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Home » Analysis and reports » Will Capital and Institutional investment in Oil and gas solve our economic woes

Will Capital and Institutional investment in Oil and gas solve our economic woes

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Youths demonstrates in kampala over the rising Unemployment. Uganda is currently banking on the budding oil sector to solve the economic puzzle that has created skyrocketing Unemployment. PHOTO BY DAILY MONITOR NEWSPAPER

Youths demonstrates in Kampala over the rising Unemployment. Uganda is currently banking on the budding oil sector to solve the economic puzzle that has created skyrocketing Unemployment. PHOTO BY DAILY MONITOR NEWSPAPER

A World Bank pledge of a $ 600 million injection into the Uganda-Kenya gas pipeline construction deal went to the annals of history as among the major oil infrastructure investments in the region.

As states in the East African Community (EAC) bloc move to tackle major economic challenges a head of integration, the oil and gas sector remains the most basic common good partners are looking at tapping.

Almost all East African community states have oil and gas fields save for the scrawny little brother Burundi. However, oil discoveries in partner states has reset the economic perspective ushering in an era of new goals and aspirations at each state level

In Uganda, Oil remains the leading attraction of public and private sector investment capital as the nation moves to oil commercial production 2018.

So of interest has the hitherto neglected sector been that since the discovery of oil reserves in the Albertine as early as 1900 that Uganda’s leading private and public institutions have now resurrected and rolled academic disciplines in relation to oil and gas just in the name of employment opportunities.

This ray of economic opportunity has also created a scramble at the international economic stage that multi-nationals have moved swiftly to tap into the sector to boost major economic makeovers.

In the $ 600 million frame work paper, the World Bank notes that the chunk is part of the $ 1.8 billion set aside by its lending department the International Monetary Fund (IMF) to facilitate sector success in the in the new oil producing African states following major discoveries in the of gas reserves.

The financial boost from the Bank is also built the idea that Oil would iron out the murky economic story visible in the increasing ratios of unemployment and extreme poverty.

To the Contrary, the capital and institutional investments could also be the chink in the “black Gold industry’s armor”. Oil proceeds as it is widely circulated are insufficient by themselves to fish society from it’s economic trenches according to analysts.

With wide spread low economic productivity, unemployment and urban poverty, this school of thought asserts that giving much attention to oil in terms of sector allocation would only open a”can of worms”

Oil and gas expert Angelo Izama says, it would rather be better to stop the insinuation that oil will constitute a larger share of the  solution to the country’s economic woes. Izama in a widely circulated audio-visual opinion suggests that the linkage of oil to unemployment is a deviation from the major economic challenges

“Contributors to the National Social Security Fund (Workers) are about 600,000. In the 20-22 years of the life span of the oil sector, only 150, 000 jobs will be created. This basically means that people should stop talking about oil jobs”. Izama warns.

In this regard, Izama continues to warn that states and the citizenry need to readdress the misconception that the day to day challenges lined along economic lackluster will be ironed when oil flows. This is a deliberate scapegoat adopted by authorities to avoid answers for failure to address the challenges according to him

“It is a lose used by government to divert itself from real problems of unemployment and urban poverty which is sky rocketing right now” he re-echoes

Perhaps what needs to be addressed in most gas producing nations where Uganda has a chance to draw hind sights and foresight is the partition of the national resource envelope to cater for all sectors as away of withdrawing the perceived and fanatical success story both genuine and misguided from Oil itself.

This perceived successes not only usurp the national human production capital but creates laxity at policy making level to draw plans on how to guide society on even the most basic requirements. Interestingly, Oil Producing nations especially OPEC countries are also the food deficit nations in the continent.

Monitor journalist Isaac Imaka, in an article to the newspaper notes that new oil producing African states are feared facing what has since been dubbed as the Dutch disease.

The Dutch disease term was coined in 1977 by The Economist newspaper to describe the decline of the manufacturing sector in the Netherlands after the discovery of the large Groningen natural gas field in 1959.

Using the Nigerian experience, Imaka reaffirms the Dutch disease is likely to be the African Oil nations’ story.

“The story of oil producing countries, especially in Africa, is such that when petrodollars start flowing in, governments ignore sectors that were hitherto the backbone of their economies and instead put their hope and dependency on petroleum” Imaka says

Once a leading food basket, with the most promising agricultural sector, the golden horizon of Nigeria was shuttered as soon as Oil and gas fields were let open. This is a horrific economic story that Africa’s largest oil producer will have to bank on time to recover from according to Imaka

“This status however was sent into a steep decline the moment oil came in. Investments in infrastructure, were redirected and rural communities slid into poverty” Imake writes.

However, Energy Minister Irene Muloni in an interview with Bloomberg Television was quick to dismiss the claims saying the number one goal of the public private investments is to convert oil proceeds to boost agricultural production, the leading employment sector of the economy

“The discovery of petroleum which we refer to as Black Gold is indeed a blessing that will enable us to transform it into Green Gold.  The revenue will go into the agricultural sector to modernize it,” she asserts

Muloni also says the state will pump proceeds into infrastructure development such as Roads, Railway network and Electricity distribution to rural areas to boost domestic industrialization as a way of withdrawing the pressure on oil and insulate society from the skyrocketing unemployment and low economic production

But with a country whose policy implementation story  is hollow especially in the agricultural sector that the minister is optimistic about, One would wonder if Minister Muloni will be able to speak the same Language when the oil wells will breath their last after 2018

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