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On her way to Dar es Salaam early this week for the 20th World Economic Forum on Africa, the World Bank Vice President for Africa, Ms Obiageli Ezekwesili, paid a courtesy visit to Uganda. She spoke to FREDRICK MASIGA about specific issues on Uganda’s oil discovery and what should be done about corruption:-
What is the specific role of the World Bank in Uganda’s exploitation of oil?
It is not so much the role of the World Bank as is the importance of conditions that will enable Uganda maximise the opportunities that production of oil presents and reducing the risks associated with the management of that sector.
So critical will be the role that government has to communicate the key issues in that sector in order to give space for the public to understand the issues in the sector, that way it will be able to manage the expectations and anxieties that citizens may have concerning the petroleum sector.
Then, there is the real technical issue of having the right legal and regulatory foundation for the petroleum sector; having the capacity within government to oversee that sector is crucial but having the systems that would enable the system operate with the highest level of transparency is essential. But even more is having a public investment strategy that would ensure that revenue from the sector would facilitate a development impact rather than create an economy that would make other sectors become none competitive.
The government has not satisfactorily allowed access to information surrounding the oil industry. There is need for more transparency to avoid misperceptions about what is happening. Do you think the government is doing enough to communicate?
I think it could be that in their whole process they don’t feel they are adequately at a point where they have the coherent piece to communicate but I do know that there is an oil and gas policy; so how much of that oil and gas policy have the citizens followed. Sometimes you know the information might be bad but how much of it have the citizens followed and that is where the government working with civil society and the media can put in some attention on policies that it has articulated. I saw the oil and gas policy and some of the elements of what I read are really well thought out actions.
At what point is the World Bank expected to intervene to ensure this transparency?
As we have supported a couple of other countries to do, the responsibility for the development of this sector belongs to Ugandans and the only kind of support that an institution like ours can provide is to share experiences of what we know worked in other jurisdictions that is in other countries that became oil producers and the things that didn’t work. And we can also support in looking at the legal framework, policy framework as well as the regulatory framework... We can support with the whole technical capacity building and the building of institutions because some of the work we currently do with the government anyway.
The oil-producing region of the country also needs to get the attention of government, so in our dialogue with the government, [we want] to ensure that government is on the lookout for problems of inequalities. We can make sure that we capture the added problem that managing oil can create and also ensure effective development [that] is pushed from government and closer to the citizens so that they can see the positive impact rather than the adverse impact of oil.
The government now accepts that corruption is one big problem and the President has admitted it himself. What is your view, do you expect the government to handle the oil proceeds in a transparent manner?
When a nation’s leaders admit that the country has a corruption problem it is really a good place to start because often it is lack of admission that keeps back people from taking important steps to combat corruption. I expect to see a comprehensive measure to enable government tackle corruption.
If you take an example of Hong Kong that had systemic corruption in the past, immediately the leaders admitted that corruption was a major bottleneck to their development, they developed a comprehensive anti-corruption strategy. Second, they put in place the right systems, procedures and the right institutions. They built order in important institutions that could simplify bureaucracy so that people did not have to pay anything to get services delivered.
Third, they prosecuted corruption whenever it happened. They reformed the judiciary and got greater reinforcement capacity. You have to make corruption costly; you can’t afford to make corruption profitable for those who engage in it by changing it around.
How is the slow global economic recovery likely to influence the recovery of the weaker African economies like Uganda?
The global economy is on the recovery, but it is still fragile and so it still requires a lot of management by the policy makers, the continent of Africa was growing on a certain level before the economic crisis impacted it. The last growth level in 2007 was 6.1 per cent which is close enough to the average growth rate of 5.7 per cent that the continent had witnessed in the last decade or so. By 2009 contrary to an estimate that the continent was going to grow by 6.4 per cent, it sharply dropped to 4.2 per cent, now it is focused on the rebound of growth and should be posting between 4.2 per cent to 4.9 per cent of growth in 2010, so the recovery has started for Africa.
However, it is still a far cry from where it should be because the continent needs to grow at 7 per cent and above on the consistent basis to make a big dent on a still too high 50 per cent of the class of the poor on the continent. For Uganda specifically, growth recovery has been quite impressive than earlier thought and that is because of some of the measures the government took with the support of donor partners such like the World Bank.
What are the key risks that you see constraining African economic recovery?
In the past, it was corruption; [today] we are hearing less of that. The private sector is saying it is infrastructure. Africa has a huge infrastructure gap. Currently we invest some $42 billion in infrastructure development across the continent supported by governments, donor partners and the private sector but it has a gap of $48 billion. And of that, $17 billion can be gained through squeezing out inefficiencies.
Secondly, the business environment can sometimes be too costly for business in Africa. There is the issue of skills gap on the continent; the human capital base for development is something that Africa should invest in... And then of course the issue of diversification away from commodity, Africa has the potential to be a food belt but today African agriculture utilises mostly rain-fed agriculture and yet the ratio of irrigated land is only about 5 percent.
Is agriculture still relevant in transforming African economies yet we could do better with industries and services?
You must dwell on agriculture because agriculture is where you capture some 70 per cent of Africans. When you run away from your area of comparative advantage your development is much more difficult to attain. The reason why African agriculture has suffered neglect is because people have moved away from it. Today many countries are back to saying that food security and competitiveness of agriculture and agro-business is an important driver of growth. In fact, if you are going to tackle poverty in Africa you need to be cognisant of the huge army of people that are involved in agricultural and what you need to do as a government is to find a right set of policies and the right kind of support for small holder farmers who are in the majority. Two years ago, the most that the World Bank was doing in African agriculture was $42 million per annum. The president of the bank Mr Bob Zoellick pledged that we in the African region will not do anything less than a $1 billion and by 2009 we did $1.5 billion because it included what we had to do to support Africa to respond to the global food crisis.
What are your expectations from the current World Economic Forum for Africa?
The theme says “Rethinking Africa’s Growth Strategy” and I think that agenda is basically an agenda that says; “how does Africa prepare to be a potential growth pole?”
It could also mean that the other strategies have failed and we need an overhaul.
No, it also means that the other strategies have delivered all they can deliver and that you need to update it. You don’t have to always think negative. When you look at some of the improvements on the continent such as the revolution of the telecom sector that gives you an indication of what can potentially happen in other sectors. Africa can grow but it needs to do much more than grow at a high level of 7 per cent it can attain digits of double growth and to attain double digits what conditions could it place on itself and how can it diversify the sources of growth.
What is your specific massage for Uganda?
For the last 10 years, Uganda has experienced impressive growth based on its poverty reduction strategy and that agenda delivered the growth and enabled Uganda to reduce poverty to 32 per cent from a high level of 50 per cent decades ago. However, the circle of growth that Uganda needs has to come from economic restructuring, the kind of economic transformation we want requires new sets of sound policy reforms and those sector policy reforms are going to be difficult ones. They are going to be challenging and politically costly but Ugandans have to make those political choices, they have to work on improving the environment and the institutions.
On her way to Dar es Salaam early this week for the 20th World Economic Forum on Africa, the World Bank Vice President for Africa, Ms Obiageli Ezekwesili, paid a courtesy visit to Uganda. She spoke to FREDRICK MASIGA about specific issues on Uganda’s oil discovery and what should be done about corruption:-
What is the specific role of the World Bank in Uganda’s exploitation of oil?
It is not so much the role of the World Bank as is the importance of conditions that will enable Uganda maximise the opportunities that production of oil presents and reducing the risks associated with the management of that sector.
So critical will be the role that government has to communicate the key issues in that sector in order to give space for the public to understand the issues in the sector, that way it will be able to manage the expectations and anxieties that citizens may have concerning the petroleum sector.
Then, there is the real technical issue of having the right legal and regulatory foundation for the petroleum sector; having the capacity within government to oversee that sector is crucial but having the systems that would enable the system operate with the highest level of transparency is essential. But even more is having a public investment strategy that would ensure that revenue from the sector would facilitate a development impact rather than create an economy that would make other sectors become none competitive.
The government has not satisfactorily allowed access to information surrounding the oil industry. There is need for more transparency to avoid misperceptions about what is happening. Do you think the government is doing enough to communicate?
I think it could be that in their whole process they don’t feel they are adequately at a point where they have the coherent piece to communicate but I do know that there is an oil and gas policy; so how much of that oil and gas policy have the citizens followed. Sometimes you know the information might be bad but how much of it have the citizens followed and that is where the government working with civil society and the media can put in some attention on policies that it has articulated. I saw the oil and gas policy and some of the elements of what I read are really well thought out actions.
At what point is the World Bank expected to intervene to ensure this transparency?
As we have supported a couple of other countries to do, the responsibility for the development of this sector belongs to Ugandans and the only kind of support that an institution like ours can provide is to share experiences of what we know worked in other jurisdictions that is in other countries that became oil producers and the things that didn’t work. And we can also support in looking at the legal framework, policy framework as well as the regulatory framework... We can support with the whole technical capacity building and the building of institutions because some of the work we currently do with the government anyway.
The oil-producing region of the country also needs to get the attention of government, so in our dialogue with the government, [we want] to ensure that government is on the lookout for problems of inequalities. We can make sure that we capture the added problem that managing oil can create and also ensure effective development [that] is pushed from government and closer to the citizens so that they can see the positive impact rather than the adverse impact of oil.
The government now accepts that corruption is one big problem and the President has admitted it himself. What is your view, do you expect the government to handle the oil proceeds in a transparent manner?
When a nation’s leaders admit that the country has a corruption problem it is really a good place to start because often it is lack of admission that keeps back people from taking important steps to combat corruption. I expect to see a comprehensive measure to enable government tackle corruption.
If you take an example of Hong Kong that had systemic corruption in the past, immediately the leaders admitted that corruption was a major bottleneck to their development, they developed a comprehensive anti-corruption strategy. Second, they put in place the right systems, procedures and the right institutions. They built order in important institutions that could simplify bureaucracy so that people did not have to pay anything to get services delivered.
Third, they prosecuted corruption whenever it happened. They reformed the judiciary and got greater reinforcement capacity. You have to make corruption costly; you can’t afford to make corruption profitable for those who engage in it by changing it around.
How is the slow global economic recovery likely to influence the recovery of the weaker African economies like Uganda?
The global economy is on the recovery, but it is still fragile and so it still requires a lot of management by the policy makers, the continent of Africa was growing on a certain level before the economic crisis impacted it. The last growth level in 2007 was 6.1 per cent which is close enough to the average growth rate of 5.7 per cent that the continent had witnessed in the last decade or so. By 2009 contrary to an estimate that the continent was going to grow by 6.4 per cent, it sharply dropped to 4.2 per cent, now it is focused on the rebound of growth and should be posting between 4.2 per cent to 4.9 per cent of growth in 2010, so the recovery has started for Africa.
However, it is still a far cry from where it should be because the continent needs to grow at 7 per cent and above on the consistent basis to make a big dent on a still too high 50 per cent of the class of the poor on the continent. For Uganda specifically, growth recovery has been quite impressive than earlier thought and that is because of some of the measures the government took with the support of donor partners such like the World Bank.
What are the key risks that you see constraining African economic recovery?
In the past, it was corruption; [today] we are hearing less of that. The private sector is saying it is infrastructure. Africa has a huge infrastructure gap. Currently we invest some $42 billion in infrastructure development across the continent supported by governments, donor partners and the private sector but it has a gap of $48 billion. And of that, $17 billion can be gained through squeezing out inefficiencies.
Secondly, the business environment can sometimes be too costly for business in Africa. There is the issue of skills gap on the continent; the human capital base for development is something that Africa should invest in... And then of course the issue of diversification away from commodity, Africa has the potential to be a food belt but today African agriculture utilises mostly rain-fed agriculture and yet the ratio of irrigated land is only about 5 percent.
Is agriculture still relevant in transforming African economies yet we could do better with industries and services?
You must dwell on agriculture because agriculture is where you capture some 70 per cent of Africans. When you run away from your area of comparative advantage your development is much more difficult to attain. The reason why African agriculture has suffered neglect is because people have moved away from it. Today many countries are back to saying that food security and competitiveness of agriculture and agro-business is an important driver of growth. In fact, if you are going to tackle poverty in Africa you need to be cognisant of the huge army of people that are involved in agricultural and what you need to do as a government is to find a right set of policies and the right kind of support for small holder farmers who are in the majority. Two years ago, the most that the World Bank was doing in African agriculture was $42 million per annum. The president of the bank Mr Bob Zoellick pledged that we in the African region will not do anything less than a $1 billion and by 2009 we did $1.5 billion because it included what we had to do to support Africa to respond to the global food crisis.
What are your expectations from the current World Economic Forum for Africa?
The theme says “Rethinking Africa’s Growth Strategy” and I think that agenda is basically an agenda that says; “how does Africa prepare to be a potential growth pole?”
It could also mean that the other strategies have failed and we need an overhaul.
No, it also means that the other strategies have delivered all they can deliver and that you need to update it. You don’t have to always think negative. When you look at some of the improvements on the continent such as the revolution of the telecom sector that gives you an indication of what can potentially happen in other sectors. Africa can grow but it needs to do much more than grow at a high level of 7 per cent it can attain digits of double growth and to attain double digits what conditions could it place on itself and how can it diversify the sources of growth.
What is your specific massage for Uganda?
For the last 10 years, Uganda has experienced impressive growth based on its poverty reduction strategy and that agenda delivered the growth and enabled Uganda to reduce poverty to 32 per cent from a high level of 50 per cent decades ago. However, the circle of growth that Uganda needs has to come from economic restructuring, the kind of economic transformation we want requires new sets of sound policy reforms and those sector policy reforms are going to be difficult ones. They are going to be challenging and politically costly but Ugandans have to make those political choices, they have to work on improving the environment and the institutions.
