan President, Paul Kagame has been there for about 19 years and Yoweri Museveni in Uganda, for over 20 years. So how do they help Congo?” he asked rhetorically.
“What these countries lack are not these documents, but leadership. If you give these [strategy] documents to some other countries, they will exploit them wonderfully but our economic and political context does not permit us to succeed in this.”

Cameroon in West Africa is currently developing the Growth and Employment Strategy Paper (GESP) in view of attaining a 2035 emergence vision, while in East Africa, Uganda’s Vision 2040 projects that the country will be a First World country in 20 years, thanks to oil.

The policy analyst however said Africa has some good examples to learn from, notably Botswana and Ghana. Botswana has avoided the curse due to good leadership and democracy in the country. “They have used their mineral resources [diamonds] very well,” observed Tumushabe. Ghana, a newly oil-producing country, is currently one of Africa’s fastest and most stable economies, due to good governance.

“Nigeria is like a huge train that is turning. It’s not there yet, but it has the opportunity to become the engine that drives this continent,” he said of Africa’s largest and most populous economy, whose oil resources have in the past been a magnet for civil conflict and instability.

Source: TrustMedia

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