By Simon Mwebaze
Editor’s note: The opinions expressed here are those of the authors. View more opinion on ScoonTV.
Uganda makes headlines for many different reasons. These include the lush nature, the long-standing president, and most recently, its laws discriminating against LGBTQ people. But on a more positive note, it has also gained popularity in the last few years for the discovery of oil in Lake Albert. Like many African countries that discover a precious resource, there are many hopes and dreams sold when a resource like oil is discovered. Here’s why those dreams may come into fruition.
The EACOP stands for the East African Crude Oil Pipeline, a pipeline being developed in Uganda. It’s one of the major infrastructures, besides refineries, that are central to exploiting the oil of Uganda. It stretches from Lake Albert in Uganda to the port of Tanga in Tanzania. From there, oil will be exported globally. The construction of this pipeline, measuring a staggering 1433 kilometers, is being undertaken by French Total Energies, China National Offshore Oil Corporation (CNOOC), and state oil companies from both Uganda and Tanzania.
Despite pushback from environmental groups, the project has been signed off citing the benefits of having it completed. East Africa stands to benefit to a greater extent in several ways.
Infrastructure is the first major benefit to the region. Already many of the towns where the pipeline passes are seeing improvements in roads and airports. This infrastructure will facilitate oil extraction and movement while also facilitating other businesses that will support the oil extraction activities. These may include businesses like catering, hospitality, and logistics. One of the cities that has benefitted is Hoima in Uganda where the second international airport in the country is being constructed. Additionally, accommodations are being developed to support the employees who will be working at the refinery.
While this may not be plain to see, regional cooperation is a direct benefit of the EACOP as well. Collaboration between Uganda and Tanzania is central to keeping the region stable, and so far, they are both cooperating. Both countries are contributing to not just the funding but compensating displaced people in the areas where the pipeline will pass. They have also cooperated by assigning their own oil companies to facilitate the completion of the project. Such moves toward common goals strengthen regional ties, which can have positive implications for trade and movement of people.
The economy stands to benefit significantly in several ways, too. The construction and completion of the pipeline and its associated infrastructure allows more opportunities for business in the areas surrounding the pipeline, especially at the refineries. Businesses that support workers will be able to set up shop easily, since there are roads that allow access to those areas as a result of the pipeline. Many businesses in different sectors such as agriculture, logistics, and accommodation will open up, potentially leading to an invigorated economy for both countries. Additionally, these businesses provide employment to a country that is already struggling with an 80 percent youth unemployment rate. The Petroleum Authority of Uganda already has a list of local suppliers on their website. Oil-related businesses can also register to participate in the industry.
Besides employment, there is transfer of skills and technology from the international companies participating like CNOOC and Total Energies. They already have apprenticeship programs that are helping train and upskill youth to take advantage of the oil industry by setting up businesses that support oil activities directly or indirectly. These are especially beneficial for the youth and small businesses which are the lifeblood of the economy.
Another economic benefit is that the participating countries will enjoy revenue from oil sales and taxes, boosting the economy significantly. Oil products sold within the region and globally shall add tax revenue which can be appropriated toward developmental projects for the country. The countries will be able to collect taxes from businesses set up as a result of the growing oil industry and exports and build further infrastructure, as well as schools, hospitals, and more.
While it seems like there are several benefits expected from the incoming oil industry in Uganda, there remains strong resistance. Besides the local organizations and communities citing environment damage and displacement, there is the international community, including the EU, that are citing moving toward cleaner energy. The industry has suffered its fair share of resistance, but the governments involved seem to have done the necessary risk management assessments giving them the go-ahead. Additionally, the governments have put in place measures to limit damage to the environment and compensate landowners who have lost their land for the sake of the project. Even with those guardrails, critics argue that the pipeline will still cause untold damage to the ecosystem.
Still, if the project is executed well, the region stands to benefit significantly, especially Uganda. But doubts are cast on the project when you look at the history of African countries after they discover resources. The shadow of the “resource curse” looms over this new project. Plus, when you look around at the current government in Uganda and Tanzania, it doesn’t necessarily cast hope that they’ll allocate resources effectively. In most cases in Africa, the elites stand to benefit more from such industries while less goes to the bottom. Only time will tell, but for now Uganda needs something to boost the economy, and the EACOP is looking like the thing to do it.
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