Uganda's 'Oil Fixation' Hinders Progress, Analyst Warns

Uganda’s pursuit of its nascent oil industry has become an all-consuming national project, potentially overshadowing other vital development initiatives. Despite discovering oil in 2006, the country has yet to export a single commercial barrel, yet its national mood and development agenda seem to revolve almost entirely around this future revenue stream.

Discussions surrounding the East African Crude Oil Pipeline (EACOP) often focus on technicalities and potential gains, as highlighted by the Uganda National Oil Company’s COO. However, a more critical question looms: what happens when a nation becomes a ‘one-trick pony’ reliant on oil? Neighboring countries like Rwanda and Kenya are actively opening new airports, expressways, and innovation cities, showcasing a diverse approach to development. In contrast, asking about completed projects in Uganda often leads back to the anticipated “first oil.”

While Uganda has taken some steps, such as implementing a local content law and ensuring national participation in the project, historical precedents offer little comfort. Chad, despite its oil wealth, remains one of the poorest nations, and Nigeria’s economy, heavily dependent on oil, has seen its manufacturing sector decline significantly, even as its private sector, particularly in fintech and entertainment, has flourished.

Uganda’s oil reserves are modest by global standards, unlikely to transform the nation into a petrostate or drastically alter national income as some officials suggest. The EACOP is nearing completion, but Uganda’s own refinery is not expected until years after oil exports begin. This delay, coupled with the political landscape nearing the end of a long-standing leader’s tenure, raises concerns about patronage and future leadership.

The pipeline itself may not be a mistake, but the national identity and development strategy built around it could be detrimental. The postponement of essential infrastructure and smaller, tangible projects in favor of the grand promise of oil revenues echoes the cautionary tale of Chad, where anticipated wealth did not translate into widespread development.

This article was originally published by the Daily Monitor (Uganda).