1. Ugandas Oil and Gas in the Pipeline: Managing Expectations Steve Kayizzi-Mugerwa, PhD Director, Development Research Department African Development Bank

2. 2 Introduction: Oil and Gas in the Pipeline Rags to Riches? The Political Economy of Expectations Managing Expectations Looking Ahead Conclusion Outline of Presentation

3. 3 Oil in Uganda suspected already by the 1920s. New prospectors came in 1990s. Discovery of oil (and gas) not announced until 2006, during 44 th Independence Anniversary. In 2008, AfDB held a Seminar in Kampala on Managing Oil Revenue on request of President Museveni. But by 2013, Uganda was not producing any oil or gasthings are still in the pipeline. Introduction: Oil and Gas in the Pipeline

4. 4 Kabarega and Oil Discovery in Uganda Everything has its time. Recapture Old Glory: Bunyoro-Kitara as African Emirate with African Sheikhs Queen Elizabeth National Parklions for oil. Lake Albert fishermenvanishing rural livelihoods? Hoima: economic capital of Uganda? Technology hub and gateway to DRC? Political Economy of Expectations (I): Local Reassessments

5. 5 Rapid Prosperitybetter service provision/jobs Middle income economy/quality of life Reduce donor dependence Fear of oil curse (corruption and civil war associated to oil wealth in other countries). Not too worried about environmental effects Go west young person Perfume from Dubai Political Economy of Expectations (II): National Level

6. 6 Dutch Disease: Rising cost of doing business (decline of the non-mineral sector). Demonstration EffectsMy future Mercedes will be bigger than yours Living off the future/Corruption/Weak Governance? Fly-by night consultants. Revenue/Subsidy Effects–food, heating, housing, transport. Encashment effects–pipelines, satellite cities Resource movement effectsspeculation, rapid urbanization but failed industrialization? Resources to abroad? Political Economy of Expectations (III): Macro side effects

7. 7 Local centre-relations will not hold? Legacy of neglected region(s). What local share of revenue? The rise of local oil nationalism (foreigners go home). Training for the futurepetroleum engineering at Makerere University Oil and gas legislationre-reading the small print The national development planplanning a future of relative affluence under uncertainty. Oil and gas as basis for broader economic transformation? Political Economy of Expectations (IV): Institutions

8. 8 Identify stakeholders (consult, involve and ensure fair deal) Ensure adequate consultation (planned, not ad hoc or under pressure) Involve stakeholders at all stages Monitor expectations (not a once-off event). Legislate transparently (cf oil and gas law in Uganda) Ensure a fair deal for all Provide reliable and timely information Transparency and accountability (Fiscal Responsibility Act in Nigeria) Managing Expectations (I)

9. 9 Secrecy (in the name of national interest) breeds suspicion and conflict Develop an outreach/communication strategy Make all information public Ensure meaningful citizenship participation (civil society and media) Consider the credibility of democratic processes Looking Ahead

10. 10 Hope and expectations are what drive human imagination If harnessed well, they can lead to higher productivity and returns They can be exaggerated/difficult to manage/self- enhancing/destructive They can be exploited by politicians to disastrous ends Avoid misinformationit is much easier than the alternatives Conclusion