Will Oil Make Ugandans Rich?

KAMPALA, UGANDA — More than a decade ago, oil was discovered in the area of eastern Uganda known as the Lake Albert Rift Basin.

Since then, visions of oil riches, with jobs aplenty and the ritzy amenities that money brings, have fueled Ugandans who are readying themselves to take advantage of it all.

“I want to help my country achieve all it can from the oil resources [and] achieve sustainable development,” says James Abbey Mugerwa, 25, who completed a two-year master’s degree program at the Institute of Petroleum Studies in Muyenga, a Kampala suburb. The school is one of a handful that have created programs to prepare Ugandans to work in the oil industry.

Mugerwa envisions taking a management job in the oil sector. But with actual oil production still years away, he took a position as a programs coordinator at the institute.

He believes it will be worth the wait.

Revenue could reach $2 billion per year at peak production – a huge boost to the country’s $25.5 billion annual gross domestic product. Total proved reserves are pegged at 2.5 billion barrels.

Life expectancy is low here. On average, people die before they reach 60 years old. More than a quarter of the population is illiterate. The country of roughly 41 million people has a sizable middle class, but poverty is still rampant. Some regions grapple with chronic hunger. The possibility of oil wealth has many ordinary Ugandans excited about their nation’s future, and about how that money could change their lives.

But now, more than a decade after oil was discovered, and with little yet to show for that discovery – the time frame for production to begin has been pushed back repeatedly, with a current target of 2020 – Ugandans are increasingly apprehensive about how even the oil industry’s infrastructure development is being handled.

Government officials say the lengthy delay is necessary so that the right infrastructure can be developed.

“Unfortunately for Uganda, oil was discovered in a very remote area, so the physical infrastructure is completely new,” says Ibrahim Mike Okumu, an economist and researcher who also lectures at Makerere University College of Business and Management Sciences. “There was need to put up new roads. High-voltage electricity is not reaching. There was need to do large-scale public investments, so they had to go gradual.”

Additional delays came because local landowners had to be negotiated with and compensated, says Michael Busingye, a field officer for the Africa Institute for Energy Governance. (See Global Press coverage of that issue here.)

Meanwhile, many Ugandans, especially those who have been trained to work in the oil sector, are frustrated with the long wait.

The industry could directly create between 11,000 and 15,000 jobs, according to a report commissioned by London-based Tullow Oil; Total E&P, which has headquarters in France; and China National Offshore Oil Corp., the three companies licensed for exploration, development and production-related activities.

And there will be plenty of indirectly created jobs, says Patrick Muinda, assistant commissioner for communication and information management at the Ministry of Education and Sports.

“Construction of pipelines, roads, rail lines and storage facilities [will] happen in the countryside and create a large demand for semiskilled and unskilled labor, which is recruited from the local communities,” he says.

But not everyone is convinced that an education tied to the oil sector will result in a fruitful career. Martin Kyeyune, the registrar for Datamine Technical Business School-Makerere, which offers business, management and technical courses not specific to the oil industry, says foreigners take the best jobs in that field.

“Oil and gas courses is the last thing I would advise anyone to choose,” he says. “Most oil companies are foreign, so the best jobs will be reserved for foreigners. Ugandans will do the dirty jobs.”

Oil executives say that’s not true. Ugandans make up approximately 90 percent of the senior staff, which totals about 70 people, at Tullow Oil, says Abdul Kibuuka, a public affairs manager at the company.

Patrick Kaharuza, the chief executive officer at the Institute of Petroleum Studies, says jobs in the sector will only be filled by international workers after they’re advertised to Ugandans, per local law.

But nothing will happen until work actually starts.

Grace Mukiibi holds a diploma in oil and gas management from Meritorious Biztech College in Kampala. Thirty people graduated in his class, he says, but no one has a job in the oil sector yet.

“We are trying to get into the industry,” he says. “Real work hasn’t started yet.”