Uganda: Understanding Why the Black Gold’s Curse of Plenty Stalks Us

Whilst reviewing the Sunday Times’ business pages to see how various share prices are unfolding on the London’s Financial Times Stock Exchange (FTSE), I came across an analysis of some well performing shares and amongst was that of Tullow Oil, who are currently exploring oil in Uganda. I was happy to note that their share prices were analysed to be doing well. To me this meant that the oil prospects in Uganda appear good, as reflected by Tullow’s share prices on the FTSE, and possibly good things await Uganda.

The discovery of oil in Uganda can at this stage be taken to be a blessing, if we plan and manage the entire process diligently and transparently.
Many scholars have cited examples of how the discovery of oil in a country can actually be a curse, which has even been termed as the paradox of plenty. This is particularly true if you look at countries like Nigeria, that produce over two million barrels of crude oil per day with output expected to double by the year 2015. But evidence to-date suggests that there has been no major positive progress in terms of political, social and economic well-being of the major African oil producing countries.

On the contrary, it has been reported that Gabon, which peaked oil production at 365,000 barrels in 1996, has now seen a steady decline in production. This has affected the economic structure of Gabon, since the government did not diversify its economic base and was just reliant on oil.

On a positive but “negative gain”, Gabon was reported to have had the highest per capita consumption of champagne in that year, but it appears with the decline in oil volumes, the champagne consumption is also reducing.

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