Oct , 17

Abstract: The exportation of oil offers tremendous opportunities for Uganda. It also poses several risks to Uganda’s domestic security. Drawing on field research in Uganda, as well as archival research, this paper identifies three potential sources of domestic instability stemming from oil exportation: increased urbaniza-tion, unpredictability in tax revenue collection, and the formation of rebel groups. The paper concludes that government transparency is crucial in avoiding most of the pitfalls associated with oil extraction and makes several recommendations for improving transparency in Uganda.

This article explores the potential risks associated with oil development and exportation in Uganda. It is based on field research conducted in July 2009 as well as on archival research and simulations using estab-lished sources of data. This paper assesses the influence of oil extraction on Uganda’s domestic security, noting the potential for a resource curse associated with oil exportation. The paper then identifies and discusses in detail three sources of domestic volatility that may arise as a result of oil development. The first factor is declining competitiveness of non-oil exporting sectors of the economy, and the increased urbanization associated with the decline of these sectors. The second factor is the potential for oil exporta-tion to foster increased presidential power and a declining ability to collect tax revenues. The final factor is the susceptibility of oil to the formation of rebel groups. All three factors may encourage civil unrest and strife in Uganda if the negative externalities of oil extraction are not properly managed. The paper con-cludes that government transparency is crucial for avoiding the many potential pitfalls of Uganda’s oil ex-ploitation and offers recommendations for increasing transparency.

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