As Uganda prepares to begin pumping its first commercial oil in 2018, government and the World Bank are set to launch a Country Economic Memorandum today.
Ms Christina Malmberg-Calvo, the World Bank Country Manager says the memorandum titled “Economic Diversification and Growth in an Era of Oil and Volatility“, discusses the prospects of oil and mineral production in Uganda, drawing on global experiences of oil producing countries.
This, she says will guide the country in making the right policy and fiscal choices so as to benefit fully from the oil and mineral windfall.
Ms Calvo is optimistic that if oil resources are well managed, it could take the country a lot less time to achieve its national vision of attaining upper middle income by 2040. “Uganda has an opportunity to get the economics right. If oil resources are well managed, it could take the country a lot less time to achieve its national vision of attaining upper middle income by 2040,” she says in a statement issued on Thursday.
She however cautions that this requires pumping back the oil profits in to sectors that will have huge economic spill-overs to the most vulnerable and poorest.
In 2006, Uganda discovered over 6.5 billion of oil reserves in the Lake Albert basin, in the South West along its border with Democratic Republic of Congo.
About 1.3 billion barrels are recoverable, but only 40% of the country’s potential has been explored so far, raising hopes of further oil finds.
Experience from oil emerging economies however shows oil and minerals tend to fuel conflict, corruption and widen income and poverty disparity, instead of boosting shared prosperity.
The World Bank says the Memorandum offers a series of recommendations including policy and institutional strengthening, to regulate the sector, and ensure greater transparency as well as accountability.
Stimulating manufacturing and industry, as well as private sector businesses, along with investing in health and education, would create a more skilled labour force capable of driving growth for the long term. The report also advocates a “sustainable investing approach” that combines substantial savings with investment and links the size and speed of the public investment program to progress in absorptive capacity.
Story By Catherine Ageno