Fighting the Resource Curse: Uganda's Pivotal Moment

Abstract

On the eve of Uganda’s 44th anniversary of independence in 2006, President Yoweri Museveni announced the discovery of oil in the Lake Albert rift on the western border between Uganda and the Democratic Republic of the Congo (DRC). Touting an initial find of 300 million barrels of oil, Museveni called for a national day of prayer, thanking God “for having created for us a rift valley” and for giving Uganda’s leaders “the wisdom...to discover this oil.” In the seven years since Museveni’s landmark announcement, circumstances have changed dramatically. Estimates of Uganda’s oil reserves have gone up twelvefold to 3.5 billion barrels, and the sector could reach a production rate of nearly 200,000 barrels annually at full capacity. In a country where 1 in 10 children die before reaching the age of five and where 64.7 percent of citizens live on less than $2 a day, oil could transform Uganda. Most observers, however, fear that Uganda’s discovery is more bad news than good. In countries that lack the rule of law required to control both public and private sector actors, oil has historically been more likely to correlate with periods of endemic corruption, instability, and economic underperformance rather than positive and inclusive development. When an influx of natural resource wealth is introduced into a state with weak controls on elite behavior and dominated by graft and patronage, this phenomenon known as the “resource curse” often occurs. Due to its long history of corruption and patronage-based governance, Uganda appears to be a perfect candidate for the resource curse. To make matters worse, Ugandan policymakers have already begun to create a regulatory framework for the oil sector that, in its current form, will invite further corruption, worsen governance, and all but guarantee long-term underdevelopment.