The extractive industry is one of the key contributors to economic development of resource rich countries through contribution to Gross Domestic Production (GDP), employment for the local communities, infrastructure development and foreign exchange earnings among others. However transforming resource wealth into well-being of local communities while minimizing human rights violation remains an important issue in Africa’s resource-abundant economies. Notably most benefits from extractive industries in Africa flow through national treasuries. Evidence can be drawn from the boom in large-scale gold mining in countries in Africa which suggests that communities of the extractive industries experience on average positive, but limited welfare gains. There are quite a number of opportunities, which the surrounding communities could tap from, when the extractive industries are open to the communities especially through functioning of markets, primarily for labor, as supply of raw materials and produce.
Whereas the above opportunities are presented, the impacts on the community development process can be direct or indirect, and positive or negative. The direct contribution to economic development comprises the value-added generated by the extracting extractive industries with respect to compensation of labor, capital, the entrepreneurial efforts etc., and/or to satisfy the fiscal agent.
The sizes of the indirect (or induced) impacts are instead linkages to other complementing economic activities in the region. Generally the impact of extracting industries could be determined on a case by case basis but relating to the size of the resources, characteristics of the community, geographical location, and the provision for resource complementing cluster activities among others. The indirect impact of extractive industries are often seen in multiplier effects, which embody the changes in demand for various goods and services (e.g., overall output) as well as inputs caused by the initial change in economic activity in industry mining.
On the other hand there some negative effects especially if the resource entails displacement of the local community and infrastructure without pre prior consent, inclusive consultation, environment impact assessment and adequate planning for the livelihood of the population hence leading to human rights violation. It is therefore important to undertake an assessment to determine the short, medium and long effects and impact to the host community.
Oil and Gas Sector in Uganda
Uganda is among the African countries that are endowed with significant amounts of oil and natural gas resource wealth, which was mapped out decades ago but discovered in the last two decades. The discovery of commercially viable quantities of oil and gas in the Albertine Graben region in Western Uganda was publicly declared by the Government of Uganda in 2006. By the end of 2017/2018 Uganda had 21 oil and gas discoveries with an estimated accumulation of 6.5 billion barrels of oil equivalent, of which 1.3 billion barrels is recoverable.
Uganda’s gas reserves are estimated at 672 billion cubic feet of gas, with 499 billion barrels of non-associated gas and 173 of associated gas. There is still considerable potential for discovering more petroleum, given that less than 40 per cent of the total area in Albertine Graben with the potential for petroleum production has been explored. This has placed Uganda among the top owners of proven oil reserves in Sub-Saharan Africa. The discovery of oil has given Ugandans both at the government as well as at the community level a ray of hope with respect to the perceived and potential benefits.
The signing of the long-awaited Final Investment Decision (FID) with international oil companies Total E&P and CNOOC in April 2021 was expected to unlock avenues for billions of dollar investment in Uganda’s oil and gas sector especially in the communities of extraction and along the 1440km crude export pipeline to be constructed from Western Uganda to the Tanzanian Indian Ocean Port of Tanga line.
Enabling Policy Environment for community participation in the oil and gas sector
Oil exploration is expected to take place along the entire western rift of the country, an area that embraces a multiplicity of countries, traditional institutions, various ethnicity groups, and local government authorities. In amidst of this diversity, many perceive that there will be increasing mistrust of the process at different levels, which may create tension.
The government of Uganda through the Oil and Gas sector has developed policy frameworks that will guide the sector, which includes; National Oil and Gas Policy, 2008; the Oil and Gas Revenue Management Policy,2012; and the Petroleum regulation act, 2016. The government of Uganda through the Oil and Gas sector has developed a policy framework that will guide the sector, which includes; National Oil and Gas Policy, 2008; the Oil and Gas Revenue Management Policy, 2012; and the Petroleum regulation act, 2016.
The above policy framework provides;
- The general issues of governance for the Oil and Gas sector. Even though the policy does not contain a specific objective with regards to community relationships, this can be inferred from the provisions on citizen participation and transparency in the policy (National Oil and Gas Policy, 2008).
- Mutually beneficial relationships between all stakeholders in the development of a desirable oil and gas sector for the country (Petroleum regulation act, 2016)
- National Content Policy on the promoting of citizens’ participation in the oil and gas sector, particularly in the areas of education and skills development, technology transfer, employment and service provision. Identification of different stakeholders, who are allocated different roles in ensuring effective citizen participation. (Petroleum regulation act, 2016).
- Information Sharing on existing opportunities, in line with the four major pillars of national content, i.e., employment, skills development, technology transfer and service provision for citizens. These guide the processes that would ensure that communities benefit from the oil mining activities (Petroleum regulation act, 2016).
Despite these developments in the Institutional and Regulatory Framework, local communities and CSOs have continuously expressed their concerns about the need to strengthen inclusivity and transparency in the processes of resource wealth extraction in oil-producing areas in Uganda and the around the globe.
Opportunities of oil and gas sector for smallholder farmers in the Albertine Region
1. Market for locally produced food commodities: The exploration and installation of extraction infrastructure has attracted a number people through a number of oil camps in the region, which are on an increase since the signing of the final investment decision (FID) in April 2021 as the industry moves to production stage. These camps and their catering companies have a target of achieving the national content by sourcing for at least 30 percent of locally produced food. Already Traidlinks, an Ireland based organization was already supplying 1-1.5 tonnes of produce per week in 2012 with the currents figures standing at over 10 tonnes of food per week in the region.
2. The commodities of high demand; rice, maize, beans, peas, meat, poultry and fish. Other commodities include; potatoes, pineapples, matooke, watermelons, tomatoes, mangoes, spinach, onions, carrots, lettuce spring onions, avocado, green pepper, cabbages and ginger
3. Improvement of transport and communication systems to give room for trade in agriculture commodities, which entails construction of road networks and installation of other communication infrastructure, eases transportation of produce from gardens to generally access road and transport system has already improved market access for agriculture products.
4. Kabale International Airport is under construction to open the region to international markets for their agricultural products.
5. Development of petro-agro chemicals, which are organic in nature to the farming community, will improve soil conditions hence sustaining production.
Gaps to be addressed to facilitate effective exploitation
- Inadequate capacity of Smallholder farmers to compete in standard markets due to the low value-adding to products and use of labour-intensive methods of production ( World Bank’s Uganda Economic Update report , 2017). Value addition and processing in major parts of the country are still low which has limited Ugandan farmers to compete on standard markets.
- Poor post-harvest handling services among smallholder farmers in the region where the produce is not adequately cleaned, graded, packaged, stored and finally delivered to the consumers. According to Traidlinks, 40 percent of food supplied to oil camps in the early 2012 was returned because of not meeting the required standards and the buying centres received payment only for the produce that was consumed implying that farmers lost incomes. However, currently, the figure has been reduced to 5-10 percent but this still represents a significant loss.
- Fragmented and small businesses along value chains of different commodities. The business community is still in the formative stage making it to maximize profits in the existing market linkages within the oil and gas sector.
- Unresolved conflicts emanating from the dynamics and conflict histories that exist in each of the affected oil-rich sub-regions of South-western; Bunyoro; West Nile; and Amuru District/the wider Acholi sub-region. The conflicts are related to access to land, and porous borders with the DRC in the districts of Amuru, Arua, Bundibugyo, Hoima and Kanungu.
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