Address power imbalances for oil sector to thrive
Dr. Jörg Wiegratz is a Lecturer in Political Economy of Global Development at the University of Leeds, School of Politics and International Studies. He is the author of, among others, Fake capitalism? The dynamics of neoliberal moral restructuring and pseudo-development: the case of Uganda, and Uganda’s Human Resource Challenge: Training, Business Culture and Economic Development.
In the past, he worked as a researcher and consultant in Uganda, for the UN Industrial Development Organization, the Ministry of Trade, Tourism and Industry and the German Agency for Technical Cooperation. He has also been a resource person at Makerere University and a visiting scholar at the Economic Policy Research Centre, Kampala. To-date, his research has explored aspects of neoliberalism especially neoliberal moral economy and moral restructuring, market society, economic fraud, cultural political economy, global value chains, industrial development, human resource development and African development, predominantly with an empirical focus on Uganda.
Oil in Uganda spoke to Dr. Wiegratz about Uganda’s oil and gas sector and he raised some interesting questions.
Oil in Uganda: Why did you pick interest in Uganda’s oil and gas industry?
Dr. Jörg Wiegratz: I am part of a joint effort of Makerere University and the University of Leeds to launch an ‘East African research network on oil and gas’. To-date I have not done research about oil in Uganda specifically, but I have done research since 2004 into various topics related to Uganda’s economy. My latest project was about exploring the political and moral economy of doing business in Uganda, looking at the relationships between different actors in the economy, the range of business practices and what economic, political, social and cultural factors shape these practices. I am particularly interested in studying the dynamics that drive trickery, fraud, deception, intimidation, and mistrust as well as those that foster trust, cooperation, and honesty between these economic actors.
I developed this interest while I was working in Uganda in the mid 2000s. Back then, our research into relationships between exporters in Uganda and importers in Europe revealed significant levels of ‘malpractice’. For instance, Ugandan exporters in one particular sector reported that they were quite regularly tricked by their counterparts in Europe, and there was also trickery the other way around. Another study we did about domestic agro-value chains in Uganda revealed as well that trickery and fraud was a significant issue. There were also newspaper reports that highlighted the same. So I went ahead to investigate these practices in more detail.
The question is what are people exactly doing in order to survive, to get out of poverty, to get rich and amass wealth, to meet the corporation’s target, to keep their job, to defend or advance their own power and wealth position or that of their own family, social group, corporation, and so on. How are they treating others that they interact with in the process of making money? And why are they doing things that way? What shapes people’s modes of reasoning? How do they justify their actions? Why is someone trying to trick another person, why is fraud rising and what have the state’s policies and programmes to do with it? What have institutions such as the central and local government, police, courts, churches, banks, media and others got to do with it? Because all of these institutions shape in one way or another the situation in which people find themselves, what people can do or have to do, how people think, and what they consider to be normal, acceptable or necessary practices.
When it comes to oil in Uganda, the first point is that this is an interesting case of observing how power structures and power relations work in this country. Furthermore, the case allows us to observe the specific dynamics, tensions, and antagonisms of capitalist development in Uganda; that is those related to the capitalist state, economy and society. Many of these features come to fore in the case of oil. For instance, we see the state acting in a particular way. Does the state in a particular instance act in the interest of the people or in the interest of corporations, politicians and the ruling elite? When it comes to oil and oil communities, are the actions of the state pro-poor, pro-people, pro-capital, pro-central government, pro-presidency, or is it a mix of these? And why is the state acting like this in the first place? We see that in many cases the state is not acting in a straightforward manner in the interest of the people. So we can observe what happens in the oil sector in this regard and then apply and test our theories.
Why do you think this is the case?
Well, you have conflicts that are particular to capitalist society. There are different social actors that have particular interests, particular agendas and these are regularly in conflict with one another. For example, one party wants to make profits at the expense of the other party, hence, the industrialist tends to pay low wages to the worker, the trader pays low prices to the farmer; one group wants to commercialise land – the other group does not, and so on. And the state is an arena where these competing and conflicting interests are fighting a battle. The result of that battle in concrete incidences is amongst others a manifestation of the distribution of power between the state, other domestic actors, and foreign actors such as governments, donors and companies. So whenever the Ugandan government does something that is not in the interest of the people or is not pro-poor then you need to ask, in whose interest is this then? And why were these interests more politically influential, powerful or effective than the interests of the poor?
So the state is not an institution that necessarily acts in the interest of the masses and if it sometimes does, then there is usually effective pressure towards the government, or some other political reason to do something for the people. The state is regularly controlled by elites, both domestic and foreign, and therefore many state policies and programmes are structured to please this particular group and its allies.
How can this imbalance of power be reshaped so that the poor have some influence on government decisions relating to oil?
Uganda’s oil sector is a very interesting case of power dynamics because you can see who has power and who does not; how power is produced, used and reproduced, and how it is contested. For instance, when civil society demands something, how many times does government take it on and actually implement it? Powerful interests regularly, though not always, call the shots and carry the day. Uganda’s daily press has plenty of examples of this dynamic.
Furthermore, when it comes to the oil sector there is a lot of money at stake. When you look at the land evictions, land speculations and allegations of corruption that have been discussed so far, and also consider the securitisation of oil areas, the level of confidentiality around oil politics and so on – all these are signs that a lot is at stake for different actors. We are not talking about onions or tomatoes but about oil. It is not little money, we are talking about billions of dollars. The elites in Kampala who want to benefit from the oil know that they have to ally and work with big players. They know that when they are able to buy the land, get the contracts, be in good books with big players, then they will get a lot out of this. There will be some economic give-aways from the powerful to the ordinary people but I doubt whether the elites that control the economy are ready to give away many business opportunities and much market shares in the juicy sectors and activities around oil.
The state navigates this complex web of power and conflicting agendas. One issue will be to what extent the state will limit oil-related impoverishment dynamics among the locals. Another issue to watch is what the state does when communities resist the demands of the state and oil firms. If community members say they do not want to sell off or give away their land, we will see if the powerful players will refuse them or allow them to organise themselves as small players, stand their ground and get concessions from power, and perhaps even somewhat benefit out of this game. With support from other actors, like some cultural institutions and civil society organisations, who want that people also benefit, small players can get organised and try to struggle for their interests.
Comment on the provision within the recently passed upstream law that 48 % of any service providing company in the oil industry should be owned by Ugandans.
That can be good for Uganda’s long term development. But realistically speaking, what are the reasons that would allow us to expect that small businesses in the oil region that are not connected to the local and national elites will get a big share of this 48 percent?
My guess is that big and connected businesses owned by the ruling elite or their allies will go for these chances that are opening up, and it seems this is happening already. This will be a continuation of the trend of the making and expansion of business empires we have seen in Uganda in the last twenty years. These players know how to use their connections and I assume that they are already warming up and preparing so that the same happens in the oil sector.
Perhaps parliamentarians and other political actors can demand a different political settlement when it comes to this issue so that non-connected local businesses can benefit more substantially from the oil economy than receiving mere tokens.
How do you see the future of Uganda’s oil and politics?
There are three important trends, among others, that one needs to keep watching. One is how, as the stakes around oil are getting higher, the related politics is getting harder. The contradictions and antagonisms that are inherent in the capitalist society will likely intensify in the oil sector. What happens in the oil sector in this regard is very important, also because over time this sector will likely start to dominate the political economy of the entire country.
It depends however on how the government will manage these dynamics; how it will use the revenue money for instance. There will likely be some corruption and inequality. We are yet to see what the oil sector will mean with regard to economic, political and social inequality in the country.
Uganda is highly unequal in terms of distribution of power. There is a lot of power concentrated in a very small share of the population. Economic concentration has been increasing in the last years; political inequality as well. Wealth and power inequality and concentration means a large group of society is marginalised and excluded and finds itself in difficult circumstances, with regard to how to survive economically and how to take the exploitative and abusive practices of more powerful actors. The marginalised and excluded are usually at the receiving end of power.
We need to know how they feel and how they respond to this. We also need to know how the powerful think and how they position themselves with regard to the mentioned power concentration and various inequalities. The rise in crime and fraud, the protests in schools, universities and markets, and the routine use of tear gas by the state are all closely related to the issue of severe inequalities in the country and the repercussions this brings about. Will the oil sector dynamics lead to more inequalities and if yes, what will be the repercussions for society?
The second thing to watch is the repercussions of the oil sector for democracy in Uganda. Here we can study the specific dynamics of democracy and democratisation within a capitalist setting. In Uganda there have been trends towards democratisation but this has been contested and there have been setbacks recently. What will happen around the oil in the coming years will give us insights regarding the question to what extent there is compatibility between capitalism and democracy. Will the decisions and the activities of the state with regard to the oil sector – about who gets what, how and when – be handled in a democratic manner? At the moment, we are seeing that the relationship between capitalism and democracy is controversial in many capitalist countries within and outside Africa.
In several European countries that are currently in crisis, many people critique and protest against the increasingly undemocratic practices of their governments. In Uganda’s case as well, we can analyse the relationship between capitalist development on one hand and democracy and democratisation on the other. The oil sector is a prime case here: whether and how people are involved in decision making and execution; whether the least powerful can make their interests and demands heard – especially when they are opposite to those of the powerful; how conflicts are handled; what the role of parliament is; what the various arms of the state do; how the relationship between central and local government changes, and so on.
When it comes to the oil sector, will the Ugandan government and the state in general become more democratic or more authoritarian? Will people power increase or decrease in specific cases? How will the government handle critical questions and substantive material demands from the communities? How will it respond to various forms of community pressures and protests? What will happen in case the corruption and fraud that has characterised other parts of the economy bleeds into the oil sector as well? We may well see authoritarian and undemocratic tendencies increasing at this stage of Uganda’s capitalist development, we have seen this happening in other countries too.
Whatever the trends, what does that suggest about the relationship between democracy and capitalism in Uganda or in East Africa generally? Each country will give us different insights here. For instance, in Tanzania at the moment things seem to be a bit different from Uganda when it comes to the politics of natural resources. A Tanzanian colleague told me that due to effective pressure from, amongst others, civil society and communities, the state and big companies have been made more accountable and transparent, and that some policies and regulations with regard to resources seem to reflect the interest of the people better than before. It seems that this is to some extent due to the specific structure and distribution of power in Tanzania. There seems to be some actors that are successful in somewhat constraining the powerful and negotiating concessions from them. One needs to study whether that translates into more material benefits flowing to the less powerful, the poor. Ghana also offers a very interesting case. So having a comparative analytical perspective is important for those who want to understand oil dynamics in Uganda.
The third point to watch is how the state and society at large will handle the economic, social and environmental harm that comes with the oil sector. There will be people whose livelihoods will be damaged by oil activities so there will be social harm and economic loss to some actors. Who will bear these costs of oil sector development? Who will address the social and environmental harm? Will the state try to compress the harm as much as possible or will there be escalating harm created by corporate activity in the sector? How is the management of this harm planned for? What about regulations and compensations? What about taming the power of those who unleash the harm?
Again, the dynamics with regard to this issue will be a manifestation of how the diverging interests play out within a structure of highly unequal power relationships. Therefore the oil sector case will reveal the interests and agendas of those in power in Uganda and to what extent their agendas and interests are beneficial or harmful to many people. The oil sector developments will also be telling with regard to the interests and agendas of foreign governments and actors such as the World Bank and the IMF.
In short then we can analyse how the oil will affect the relationship between the state and the people, the people and corporations, corporations and the state, and between domestic and foreign actors. The realities on the ground will in various ways be quite different from mainstream textbook theories and cases of economic development taught in universities.
There will be significant discrepancies between what the text books in business study and economics say, and what is on ground. There is a lot to study and learn, and for universities to research. Topics such as corporate crime including green crime, social harm, the political economy of regulation of corporations, and related issues of state crime are hardly analysed when it comes to Uganda’s economy. But that is a research gap that goes beyond Uganda. These topics are also severely understudied in other African countries as well as in countries in Europe and North America. Getting a scholarly grip on these topics for the case of the oil sector in Uganda should produce insights that can contribute to the larger debate in society about this sector, and economic and political development in the country generally.
Note: Makerere University and the University of Leeds recently launched an ‘East African research network on oil and gas’ at a workshop in Kampala on 13 June 2013, which explored the politics of oil and gas in East Africa. For more information contact Dr James Van Alstine, firstname.lastname@example.org, or Dr Jörg Wiegratz, email@example.com
Questions put by FN