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Africa Oil Industry: New Actors Vulnerable To Oil Curse 

By Jude Fuhnwi in Uganda — 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. This is an assertion, of a Ugandan Policy Analyst and Executive Director of Advocates Coalition for Development and Environment, ACODE, Godber Tumushabe.

The oil curse is a phenomenon where a country, after discovering oil resources, tends to pay little or no attention to other lucrative sectors of the economy and concentrates in the energy sector. “The Presidents focus on how to stay in power and when they do this, the economy is affected,” Tumushabe said. He was speaking to Sub-Sahara African Business Journalists on Thursday, June 13, at the conference hall of ACODE in Kamwokya, in the Ugandan capital, Kampala.

To him, the problem of leadership, coupled with the lack of economic and political freedom in most African countries has flawed the oil sector and the economies of such countries in general. According to him, Uganda, a new actor in the oil industry in Africa with approximately 2billion barrels of oil, is “vulnerable to the oil curse because of President Museveni’s regime survival system of rule”.

He cited Equatorial Guinea and Cameroon as vivid examples, and said though an old actor in the oil industry with about 80 percent of its revenue dropping from oil production, Nigeria is not yet there; despite having the potential to take the continent out of the oil curse. The African Economic Outlook, AEO, says Cameroon has abundant natural resources. However, revenues obtained from the exploitation of these resources, and from oil in particular, have not been sufficiently channelled into structural investments in infrastructure and the productive sectors.

The decline of the agricultural and forestry sectors in the country’s economic structure over the past decade attests to this. Recently, the State has undertaken steps aimed at reviving the productive sectors, particularly by strengthening infrastructure. While efforts have been made to maintain macroeconomic stability, poor governance still persists and impedes the optimal use of public resources for the country’s socio-economic development.

A view corroborated by Mr. Tumushabe who described Cameroon’s Head of State, Paul Biya as an “absentee President”. He told journalists that Congo is a victim of undemocratic neighbours and so is very 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.

Nevertheless, the policy analyst hinted that Botswana has been able to brave the curse. An accomplishment he attributes to good leadership and democracy in the country. “They have used their mineral resources very well,” observed Tumushabe. Going by him, Ghana is on course to step out of the economic blight. On why the oil curse still persists in Africa despite strategy growth and development documents, Tumushabe saidthe crisis is still rooted on leadership problems.

“What these countries lack are not these documents, but leadership. If you give these 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 working on the Growth and Employment Strategy Paper (GESP) in view of attaining a 2035 emergence vision, while in East Africa, Uganda is working on a similar document to accomplish a 2040 development goal.

The oil curse is also referred to in economics as the Dutch diseases because it was first experienced in Holland in the 1950s. The term was coined in 1977 by a London based English-language weekly news and international affairs publication, The Economist, to describe the decline of the manufacturing sector in the Netherlands after the discovery of a large natural gas field in 1959.

First published in The Post print edition no 01439

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