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Natural resources need more transparency

The last decade has seen resurgence in interest in the vast natural resources in Africa.

Oil and gas resources have been at the forefront of natural resource exploration in many countries in Africa.

It is now widely believed that Africa is the new frontier for oil exploration and production. In East Africa, Uganda was the first to confirm the existence of commercially viable oil deposits in 2006.

Subsequent efforts led to large findings of gas in Tanzania and oil in the eastern arm of the Rift Valley in Kenya. To date, exploration efforts have intensified not only in Uganda, Kenya and Tanzania, but also in Somalia and Ethiopia.

The discovery of vast oil resources in East Africa has spurred much policy debate on the types of government policies that will ensure that resources are used to accelerate growth while maximising economic and social benefits.

Traditionally, natural resource management has been centred on three pillars. The first pillar is resource management and usually relates to the processes of exploration, extraction, refining, value addition and marketing. The objective under resource management is to maximize the recoverable amount of the resource.

The second pillar is revenue management, which ensures efficient and equitable financial management of a country’s natural resource revenues.

The third pillar is environmental management, which creates and enforces the requisite measures necessary to minimize environmental damage arising out of natural resource extraction.

At the centre of these three aspects are usually two actors: the state and private companies. While private companies often provide the capital and technology for efficient resource extraction, the state provides a conducive legal and regulatory framework. A third actor—the community—is often neglected, while any negative social and environmental impacts of natural resource extraction projects are often overlooked as well.

Yet the discovery of commercially-viable oil deposits in Uganda’s Albertine valley has changed the economic and social landscape in the region.  In some ways, this change has been positive. For example, this discovery of oil has led to the development of various infrastructural projects in transport and energy sectors. In addition, the communities, including the local and cultural leaders, have formed ambitious expectations around oil.

The positive expectations are anchored around expected improvements in social services delivery, infrastructure developments, employment prospects and poverty reduction. However, there are fears that the state has not extensively consulted the community, and thus that oil resources may not be used to adequately respond to the unique needs of that community.

In this case, the people feel that oil may present skewed opportunities and risks where only persons in positions of influence and power stand to benefit at the expense of the poor and marginalised. This feeling of marginalisation is exacerbated by what the community calls a sense of secrecy that surrounds the oil-related activities in the sub-region.

For example, residents of the towns of Buliisa and Butiaba claim that sometimes, especially at night, they see trucks carrying away unidentified materials from the exploration and drilling sites. They wonder why these trucks only operate in the dark of night.

One community member even wondered: “Could it be that they are already taking way the oil without our knowledge?”

While this is highly unlikely, it shows that secrecy and limited access to information by the community breeds all sorts of rumours and anxiety. In the extreme, the locals feel that they may ultimately not benefit much from the oil industry if activities are not carried out in a transparent manner.

What is required, therefore, is improved engagement and communication with local communities regarding the activities in the oil and gas sector and how such activities are likely to affect their usual way of life.

Joseph Mawejje is a research analyst at the Economic Policy Research Centre.

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