Tuesday, August 9, 2011

Can Uganda avoid the Oil resource curse?

The Center for Global Development in Washington published in July 2011 a study titled “Oil for Uganda – or Ugandans? Can Cash Transfers Prevent the Resource Curse?
Tullow oil camp, Uganda. Flickr/Mark Jordahl

Written by Alan Gelb and Stephanie Majerowicz, the paper considers the tradeoffs and potential impact of alternative uses of the oil rent. It argues that alternative approaches towards absorbing rents should be judged from two perspectives — the direct impact on growth and living standards, and the indirect effect on governance.

The paper argues that Uganda’s deteriorating governance and mounting corruption raise questions about its capacity to wisely invest oil revenues. The paper urges distribution of oil rents to the population through cash transfers so as to give Ugandan citizens a stake in their own resource wealth. While an interesting idea, one wonders how this would reduce the potential for corruption.

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