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Who will benefit most from Uganda’s oil, and who might suffer?

Natural resource wealth often tends to further enrich existing elites –those with the knowledge, connections and power to take advantage of the opportunities oil presents—without doing much for the ‘man in the street’ or the woman labouring in the field.

Most vulnerable are those many Ugandans who are already poor, uneducated or only semi-educated, struggling to live from smallholder farming. Such people may find themselves squeezed between their skills deficit and increased concentration of farmland if reduced competitiveness of agriculture encourages a shift to large-scale farming. 

The oil and gas industry requires huge investments of money but generates relatively few jobs, which is not good news for a country with such high birth rates and extensive youth unemployment as currently prevail in Uganda.  Rural youth will remain at the end of a very long queue for a small number of jobs.  International oil companies require specialised skills and high standards.   A young hopeful from the village with some talent for welding, wiring or mechanics might just make it onto an urban building site or workshop but would not be allowed anywhere near an oil installation. And Uganda has not yet made much progress in training programmes to equip youngsters with the skills they would need to work in the oil industry.  Even the handful of recent graduates from the Kigumba Petroleum Training Institute are not yet ready to join the workforce, as they first need additional, hands-on training overseas.

More accessible job opportunities are likelier to appear in construction, ancillary and service industries in towns such as Hoima and Masindi, which are already experiencing an oil-driven development boom.  Government infrastructure projects would also create jobs.

But for rural youth who have the least chance to acquire skills and work experience, the biggest opportunity may lie in growing demand for high-end farm products such as meat and fresh vegetables.  (Foreign oil workers and their families are no more likely to adapt to matooke and posho than the foreign tourists Uganda hopes to keep attracting, despite the disruption to the wildlife industry that oil may bring. Ugandan diets are changing too as more people make it into the ‘middle’ classes.)

Yet it is widely agreed that agriculture is also the sector most vulnerable to Dutch Disease. If increased government spending drives up the value of the Ugandan shilling, imports will become cheaper and small farmers in Uganda will find it harder to compete.  If this happens, it may accelerate a trend that is already visible in some parts of the country: the shift towards larger-scale, commercial farms. The nightmare scenario,  a couple of dozen years down the line, would be a country divided between a small number of large, wealthy farmers, millions of landless or land-poor peasants, and no more oil.

This is by no means a foregone conclusion in Uganda.  Everything depends upon what policies are made in the short-term and how they are implemented in the medium term.