11 December 2013, Kampala – Investing wisely Uganda’s oil revenues in productive sectors of the economy will ensure future generations benefit from the country’s promising petroleum industry, a new paper released on Dec.10 by the Economic Policy Research Centre (EPRC) and the Africa Growth Initiative at the Brookings Institution says.
The researchers insist that since Uganda has many infrastructural challenges, investing oil money in infrastructural projects like roads, railways, airports and other important economic sectors like agriculture and tourism will ensure the economy is diversified to benefit all Ugandans even after oil has stopped flowing in 30 years’ time.
To guarantee that the people who come later benefit more from the country’s recently discovered oil and gas resources, the paper entitled, ‘Accelerating Growth and Maintaining Inter-generational Equity using Oil Resources,’ also calls for a robust legal regime that favours rule of law and independence of institutions.
According to Dr. Lawrence Bategeka, a senior fellow at EPRC and co-author of the research, intergenerational equity will be realized only if a robust legal regime, alongside strong, independent institutions, transparency in government operations, communication, prudent public financial management, and responsible environmental management practices are respected.
Bategeka said ensuring oil revenue management by investing it wisely, knowing how much to save and how much to invest, making choices between domestic investment and foreign investment [sovereign wealth funds] will equally be important.
“Countries which have ended up with the so-called ‘Dutch Disease’ did not do so knowingly,” Bategeka said.
“Naturally, oil production will increase national income, with high propensity to increase consumption but Uganda should guard against this [spending on consumption] and instead spend on supporting performance of the non-oil production sectors [agriculture, manufacturing and building the production capacity of the economy.”
He added that the government should also guard against inflated public expectations such as oil revenues wiping away poverty and budget constraints for both the government and the general population.
– The Independent