Uganda can avoid the oil curse by planning ahead - Transparency chief

Dr Peter Eigen is the founder of Transparency International, a global body promoting transparency and accountability in international development. Daily Monitor Business Editor DENNIS KAWUMA caught up with him at his offifi ce in Berlin, Germany recently. Excerpts:-

Transparency International’s Corruption Perceptions Index (CPI) is widely quoted by international media as a key indicator of corruption levels in a country. If I were an investor, would it be wise to consider this index before investing in a country?

Well I would use it as one of the elements of my decision making. I would also look at the weaknesses of the index. The index for instance is not very fast at reacting to developments. So, very often you have a country which has a bad reputation because they were corrupt a few years earlier. I think it’s very important that one sees what the strengths and weaknesses of the index are.

The index only looks at the hand that takes the money and not so much at the hand that offers the money. So I think the index is very helpful but I would not, as an investor, use it as my only guide. I would rather go to the country, talk to the people, talk to the chapters of Transparency International in the country to get a better feeling of how the situation is.

The UK and American governments recently withheld funding for primary school education due to corruption. The effects of suspending funding in such situations could be detrimental to many otherwise innocent children and public servants. What’s your take on this?

Well, that’s one of the problems you face whenever you have this kind of situation. Some people say you hit too many innocent people. On the other hand it’s of course a fiduciary responsibility of the aid agencies. They owe it to their own tax payers to ensure that money is not stolen, misused or used in an ineffective way. And they cannot force governments to do the right thing.

Governments can do what they want unless their own people hold them responsible. So I think donors have that responsibility. If they don’t stop the abuse and corruption which you often have in the education sector, then they will be blamed by everybody around including the honest people who are suffering from the corruption of their leaders.

You also serve as chairman of the Extractive Industries Transparency Initiative (EITI - an agency that sets global standards of transparency in the oil, gas and mining industry). Given Uganda’s oil discoveries, would it benefit from being a member of EITI?

I think it would be very good for a country to join EITI before the big money starts to flow. Because if you think that a hydro-power dam project which costs $200 million is a big temptation to ministers, presidents and top officials to get kick backs and so on, imagine what could happen when you get a $5 billion or $10 billion investment in oil and gas and mining. So the temptation in the extractive industries sector is great.

Not only for the people who ask for the money and take the money but also for the companies which come in and are trying to get an investment agreement.

They also have a tendency to look at the possibility of improving the deal by giving gifts, offers and so on. If that is the situation, it is quite clear that it is better to have in place a system to create transparency and stability in the sector management before you have found the money.

Where, in your view, does Uganda stand in regard to issues surrounding its oil findings?

You know where Uganda stands in the Corruption Perceptions Index, so I think a lot can be done to strengthen the integrity system in Uganda. And a lot can be done to get the country ready for becoming an oil producing country. And I hope that this will be done soon, because under the EITI system, the country will be required to report all the payments it receives from the oil companies and the oil companies will be required to publish whatever they pay to the government.

Once you publish these figures the parliamentarians in Uganda for instance, can take the money and include it in the government budget rather than leaving it in some opaque account of the national oil company, the Central Bank or somewhere in the President’s office.

And this forms the first very important step of using the oil revenues to fight poverty.