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Uganda: Nigeria Oil Troubles Offer Key Lessons

The Monitor (Kampala)

4 January 2012


Since Uganda discovered its first commercially viable oil deposits, the country has had its fair share of controversy and shenanigans surrounding its nascent oil sector.

In what might offer important lessons for Uganda, this week Nigerians woke up to news of government scrapping their fuel subsidies. Nigeria is particularly interesting because it is Africa’s leading oil producer and among the top producers in the world.

More to that, the country has been producing oil for many years now but this lucrative resource has not alleviated most of Nigeria from poverty. Nigerians still have challenges with water, roads, quality education and other basic requirements.

True, in a free market subsidies are never easy to sustain and the Nigerian government says the subsidies have been accounting for about a quarter of government hence the need to free them up for infrastructure projects such as power and roads.

There are other plausible arguments against the subsidies but one might as well ask: Why is Nigeria still struggling to provide its people with the most basic utilities like water, so many years after the discovery and production of its oil?

Still, why has the standard of living for most Nigerians remained so low in a country that is immensely gifted with one of the world’s most sought-after products? Back home, up until now the country is yet to put in place proper governance structures for the oil sector.


An oil spill in Ogoniland (file photo).

The sluggish approach on this front has allowed dealings in the oil sector to thrive in an environment that is largely devoid of transparency. This covert approach to the management of the country’s oil sector has drawn anger towards government, which is primarily charged with transacting business on behalf of Ugandans.

In all fairness, Nigeria should have been by now a glowing example of good governance and socio-economic development on the African continent but that, unfortunately, cannot be confidently said of it given what it is today.

Government should drop the covert and shady approach in its oil sector dealings. It should also move fast to put in place clear laws and benchmarks for the oil sector if Uganda’s oil story is to turn out different from that of Nigeria.

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