Additionally, Uganda’s location and history continue to weigh heavily on its economy. It is of course landlocked, which makes its economy dependent upon access to global trade flows through its neighbors—something it has not always been able to count on.
In theory Uganda could serve as an important transport hub between the eastern DRC and ports in Kenya and Tanzania, but in practice years of instability and paltry investment in cross-border transport infrastructure has meant relatively little headway has been made in ending Uganda’s geography-imposed isolation.
Figure 3:
Uganda Economic Growth,
Percent Increase, 2003 – 2013
Still, as the chart above shows, growth has nonetheless been occurring in Uganda much as it has been in the rest of eastern Africa. That’s because the relatively stability—both political and macroeconomic—that have been brought by Museveni’s leadership have created the conditions necessary for some long-term investment to occur and for commerce to be carried out.
While inflation is now under much better control than it once was and poverty has been reduced to just 22% or so of the population, fiscal tightening over recent years has led to a slip in development outcomes in health and education that, if it continues, could grow worrisome.
One bright spot that could do much to transform the country, however, is oil. As in neighboring Kenya, oil and gas in significant quantities has been discovered, and the U.S. Energy Information Agency estimates the country holds up to 2.5 billion barrels of petroleum and perhaps 500 million cubic feet of natural gas—enough to supply the country’s domestic needs for many years as well as produce for exports. At present prices the oil alone would represent a windfall of $280 billion dollars—13 times the size of Uganda’s current GDP.
However, three obstacles remain to putting these newly discovered resources to economic use. The first is that though these reserves have been known about since 2006, they have not yet been put into production due to dithering on the part of the government on crafting a new hydrocarbon law.
This has prevented companies from moving forward with intensive appraisal and development plans for fear of what might be contained in the new law. Luckily, the Ugandan government seems to have finally nailed down language on the law, which is expected to pass soon, and so development of these resources should begin soon, perhaps as early as next year as the legal and regulatory environment surrounding oil and gas in Uganda becomes more clear.
Second, even if Uganda began production of oil and gas today there is no way to get it to global markets thanks to the country’s isolation and creaky transport links. Here, though, progress too is being made as just recently energy ministers and corporate executives met in Nairobi to hash out the details of a pipeline that would link up Uganda’s and Kenya’s nascent fields with those already in production in South Sudan. Terminating near Lamu on the Kenyan coast, such a pipeline would be a boon for the entire region, including Uganda.
Finally, third, the country is still a relatively insecure place administered by a man and political party that, while democratic in form, lacks much of what we might call a functioning democracy in the West.
In the northern part of the country the Lord’s Resistance Army run by rebel commander and war criminal Joseph Kony is a constant threat while, in the rest, the slow withering away of democratic accountability via the continued rule of Boss Museveni means that political tensions could eventually boil over into destabilizing political conflict.
This is because things like elections occur, but as in Kenya under Moi they do not seem to mean much as at no time has Museveni ever been seriously threatened by a loss of power. Indeed, he is so secure that when rumors recently circulated that he was grooming his son to take his place in a sort of planned dynastic succession the newspapers that printed them were shut down on orders of the government. This bodes ill for the future and it is very possible that Uganda could once again slide into despotic rule.
So, does Uganda have promise? That once again depends upon the amount of risk one is willing to accept. At best it has the potential to be a real performer, but as of yet its isolation and weak political system has kept the country from performing as it should. Reforms need to be made in order to ease burdens on business, which are significant, while continued investment into health and education need to be made. Perhaps oil wealth, if it comes, will allow all that to happen. On the other hand, it could just as easily be stolen by a corrupt, unassailable central government that increasingly uses fraud and force to get its way.
Jeffrey Cavanaugh holds a Ph.D. in political science with a specialization in international relations from the University of Illinois at Urbana-Champaign. Formerly an assistant professor of political science and public administration at Mississippi State University, he writes on global affairs and international economics for AFK Insider, Mint Press News and BAM South.
