World Bank, government design new policy to manage oil wealth

An oil rig. International experience suggests that the discovery and exploitation of extractives has often turned out to be a curse rather than a blessing for many countries. FILE PHOTO

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Aim. The policy will enable Uganda harness the opportunities of its newly discovered natural resource wealth.

Kampala. The World Bank and Ugandan government are in final stages of producing a new working document (Country Economic Memorandum) to guide planners and policy makers on how to manage oil and gas revenues in a way that benefits society as a whole.
The new policy also takes into account mechanisms of diversifying the economy by developing other sectors such as agriculture, education, health, roads and energy infrastructure for economic development.
A joint team of senior government officials and the World Bank recently met over a two-day retreat to prepare a joint Country Economic Memorandum report, which will seek to identify key opportunities and challenges to accelerate the quest of socio-economic transformation, as Uganda aims at harnessing the opportunities of its newly discovered natural resource wealth.
“The Country Economic Memorandum will emphasise the steps Uganda is undertaking to embark on the exploitation of oil,” said Mr Patrick Ocailap, the deputy secretary to the Treasury, in a joint statement issued by the World Bank and Uganda in government on Friday.
International experience suggests that the discovery and exploitation of extractives has often turned out to be a curse rather than a blessing for many countries.
However, the government will ensure that opportunities from oil extraction translate into increased opportunities for the Ugandan society as a whole.

Economic diversification
International evidence shows that countries exporting a large variety of different products tend to have higher average incomes.
In Uganda, export diversification continues to be low with most export earnings stemming from agricultural commodities such as coffee, tea and cotton. However, this could change with the recent discovery of Uganda’s natural resource wealth, which could be used to achieve faster economic diversification through targeted investments in physical and human capital.
The senior country economist at the World Bank and lead author of the report Dr Jean-Pascal Nganou, said: “For Uganda to benefit from oil and gas resources, the government must undertake a realistic assessment of the expected long term revenues. In making this assessment, it is crucial to determine how long the resources will last.”

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