sharing in governance of extractive industries
By Coletta Wanjohi, Uganda
Bank of Uganda's main role is advising the government on all matters pertaining economic policy and de-velopment and this also involves the oil sector. The National Oil and Gas Policy that was approved by cabi-net in 2008 gives Bank of Uganda the mandate to be the manager of the oil revenue. This means that when Uganda's oil starts flowing and it is either exported or sold whatever revenue is realized will be managed largely by the central bank.
"When we say management it means looking for investment where this money can be put and therefore earning good returns for the government," explains Dr. Adam Mugume the director of Research in Bank of Uganda. Managing the oil fund will not mean that the central bank will be the investor. It will source for international investment advisors. With this oil money being expected maybe in more than five years to come, the central bank says it is currently building its structures to ensure that once the money starts flowing al will be ready.
Being a manager will not make the central bank have autocratic powers over the oil revenue. There are many institutions that will come along like the oil authority that is yet to be created. Following the money The Bank of Uganda has been the hot seat lately for the alleged misuse of the first oil money to purchase fighter jets for the government. The governor Prof. Emmanuel Mutebile has been tasked to explain how he agreed to release over I trillion shillings of oil money to purchase fighter jets. This has raised much talk of the ability of the Central bank to watch over the oil funds.
If Uganda were to sell crude oil today at a rate of say 100 dollars per barrel then from approximately 2 billion barrels that have so far been discovered we would earn not less than at least 2 billion dollars. This is the kind of money that would increase the speculation that is currently looming in the country over the oil money yet it hasn't flowed yet.
Economic experts advise that transparency is the best way to shove aside speculation among the citizenry. Bank of Uganda says that it has already put this in consideration and will strive to inform the nation on the flow of oil money. "One of the ways to think about it is to make sure that every quarter for example a report is given out to the public or members of parliament on how the money has been invested and what the returns are." Central Bank's Adam Mugume adds.
In Democratic Republic of Timor – Leste in South East Asia, to ensure transparency, the Central Bank sub-mits quarterly Reports on the performance of the Petroleum Fund to the Minister of Finance, with the reports being published within 40 days of the end of each quarter. Ghana discovered oil in 2009 established two funds in 2011, the Ghana heritage Fund and Ghana stabilization fund. The former Is for keeping money for the future generation of Ghana while the latter is for putting money that will be used to cushion the impact or sustain public expenditure capacity in periods of revenue shortfalls. It has made an effort to have information frequently published on the Internet.
Botswana is always fronted as one of the countries that have managed to ensure that the nationals know how money from the diamonds flows and this has in turn had a positive impact even on their standard of living. According to International Monetary fund, transparency of any extractive industry is key in building trust between citizens and their governments. Even Russia that has some challenges, publishes on their website every day or week the value of money that is in their petroleum fund, what comes in and what goes out
According to Revenue Watch, lack of public information on the sector raises uninformed speculation and high level of mutual suspicion between the government and the people. "People demanding more information about the sector should be understood to be people who want to have more transparency about the laws, and decision being made in the gas and oil sector," says Dr. George Lugalambi, the director of Communication, Revenue Watch Institute.
Even with the call to transparency the interference of the executive and sometimes the legislature in the running of sectors of the economy has been criticized by some members of the civil society. The executive Director for Advocates Coalition for Development and Environment, ACODE Godber Tumushabe, director warns of a failure if those obligated to manage the sector in whatever way are not given their independence.
"Even with oil, if we don't create systems that allow our technical people in the ministry of energy, Finance or wherever to do what we pay them to do then we are not likely to get the benefits we are supposed to get from oil," says Godber. Currently, the petroleum fund is still on paper but this is the best time for Uganda to learn how it should manage it. The hope is that when it comes to play Uganda will have learnt from countries that have mis- managed their funds as well as those that are considered success stories, and positively impact the lives of their citizenry.
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