Uganda is on course to join Angola, Nigeria, Equatorial Guinea, and Ghana as one of Africa’s oil-producing countries. Up to 21 oil discoveries in the country have yielded more than one billion barrels of potentially recoverable oil. And, while the possibility of future stock is unclear, the government is optimistic and has committed to fast-track the country’s pre-oil infrastructures and major oil extraction and commercialisation projects.
But, will the country be able to evade the ‘resource curse’, a paradox that has afflicted oil-rich countries across Africa and elsewhere? This political-economic phenomenon happens when an extractive resource – such as oil – undermines a country’s socioeconomic performance. This is causing anxiety for Ugandans, who are worried about the possible decimation of other sectors, rising social inequality, and irreparable damage to the environment.
Corruption is a deeply entrenched and lucrative part of the country’s political economy. Therefore, governance improvements will be needed to mitigate the risk of corruption that is a key feature of the ‘resource curse’.
Uganda’s oil sector has four main areas of corruption risk to date:
1. Project expenditure and recoverable costs: Petroleum operations in Uganda are mainly implemented through production sharing agreements between the government and multinational companies. Confidentiality and limited oversight of recoverable expenditure increases the risk of revenue loss for government, highlighting the need for close monitoring.
2. Project-related procurement and labour recruitment: There have been cases where relevant laws have been evaded, and oil industry procurement processes have involved ‘influence peddling’ by individuals in positions of authority. Kickbacks are allegedly involved, alongside cash payments by suppliers and job applicants.
3. Land acquisition and resettlement: Land acquisition for oil projects has seen rights breaches for project-affected persons, illicit transactions, collusion, evictions, and stalled court cases.
4. Revenue collection management: Revenue collection and management (and potential mismanagement) are key features of the ‘resource curse’ debate. While the government created the Petroleum Fund to prevent mismanagement of oil revenues, the ‘oil-cash bonanza’ has already revealed lapses, with civil servants treated to cash bonuses. Institutional anti-corruption strategies in the oil industry have proved to be fragile. The power to determine oil revenue outcomes rests with the executive, rendering all other accountability largely ineffective. At subnational level, there are also concerns that some actors operating in the oil-bearing districts do not fully comply with their tax obligations.
Existing anti-corruption structures and their limitations
Uganda has many anti-corruption structures and laws, including parliament, the Inspectorate of Government, the Office of the Auditor General, and the Anti-Corruption Court Division in the High Court. The country also established the State House Anti-Corruption Unit and the State House Investors Protection Unit.
However, corruption continues to plague the country and has become a lucrative venture that is operated by ‘gainful concealment’. The oil industry in Uganda is built on a foundation of secrecy, with confidentiality maintained about production sharing agreements between the government and joint venture partners. When viewed through a political settlement lens, this looks like political networks discreetly shelving corruption information to shield it from public view.
There is little official information on the oil sector in the public domain, and sector-level confidentiality in the oil industry limits the potential for meaningful preventive interventions. Existing institutions and structures are mainly constrained by bureaucracy, unresponsiveness, disjointed operations, and limits to legal mandates. Communities in project areas could report unlawful official conduct, but some community members have allegedly benefited from illicit transactions.
The oil industry offers rich ground for corruption to continue, evidenced by cases arising from projects implemented by private firms. Recent events also revealed parliament to be a hub of corruption. Public scrutiny and subsequent revelations resulted in sanctioning of the Speaker of Parliament, Anita Annet Among, by the USA and UK, as well as the arrest and arraignment in court of some members of parliament. In subsequent civil action, young people marched to parliament asking for the resignation of the Speaker. This resulted in dozens of demonstrators being arrested – heavily denting public trust and creating uncertainty about how oil revenues will be managed.
Strengthening anti-corruption efforts in Uganda
Although the government has designed several anti-corruption measures, these face real tests. New anti-corruption institutions may not be the answer if they are constrained by the same systems that created existing agencies. Yet efforts to strengthen resource governance have led to a series of multi-stakeholder engagements in Uganda, which can promote change and perhaps help maximise the benefits gained from oil extraction.
Continued development of Uganda’s oil industry could bring the country closer to national transformation. But, to avoid the ‘resource curse’ and ensure that anti-corruption efforts succeed, there are important roles for government, civil society, and the international community of development partners and lenders. Institutions, agencies and individuals should work together to ensure transparency across the economy, to limit the potential for officials to collude with communities to engage in corruption. This will also require better monitoring, and more proactive oversight of the oil sector.