Policy Impacts on Africa’s Extractive Sector: Uganda, the Stagnation of Minerals, and the Promise of Oil21 22

Abstract

The East African country of Uganda has seen its growth increase steadily in the
last decade. While minerals have stagnated, the continued presence of agriculture
and the 2006 discovery of oil have given the country reason for economic
optimism. Not yet tapped, Uganda expects to construct a pipeline and start
extracting this oil within the next five years. The Ugandan government, led by
President Yoweri Museveni, has promoted oil as the opportunity to industrialize
the country. However, Uganda must improve on several facets to make this
happen. Their fiscal regime needs improvement, as it is not internationally
competitive and suffers from tax leakage. As for economic diversification, the
government plans for a quasi-market approach to industrialize, but it will need
to improve education before attracting investment. Value addition must also be
created for their resource economy, especially in minerals. In terms of regional
connections, Uganda should continue its involvement with the African Union
and the East African Community. While the government promotes oil as the key
to transforming Uganda into a middle-income, industrialized country this change
will not occur unless the government changes the country’s prevailing policies.
Museveni’s government must, for instance, improve their transparency, not muzzle
civil society groups and let institutions build more capacity. Without structural
changes to the government, oil will not lead to the envisioned development of
Uganda.