Title: "Mitigating The Resource Curse: A Legal and Policy Analysis of Uganda's Oil Industry Through Transparency and Accountability Measures"

Student ID No.
51339144
TABLE OF CONTENTS
1 List of Abbreviations.....................................................................................................................2
2 ABSTRACT..................................................................................................................................3
3 CHAPTER 1..................................................................................................................................4
3.1 INTRODUCTION.................................................................................................................4
3.2 RESOURSE CURSE CONCEPT..........................................................................................6
4 CHAPTER TWO.........................................................................................................................10
4.1 TRANSPARENCY AND ACCOUNTABILITY AT A GLANCE/Overview.....................10
4.1.1 ACCOUNTABILTY....................................................................................................13
4.2 NATURAL RESOURCE GOVERNANCE IN UGANDA.................................................14
4.3 LESSONS FROM OTHER JURISDICTIONS FOR UGANDA.........................................15
4.3.1 NORWAY...................................................................................................................15
4.3.2 BOTSWANA...............................................................................................................16
5 CHAPTER THREE.....................................................................................................................17
5.1 THE EITI.............................................................................................................................17
5.2 The Dodd -Frank Financial Regulation Act.........................................................................21
5.3 EU DIRECTIVE AND THE EITI.......................................................................................22
6 CHAPTER FOUR.......................................................................................................................24
6.1 UGANDAN LEGAL FRAMEWORK AND OIL AND GAS POLICY..............................24
6.2 Confidentiality of Data........................................................................................................25
6.3 The Public Finance Bill 2012...............................................................................................27
6.4 THE ANTI CORRUPTION ACT 2009...............................................................................27
7 CHAPTER FIVE.........................................................................................................................28
7.1 POLICY RECOMMEDATIONS.........................................................................................28
7.2 CONCLUSIONS.................................................................................................................31
8 Bibliography................................................................................................................................34
1
Student ID No.51339144
1 LIST OF ABBREVIATIONS
AFT………………..Action for Transparency
CBOs……………………..Community Based Organisations
CIID………..Director of Criminal Investigations Division
CSOs ………………………… Civil Society Organisations
Ed. ……………………………..Editor/edition
Eds ……………………………. Editions
EITI ……………………….. Extractive Industries Transparency Initiative
EU…………………European Union
FDI………………….Foreign Direct Investment
GOU………………………Government of Uganda
IGG……….Inspector General of Government
NGO …………………… Non-Governmental Organisation
MEMD……………….Ministry of Energy and Mineral Development (Uganda)
NRM…………..National Resistance Movement
NEITI…………………..Nigerian Extractive Industries Transparency Initiative
PEPA ……………… The petroleum (exploration and production act) Act 2013
PP…………………..pages
PSA…………………..Production Sharing Agreement
PWYP…………………Publish What You Pay
TAIs ……………Transparency and accountability Initiatives
UEITI………………Uganda Extractive Industries Transparency Initiative
UN ………………………….……….United Nations
UNCAC……United Nations Convention against Corruption
2
2 ABSTRACT.
The oil and gas industry is the foundation upon which modern society has developed in the
course of the past fifty years. 1 Hydrocarbons underpin transportation, production and
commerce throughout a global environment, and demand continues to remain high.2
History shows that oil, gas reserves and minerals frequently can be a bane, not a blessing for
poor countries leading to corruption, wasteful spending and instability; this is known as the
“resource curse” which leads to the paradoxical outcome that the citizens of some of the
countries most blessed with the resources have the poorest quality of life. 3 Uganda has sub-
Saharan Africa’s largest oil reserves after Nigeria, Angola and South Sudan according to the
International Monetary Fund.4
Oil has been discovered in Uganda, but no commercial oil is yet flowing, and no oil revenues
are expected until after 2015. Ugandans at the national, local government and community
levels appear to already have high expectations related to the discovery of oil. There is hope
that oil exploitation will improve their quality of life. There is however considerable
apprehension. Ugandans are also aware that many resource-rich African countries seem to
have been affected negatively by oil wealth, with increasing corruption in public affairs,
political instability, environmental degradation, and increasing inequality. 5Using the
available literature on Ugandan law and an extensive analysis of resource curse literature,
this paper will posit that through transparency and accountability Uganda can avert the
“resource curse” and its underlying effects. The policy recommendation in this research is
that Uganda can protect itself against the “resource curse” by joining the EITI.
1
Leanne M Bain, Book Review Oil and Gas Law – Current Practice and Emerging Trends (2nd Edition) Greg
Gordon, John Paterson and Emre Üşenmez (eds) (Dundee University Press, Dundee 2011).
2
ibid.
3
Peter J Reese QC, ‘Revenue transparency: global not local solutions’ (2014) 7 Journal of World Energy Law
and Business 1.
4
<http://www.bloomberg.com/news/2014-02-06/total-tullow-cnooc-sign-uganda-deal-opening-way-for-oil-
output.html> accessed on 3 August 2014. Uganda has an estimated 3.5 billion barrels of crude, according to the
Energy Ministry.
5
Managing Oil Revenue in Uganda, A Policy Note (March 2009) extracted from the proceedings of a National
Seminar on Managing Oil Revenue in Uganda Held at Munyonyo Commonwealth Resort, Kampala, 8-9 July.
2008.
3
3 CHAPTER 1
3.1 INTRODUCTION
Uganda struck commercial deposits of oil in the Albertine rift valley 6 basin near the border
with the Democratic Republic of Congo in 2006.7 Although the oil seeps were reported along
the shores of Lake Albert in the 1920s,8 the search for the oil slowed down due to political
instability in the country from the 1940s to the 1980s. 9 The Albertine rift valley is located in
the eastern part of the country, around Lake Albert which forms the Northern part of the
Western arm of the East African rift valley.10 Current estimates put the country’s oil potential
at around 2.5 billion barrels of recoverable reserves from the blocks which have so far been
drilled.11 The Albertine rift valley is subdivided into seventeen licensing areas. 12 Currently,
the government of Uganda has licensed five of the seventeen areas, both onshore and
offshore, to oil exploration companies.13 There is no doubt that the extraction of oil has the
potential to provide tremendous economic benefits for Uganda and its citizenry.14
This paper will argue that through transparency and accountability measures will Uganda
avoid the “resource curse”, a phenomena faced by most resource rich countries in sub-
Saharan Africa. Joining and implementing the latest 2013 EITI standard, which goes beyond
6
The Albertine rift valley has the same meaning as the Albertine Graben. “Graben” is a German word for ditch
or trench or valley.
7
‘Strengthening the Management of the Oil and Gas Sector in Uganda: A Development Program in
Cooperation with Norway’ Ministry of Energy and Mineral Development (February 2010).
8
‘Environmental Management in Uganda’s Oil and Gas Sector’ The Republic of Uganda (2011)
9
ibid.
10
ibid (n 7).
11
ibid.
12
Arthur Bainomugisha, ‘Escaping the Oil Curse and Making Poverty History in Uganda’ (2013) 6
<http://www.acode-u.org/documents/oildocs/OIL%20GOVERNANCE-%20UNEP%20Nairobi.pdf.> accessed
10 August 2014
13
Governance and Livelihoods in Uganda’s Oil-Rich Albertine Graben: International Alert (March 2013) 10
para 3.
14
Jacob Kathman and Megan Shannon, ‘Oil Extraction and the Potential for Domestic Instability in Uganda’
(2011) African Studies Quarterly, 12, 3 <http://www.africa.ufl.edu/asq/v12/v12i3a2.pdf 37> accessed 3 August
2014.
4
revenue transparency and a combination of other mandatory transparency initiatives like the
Dodd-Frank Act and the EU Directive on transparency, will help ensure that Uganda avoids
the resource curse.
With all government bodies adhering to these principles, revenues from the oil and gas sector
will be able to change the entire country’s fortunes from a poor economy to a middle class
society.15 The law and society at large will have a huge role to play. ‘As a precursor to what
has proven to be an enduring national debate on the future impact of the oil wealth on
households and the economy, His Excellency the President argued pointedly that oil would be
a blessing for Uganda and not a curse.’16
At the national level, the “positive” expectations include those of increased national
prosperity as the Government invests in roads, power plants, education and health services
and other socio economic infrastructure. 17 The general public also expects to see the “end of
donor dependence and conditionality” and the regaining of economic sovereignty.18
This research paper will use a comparative methodology focusing on a critical analysis of the
literature available on the resource curse and transparency and case studies/comparisons with
other oil rich countries. The paper contributes to recent academic literature on the resource
curse and provides possible solutions for how Uganda can escape the resource curse by using
its hydrocarbons sustainably under various legal and social economic policy mechanisms.
The paper will analyse the importance of transparency and accountability, the EITI and the
Dodd Frank Act. It will examine how Uganda can take utmost advantage of these 21 st century
transparency and governance initiatives. It is generally accepted that transparency in the
management of revenues from natural resources is fundamental to the successful economic
development of the country and poverty reduction in Uganda.19
To accomplish the above analysis and assist the reader, the paper is divided into chapters.
The second half of Chapter One will introduce the “resource curse” concept from an African
15
ibid.
16
President Museveni reiterated the fact that Uganda will face an oil curse that the oil of Uganda cannot be a
curse; “Oil becomes a curse when you have got useless leaders and I can say that we don’t approach that
description even by a thousandth of a mile.”
17
Managing Oil Revenue in Uganda (n 5) 8.
18
ibid.
19
<http://www.globalwitness.org/library/time-transparency>accessed> accessed on 5 August 2014.
5
perspective giving various examples of how Uganda can avoid it through transparency and
accountability.
Chapter Two will introduce transparency and accountability, and give a background to
natural resource governance in Uganda and lessons a prospective oil producing country can
learn from other jurisdictions which have successfully utilised their hydrocarbons for the
benefit of their people. The analysis will examine the economy of Norway and then
Botswana from the African perspective. Chapter Three will introduce the EITI and other
transparency initiatives like the Dodd-Frank Act in the USA and the EU Directive on
transparency in the European Union. The part of this Chapter will outline how Uganda must
subscribe to these initiatives in order to benefit from its hydrocarbon resources.
Chapter Four will depict the legal situation in Uganda, in as far as it is suited for the
transparent management of the soon to materialise oil and gas revenues. This analysis will
focus on the Constitution, the confidentiality clause in the Model PSA, the Anti-corruption
Act and the Public Finance Bill. Chapter Five will provide the policy recommendations of
this paper for why Uganda must join transparency initiatives like the EITI and create an oil
fund like that is already suggested in the Public Finance Bill of 2012. And lastly, the paper
will draw conclusions on the best path forward for Uganda at the present time.
3.2 RESOURSE CURSE CONCEPT
The “resource curse” is a phenomenon that has plagued hydrocarbon rich countries and
explanations for resource curse vary. 20 Resource Curse describes the persistent inverse
relationship between natural resource abundance on the one hand and economic growth, good
governance, and political stability on the other. 21 Resource Curse is generally classified into
two groups; a “Dutch disease” model and a “Nigerian disease” model.22 The Dutch disease
model affects the economies by causing a resource movement effect from one sector of the
20
Andrew Williams; ‘Shining a Light on the Resource Curse: An Empirical Analysis of the Relationship
between Natural Resources, Transparency, and Economic Growth’ (2011) World development, 490
21
Daniel M Firger, ‘Transparency and the Natural Resource Curse: examining the new Extraterritorial
information forcing rules in the Dodd-Frank Wall Street Reform Act of 2010’ (2010) Georgetown Journal of
International Law, 1043.
22
Williams (n 20) 490.
6
economy to another, and by inducing spending effects that lead to an appreciation of the real
exchange rate of the country’s currency.23
According to economist Michael L Ross, Resource Curse is:
...the process that causes a boom in a country’s natural resource sector to

produce a decline in its manufacturing and agricultural sectors, this is caused
by both resource movement and the spending effect as money from the
booming resource sector enters the economy it raises the real exchange rate
and a higher real exchange rate makes it cheaper to import agricultural and
manufactured goods than to produce them domestically thus suffocating the
rest of the economy24
The Nigerian disease model on the other hand ‘presupposes that natural resources are divided
into “point” resources, such as fuels, ores, and metals, and “diffuse” resources (essentially
agriculture)’.25 It is argued that since point resources are more geographically specific, it
makes it easier for governments to control them and rent-seeking behaviour is therefore more
likely.26 Diffuse resources are geographically diverse, and so ownership and control also tend
to be more diffusive. 27
Low and medium income level28 countries that are largely dependent on mineral resources 29
achieve poorer socio-economic results than similar countries with no mineral wealth. 30 In
essence, the effects are weak economic growth, poverty, inequality, fragile institutions, poor
governance, political instability and large scale corruption. 31 The resource curse has also been
explained via economic models as being a diversion of investment towards the extractive
23
Jason Gould and Katen N Kapadia, ‘Dutch Disease in Africa: A Case Study of Nigeria and Chad’, Think
International Volume 1 Issue 1 Fall (2008) p 50
24
Michael L Ross, The Oil Curse, How Petroleum Wealth Shapes The Development of Nations, (Princeton
University Press, 2012) 48.
25
As per Auty in 2001 and Isham et al in 2005.
26
Managing Oil Revenue in Uganda, A Policy Note,( March 2009), Extracted from the proceedings of a national
Seminar on managing Oil Revenue in Uganda Held at Munyonyo Commonwealth Resort, Kampala, 8-9 July
2008
27
ibid.
28
Richard Auty, ‘Sustaining Development in Mineral Economies. The Resource Curse Thesis’ (Routledge 1993)
pp 13-17.
29
Williams (n 20)
30
Erika Weinthal, ‘Combating the Resource Curse’ (2006) 4 (1) Perspective on Politics 36.
31
ibid (n 24).
7
industry and the increase of exports which appreciates the currency generating a reduction of
economic competitiveness and de-industrialising the country.32 Jennifer Drysdale posits that
‘the resource curse occurs when an influx of revenue from exploitation of natural resources
hinders development, leading to stagnation or a decline in economic growth’.33
To some scholars the resource curse is considered ‘primarily a political [...] phenomenon’. 34 It
can be explained by the principal-agent problem, exacerbated in ‘weak institutional
environments’.35 ‘The agent (government) acts in its own interest, instead of seeking the best
outcome for the principal (citizens)’.36 Resources provide governments with a source of
income independent of citizens’ taxation.37 Thus the state does not need to tax citizens and
strong and efficient institutions, inherent to tax collection, 38 are not developed.39 Interestingly,
when a citizens’ economic contribution to the government is scarce, they are less compelled
to demand accountability thus preventing public scrutiny and efficiency demands. 40 As a
result governments implement ‘policies in which ordinary citizens have little influence and
enjoy less of the benefit from […] revenue’.41
Institutional weakness and lack of accountability imply that bureaucrats have strong
incentives to engage in corruption.42 Thus resource-abundance weakens institutions and
creates opportunities for corruption or rent-seeking and mismanagement due to lack of
accountability, because there are no checks and balances as every society thrives on effective
checks and balances. However Botswana, one of the most resource-rich countries, 43 and
which is one of Africa’s most successful countries in managing its resources for the benefit of
32
ibid (n 27).
33
Jennifer Drysdale, Timor Leste-Sustainable development or resource cursed? An exploration of Timo- Lestes
Institutional Choices, (2007) Australian National University.
34
Terry Karl, ‘Ensuring Fairness the Case of Transparent Fiscal Contract’ in Humphreys, Sachs and Stiglitz
(Eds), Escaping the Resource Curse (Columbia University Press 2007) 256.
35
Alexandra Gillies, ‘Does Transparency Work? The Challenges of Measurement and Effectiveness in
Resource-Rich Countries’ (2011) 6 Yale Journal, International Affairs 27.
36
Paul Stevens, ‘Resource curse: An analysis of causes, experiences and possible ways forward’ (2007)36
Energy Policy 57.
37
Gillies (n 33)
38
Macartan Humphreys, ‘Where the Resource Curse come from?’ in Humphreys, Sachs and Stiglitz (eds),
Escaping the Resource Curse (Columbia University Press 2007)12
39
Erika Weinthal, ‘Combating the Resource Curse' (2006) 4(1) Perspective on Politics,38
40
ibid.
41
Mick Moore, ‘Revenues, state formation, and the quality of governance in developing countries’ 2004(3)
International Political Science Review, 308.
42
Stevens (n 34).
43
Iimi Atsushi, ‘Did Botswana Escape from the Resource Curse?’ (2006)138 IMF Working Papers 3.
8
its people, has enjoyed strong and efficient institutions and low levels of corruption which are
indeed connected to its economic performance. 44 Strong and efficient institutions are
therefore needed to end the resource curse, and transparency is considered as a necessary first
step towards this end.45
Ideally all Ugandans wish to avoid the ‘Resource curse’. 46 ‘In its commitment to promoting
zero tolerance to corruption, the NRM government has established strong institutional and
legal frameworks prioritising resources to confront this vice that pervades society’. 47 A case
in point is the Prime Minister of the government of Uganda (GOU) Amama Mbabazi has
launched the Action for Transparency (A4T) awareness campaign and a website to fight
corruption and mismanagement of public funds meant for schools and health centres in
Wakiso district. These kinds of domestic transparency initiatives and other policy changes are
essential for Uganda in the wake of the new found oil wealth, as much as their effectiveness
will be tested over time.
44
Daron Acemoglu, ‘Why Nations Fail: The Origins of Power, Prosperity, and Poverty’ (Crown Business
2012).
45
Gillies (n 33) 32.
46
Ben Shepherd, ‘Oil in Uganda: International Lessons for Success’, February 2013.
47
<http://www.newvision.co.ug/news/656166-mbabazi-launches-anti-corruption-campaign.html>accessed
June 01, 2014.
9
4 CHAPTER TWO
4.1 TRANSPARENCY AND ACCOUNTABILITY AT A GLANCE/OVERVIEW

Over the past decade Transparency and accountability have emerged as key ways to address
both developmental failures and democratic deficits, mainly in developing countries. 48
Shining a light on transparency is often seen as the recommended first step. 49 In the
development and aid context, the argument is that through greater accountability, the leaky
‘pipes’ of corruption and inefficiency will be repaired, aid and public spending will be
channelled more effectively and development initiatives will produce greater and more
visible results.50 Drysdale points out that:
Natural resources provide an opportunity for a country to generate wealth, and

depending on how that wealth is managed, either create sustainable
development or render a country resource cursed or somewhere a long that
continuum.51
In this Chapter, the paper will show how the two principles of transparency and
accountability are crucial in ensuring that Uganda benefits from the oil revenues. The paper
will also take a critical look at natural resource governance in Uganda and the possible
lessons to be learned from other jurisdictions like Norway and Botswana.
Transparency is defined as ‘the information available to outsiders that enables them to have
an informed voice in decisions’52 ‘which reduces information asymmetries, diminishing
problems associated with the principal-agent theory’. 53 Transparency is also linked with a
demanding civil society,54 the more information available the more demands for
accountability.55 As the costs of negative decisions increase governments are forced to
48
Uwafiokun Idemudia, ‘The resource curse and the Decentralisation of oil revenues: the case of Nigeria’
(2012) 35 Journal of cleaner production 183.
49
ibid.
50
John Gaventa and Rosemary McGee , ‘The Impact of Transparency and Accountability
Initiatives’ Development Policy Review, 2013, 31 (S1): s3-s28
<http://onlinelibrary.wiley.com/doi/10.1111/dpr.12017/pdf> accessed on 5 August 2014.
51
Drysdale (n 31) 2.
52
Gillies (n 33)
53
ibid.
54
Virginia Haufler, ‘Disclosure as Governance: The Extractive Industries Transparency Initiative and
Resource Management in the Developing World’ (2010)10 (3) Global Environmental Politics 59.
55
Macartan Humphreys, ‘Where the Resource Curse come from?’ in Humphreys, Sachs and Stiglitz(eds),
Escaping the Resource Curse (Columbia University Press 2007)
10
implement fair and efficient policies.56 The presumption is that when institutions respond to
citizens’ demands, they are able to improve socioeconomic outcomes and are less corrupt
increasing popular support and thus being more stable. 57 Transparency is also defined as the
‘increased flow of timely and reliable economic, social and political information, which is
accessible to all relevant stakeholders’58. Transparency is a fundamental attribute of a
democracy like Uganda, a norm of human rights, a tool to promote political and economic
prosperity and to curb corruption and a means to enable effective relations between nation
states.59A UN general Assembly Resolution emphasises that transparency and accountability
are objectives that should be embraced and promoted by all member states, regardless of their
size, level of development or resource endowment.60
The theory of transparency and accountability is that if the public knows what payments are
made to its government from the oil, gas and mineral extracting companies, then they can
hold the government more accountable in their spending. 61 It should be noted however that
this makes the assumption that the masses are educated. Revenue transparency also builds
trust and helps in strengthening good governance and accountability in order to mitigate the
risk of misappropriation of public funds.62
In many resource abundant countries especially developing countries, little information is

available about how much money the nation receives from its oil or mining operations and
how that money is spent.63 With the failure of disclosure of payments to governments, it is
easier for government officials to steal and more difficult for citizens to hold officials
accountable.64
56
Susan Ariel Aaronson, ‘Oil and the public interest’ (2008)7 < http://www.voxeu.org/> accessed on 3 July
2014.
57
ibid.
58
Tara Vishwanath and Daniel Kaufmann, Towards Transparency in Finance and Governance, the World Bank
Draft, (1999) 3
59
Hein online 91 Lowa Law review,885 (2005-2006)
60
Resolution adopted by the general assembly on 11 September 2008, it also reaffirms as states in the United
Nations the need to combat corruption and enhance transparency in accordance with the principles of domestic
law among other provisions.
61
Peter J Reese QC, ‘Revenue Transparency: global, not local solutions’, Journal of World Energy law and
Business, 2014, vol.7, No.1.
62
ibid.
63
Mingcong Li, ‘Corruption, Transparency and the Resource Curse’ (November 2013) International Journal of
Social Science and Humanity < http://www.ijssh.org/papers/305-CH247.pdf>accessed 6 August 2014, see also
John Weeks, The Resource Curse, Global Issues, The Congressional
Quarterly, CQ Press, 2012 Edition, ch.14, pp. 359-378.
64
ibid.
11
This can be illustrated by the experience of the Ugandan educational sector. A recent study
by the government revealed that only 20% of the money that was being sent to primary
schools, other than for teachers’ salaries, was actually reaching the schools. 65 ‘They came up
with a novel plan: whenever the government released money for schools, it informed the
local media and sent a poster to each school stating what it should be receiving, three years
on, they found that 90% of the money was getting through’. 66 The lesson is that when people
know what they are due, it is much harder for corrupt individuals to keep it from them. It is
this idea that has fostered the current wave of transparency initiatives and holds great promise
for the future. 67 This should be applied to the oil revenues with the aid of other transparency
initiatives like the EITI.
Although scholars68 disagree over the capacity of transparency to solve the resource curse,
key stakeholders69 support transparency as the best policy to fix the resource curse and
believe that its benefits extend beyond the extractive sector by empowering citizens to
demand more equitable and sustainable development. 70 Transparency helps to manage
expectations and communicate information to the public, which in turn helps to keep oil
companies in check as more information is in the public domain. 71 Transparency of revenues
alone may not be a sufficient condition for good governance but it is a necessary condition. 72
Promoting transparency of revenues is therefore a good first step in helping to tackle the
problems of governance in Uganda as bureaucrats may be tempted by massive oil revenues.
65
Ana Elizabeth Bastida, ‘Turning the resource curse into a blessing: How to further social and economic
development in resource-rich countries’ (2007)
<http://edoc.vifapol.de/opus/volltexte/2013/4661/pdf/fv_2007_06_bastida_en.pdf>accessed on 11 August 2014.
66
ibid.
67
ibid.
68
See I Kolstad ‘Is Transparency the Key to Reducing Corruption in Resource-Rich Countries?’ (2009)37(3)
World Development,528 or E Weinthal 'Combating the Resource Curse' (2006)4(1) Perspective on
Politics46
69
G-20 Leaders’StatementG-20 Pittsburgh Summit (2009) 42.
70
Haufler (n 52) 53.
71
Managing Oil Revenue in Uganda, A Policy Note, March 2009, Extracted from the proceedings of a National
Seminar on Managing Oil Revenue in Uganda held at Munyonyo Commonwealth Resort, Kampala 8 - 9 July
2008.
72
Alexis Majnoni d’intignano, ‘Revenue transparency and the extractive Industries transparency Initiative’’
Block 4, forum 16 paper, the World Bank, Washington DC, USA.
12
Information and revenue transparency will help in managing expectations, but access to
information is only useful when citizens can use it to their benefit. 73 This will help Uganda
avoid instabilities common in some hydrocarbon rich regions like the Niger delta.
A recurrent theme associated with improved governance of the extractive industries sector is
the relevant country’s commitment and actions towards increased transparency. 74 Kolstad and
Wiig document that increased budget transparency is associated with a reduction of
perceptions of corruption. In their attempt to explain the mechanisms through which
transparency can reduce corruption, they argue that it is not sufficient to make information
available to improve transparency, but rather the presence of three intervening factors is
essential:75
The appropriate political motivations or will and resources to empower

individuals’ ability to act on that information, higher degree of media
competition that can ensure the good quality of available information and
‘improved education scores’ that will aid people’s ability to process the
available information76
Transparency is the key to improving the governance of Natural Resource revenues as it

undermines the underlying mechanisms that reproduce the resource curse, namely patronage
and rent seeking incentives.77
4.1.1 ACCOUNTABILTY
73
Devin Holterman, ‘The bio political war for life: Extractivism and the Ugandan oil state’ (February 2014)
York University, 4700 Canada <www.elsevier.com/locate/exis>acceesed on 3 August 2014.
74
Andrés Mejía Acosta, ‘The Impact and Effectiveness of Accountability and Transparency Initiatives: The
Governance of Natural Resources’, Development Policy Review, 2013, 31 <
http://onlinelibrary.wiley.com/doi/10.1111/dpr.12021/pdf>accessed on 3 August 2014.
75
ibid 12.
76
Ibid 13.
77
ibid.
13
Accountability refers to the process of holding actors responsible for their actions. 78 More
specifically it is the concept that individuals, agencies and organisations (public, private and
civil society) are held responsible for executing their powers according to a certain standard
(whether set mutually or not).79 Ideally, it involves both answerability, the responsibility of
the duty bearers to provide information and justification about their actions and
enforceability.80 Transparency is closely related to accountability. 81 Chapter XXVI of the
Ugandan Constitution does provides for Accountability and it’s to the effect that lawful
measures should be taken to expose and fight corruption by those holding political and public
82
offices in trust for the people. This is in line with transparency initiatives like the EITI
which Uganda is yet to join. Accountability also ensures that the government remains
adherent to the needs of its citizens and makes it harder for governments to divert revenues to
corruption and patronage.83
4.2 NATURAL RESOURCE GOVERNANCE IN UGANDA.
Resource governance in this context is defined as the hard and soft rules which shape and
constrain the way hydrocarbons contribute to sustainable development and poverty
alleviation in host countries.84 Article 244 of the Constitution of Uganda, which is the
supreme law of the land, states that all minerals and petroleum in Uganda are held by the
Government on behalf of the people of Uganda. The Uganda government is in advanced
stages of setting up institutions to manage the oil and gas sector, as the country picks up the
pace towards oil production anticipated in 2017.85
78
John Gaventa and Rosemary McGee , ‘The Impact of Transparency and Accountability
Initiatives’, Development Policy Review 2013 <http://dx.doi.org/10.1111/dpr.12017>accessed on 5 August
2014.
79
ibid.
80
ibid.
81
See The IMF’s Fiscal Transparency Guidelines.
82
1995 constitution of Uganda.
83
Caitlin C Corrigan, ‘Breaking the resource curse: Transparency in the Natural Resource Sector and the
Extractive Industries Transparency Initiative’(2013) 3 Resources Policy <
http://dx.doi.org/10.1016/j.resourpol.2013.10.003i > accessed 15 July 2014
84
James Van Alstine and others, ‘Resource governance dynamics: The challenge of ‘new oil’ in Uganda’ (Feb
2014) <www.elsevier.com/locate/resourpol> accessed on 3 June 2014.
85
Speaking at the 5th East African Oil and Gas Summit (2014) in Nairobi, Robert Tugume, a Principal
Geophysicist at the Petroleum Exploration and Production Department (PEPD), said that the institutions,
namely; the National Oil Company, the National Petroleum Authority and the Petroleum Directorate would be
in place as soon as possible< http://www.oilinuganda.org/features/companies/government-to-set-up-petroleum-
14
Article 1 of the constitution of the republic of Uganda emphasises the Sovereignty of the
people, it states that:
(a) All power belongs to the people who shall through regular free and fair elections
express their will and consent on how and by whom they shall be governed
(b) The Government and its organs obtain power and authority from the Constitution
and the Constitution in turn derives its authority from the people, fighting corruption
and wastage of public property is one of the major duties of a citizen86
4.3 LESSONS FROM OTHER JURISDICTIONS FOR UGANDA
4.3.1 NORWAY
In this Chapter, the paper looks at Norway from a European point of view and Botswana
from the sub-Saharan point of view. Both countries can provide possible learning experiences
for Uganda. Notwithstanding that each country’s situation is different, successful cases
usually share some common elements, such as strong democratic institutions and a focus on
the long term future.
The question is to what extent Uganda can learn from the Norwegian experience despite
having entirely different political and economic phase of development. Ideally, Uganda hopes
to benefit from a more stable and sustainable economic development model, similar to
Norway’s. Norway’s success in petroleum development has been the result of successfully
depoliticizing the management of oil profits, making publicly transparent the process of the
resource’s exploitation, and structuring oil revenue investments to avoid many of the
economic hazards that have befallen other large oil exporting countries. 87 Emmanuel
Mutebile, Governor of the Bank of Uganda highlighted the importance of responsibly
managing the oil sector stating ‚ ‘We must be Africa's Norway’ and referred to other success
stories in reference to …the stellar manner in which Botswana has managed its wealth from
institutions-this-year.html>accessed on 3 August 2014.

86
Article 17, 1995 Ugandan constitution.
87
Managing Oil Revenue in Uganda (n 71).
15
diamonds,88in recognition of transparency and other good governance mechanisms toward

avoiding the resource curse. Unlike in Uganda, when oil was discovered in Norway the
country had been a stable democracy since it had acquired independence in 1905, and the
state bureaucracy functioned well with little corruption. The legal system worked well and
the media was actively evaluating and commenting upon the workings of the system.89
In Norway the petroleum wealth is invested abroad, via the Pension Fund. 90 While there has
been broad support for this among the political parties and economic experts, there has also
been opposing voices from firms, capital institutions and individual politicians, arguing that
part of the money should be used for domestic investments. 91 However, economists defending
the current system, have argued that Norwegian firms have access to national and
international capital markets, so profitable investments have sufficient funding. Uganda badly
needs the money to develop its ailing infrastructure, mainly its roads, hospitals and education
facilities. The immediate use of an investment fund might not be a welcome option at first,
despite its enormous advantages.
4.3.2 BOTSWANA
Botswana’s experience provides several lessons for Uganda’s efforts to translate oil into
development: ‘principally Botswana was able to leverage valuable natural resource wealth
into sustainable development, because her legislators successfully created a series of
overlapping and empowered institutions of accountability both inside the oil sector and
within the wider government’.92‘Botswana developed and continued to strengthen a set of
independent and empowered institutions to stave off the potentially corrupting influence of
valuable natural resource wealth and thus promote inclusive economic and political
development’.93 If Uganda hopes to avoid the resource curse, her policymakers will need to
follow Botswana’s example.94
88
Van Alstine (n 84).
89
Jack Mosbacher, ‘Fighting the Resource Curse: Uganda’s Pivotal Moment’ The Washington quarterly & fall
2013, 46.
90
ibid.
91
Mosbacher (n 85)
92
ibid 46.
93
ibid.
94
ibid 47.
16
5 CHAPTER THREE
5.1 THE EITI

The EITI is a relatively new programme that was launched in 2002, by the then British Prime
Minister Tony Blair at the World Summit on Sustainable Development in Johannesburg to
address the “resource curse” whereby citizens of many resource-rich developing countries
have not reaped the benefits of their country’s resources because of mismanagement,
corruption, weak accountability and poverty. 95 The EITI focuses on bringing transparency to
the revenue flows from extractive industries by third-party reconciliation of payments from
companies to government for the extraction of natural resources, and from government of the
monies received from industry.96
Member countries voluntarily adopt the EITI standard, and seek ‘validation’ status through
compliance.97 It is arguably one of the most prominent global attempts at combating the
resource curse through a voluntary multi-stakeholder initiative that Uganda ‘must’ join. 98 The
challenge of the EITI is that legally it is a soft law that is not necessarily binding on member
states notwithstanding the introduction of hard law pro-transparency legislations like the
Dodd Frank Act in the USA and the EU Directive on Transparency that have robustly
boosted the EITI.99 The EITI will help Uganda build its capacity for transparent management
of its oil revenues in the long run and being a member will enhance its international
credibility and create a more favourable environment for Foreign Direct Investment (FDI),
even in other economic sectors, helping to avert the resource curse.100
There are many positives that EITI compliant countries have registered that Uganda should
avail itself off:
(a) Financial data on oil, gas, and mining being widely released in the public domain
for the first time; and
95
30 Journal of World Energy Law and Business, 2014, Vol. 7, No. 1, <http://jwelb.oxfordjournals.org/ at
University of Aberdeen on August 3, 2014.
96
ibid.
97
Acosta (n 72)104.
98
Georg Caspary, ‘Practical Steps to Help Countries Overcome the Resource Curse’: The Extractive Industries
Transparency Initiative (2012)18, 171, Global Governance.
99
Companies in the United States and the EU have an obligation to disclose their financial payments to states
mainly in developing countries all aimed at ensuring transparency notwithstanding the recent appeal the DODD
frank act.
100
Managing Oil Revenue in Uganda: a Policy Note, March 2009, National Seminar on Managing Oil Revenue
in Uganda, Kampala July 2008.
17
(b) The creation of effective multi stakeholder structures, that have helped build trust
and collaboration and indeed peace building in some war-torn countries.101
In 2005, Nigeria’s EITI (NEITI) report showed a discrepancy of $8.3billion in missing tax
payment from the Nigerian National Petroleum Commission (NNPC) which led to an audit
and investigation. By the 2010 report, $443 million of these missing revenues were reported
recovered,102 and Uganda can equally benefit from the same type of oversight.
Uganda remains hesitant when it comes to the implementation of the EITI. In a recent
meeting organized by Global Rights Alert, the Minister of Finance indicated that the
Ugandan government is ready to sign to EITI, yet did not commit to a particular date. 103 It is
important for a country rich in natural resources like Uganda to join EITI. Natural resources
such as oil, gas and minerals belong to Ugandan people.104 Extraction of these resources
could lead to economic growth and social development, but only if principles of transparency
and accountability are fully implemented.
The resource curse is not inevitable; by implementing the EITI, the potential negative impacts
can be mitigated. The implementation of the EITI in Uganda will improve the investment
climate by providing a clear signal to investors and international financial institutions that the
government is committed to greater transparency. 105 EITI will also assist in strengthening
accountability, transparency and good governance as well as promoting greater economic and
political stability, notwithstanding the contribution to the prevention of conflict based around
the oil, mining and gas sectors and society at large.
101
Liberia is a prominent successful example here, as it became the first African country to be designated as
EITI compliant in October 2009. It subsequently went substantially beyond the EITI in its resource governance
effort, for example, by passing a comprehensive El governance law and it was given the Best EITI
Implementing Country award by the international EITI Board in Doha, Qatar in 2009, based on its rapid
progress and trend-setting performance, see Georg Caspary and Verena Seiler, "The EITI: Combating the
Resource Curse in Fragile and Conflict-affected Countries" (Washington, DC: World Bank Smart Lessons,
2011) in George Caspary practical steps Help Countries Overcome the Resource Curse,13.
102
Progress Report ‘Nigeria: recovering missing payments (2014) <
http://progrep.eiti.org/2014/country-focus/nigeria>accessed 15 August 2014.
103
Robert Tumwesigye Baganda, ‘What Uganda could gain from joining EITI’ (April 2014) 12,
http://www.publishwhatyoupay.org/newsroom/blog/what-uganda-could-gain-joining-eiti> accessed 5 August
2014.
104
Article 244 of the Ugandan Constitution is vests all minerals in the Government on behalf of the people of
Uganda.
105
Baganda (n 98)
18
The reason Uganda should take the opportunity of implementing EITI from the beginning of
its exploitation of oil is that the country has the opportunity to avoid the entrenchment of poor
policies in the oil sector by signing on to EITI before oil production starts. The government
has claimed that it can only join the initiative after commercial oil production has started in
2018, but this is an ill-advised political “game”, as many transactions are already underway
and some have been concluded between the government and international players in the
emerging oil and gas sector.106 There has been much debate in the country over the oil
regulations, and there has been a push from civil society to incorporate EITI into the laws.107
Transparency is not an end in itself but it is the ideal starting point for Uganda. 108 The
implementation of the EITI alone may not prevent the resource curse, but it can act as an
international spotlight on Uganda’s dealings with the international oil industry, as well as a
tool to inform the public and inform civil society’s demands for transparency and
accountability.109 By implementing the EITI Standard, Uganda will ensure full disclosure of
taxes and other payments made by oil, gas and mining companies to the government. 110 These
payments will be disclosed in an EITI Report that allows citizens to see for themselves how
much their government is receiving from their country’s natural resources. Transparency,
however, can only lead to accountability when there is an understanding of what the figures
mean and public debate about how the country’s resource wealth should be managed.
Therefore, the EITI Standard requires that EITI Reports are comprehensible, actively
promoted and contribute to public debate.111
Uganda joining the EITI will limit the negative consequences of secrecy, it is documented
that ‘secrecy of petroleum revenues compounds many problem’. 112 Governments often
collude with international oil companies to conceal their transactions and use their own
national oil companies to hide both revenues and expenditures. 113 A case in point is that
during Saddam Hussein’s era in Iraq, more than half of his government’s expenditures were
diverted to private expenditure through the Iraqi National Oil Company whose budget was
106
ibid 28.
107
The implementation of the NEITI in Nigeria has made some substantial changes in the notable text book
corrupt Governance system.
108
ibid (n 101).
109
ibid.
110
Baganda (n 98).
111
Baganda (n 98).
112
Particularly with the latest 2013 EITI standard which goes beyond advocating for mere transparency but
comprehensiveness of revenue disclosure.
113
ibid.
19
secret.114 This is the situation that Uganda could possibly avoid by agreeing to publish what it
is paid and accounting for how the revenues are spent to the public through initiatives like the
EITI. Uganda’s nondisclosure laws in the production sharing agreements are secretive. These
confidentiality clauses are likely to breed unaccountability and wastage of oil revenues. 115
Ross observed that:
Secrecy is a key reason why oil revenues are so commonly squandered, why oil
fuelled dictators can remain in power since they can conceal evidence of their greed
and incompetence and why insurgents are generally reluctant to lay down their arms
because they distrust offers by the government to share their country’s oil revenues
more equitably116
Scholars stress that the ‘impact of transparency […] would increase if voluntary mechanisms
like EITI became mandatory.117 Corporations fear transparency, because they do not want to
reveal commercial strategies and lose competitive advantage. 118 Corrupt governments want to
keep their privileges.119 The absence of sanctions does not encourage a true commitment to
transparency.120 Corporations and governments can enter into collusive agreements to conceal
certain information.121 Some countries122 have incorporated the EITI into their legal system a
possible policy and regulatory recommendation for Uganda as discussed above. 123 There is
consensus around the world that greater transparency is generally good for business despite
the challenges of reporting and managing the commercial, legal and political implications of
public disclosure.124
114
ibid.
115
Ross (n 22) 6.
116
Michael L Ross, The Oil Curse: How Petroleum Wealth Shapes the Development of Nations, (2012)
Princeton University Press.
117
David Lynn, ‘The Dodd-Frank Act's Specialized Corporate Disclosure: Using the Securities Laws to
Address Public Policy Issues' (2011) 6 Journal of Business & Technology Law 348.
118
Haufler (n 52) 64.
119
ibid.
120
Firger (n 19) 1067.
121
ibid.
122
Nigeria and Liberia have successfully incorporated EITI principles through promulgating their own version
of the EITI, Having the Uganda Extractive transparency Initiative (UEITI) is suggested by the author however it
is not part of the scope of this research paper.
123
Nigeria is the case in point which was one of the first countries to formulate a hard law in form of the
Nigerian Extractive Industries Transparency Initiative (NEITI), this piece of legislation supplemented the soft
law nature of the EITI that Uganda should do by promulgating the UEITI.
124
Carl D Hughes and Oliver Pendred, ‘let’s be clear: compliance with new transparency requirements is going
to be challenging for resource companies’ (2014) 7 Journal of World Energy Law and Business.
20
The EITI has been critiqued severely, and has not taken the criticism lightly. 125 It has come
out profoundly to defend its relevance on the transparency scene by introducing the EITI
standard 2013.126 There has been improvement in providing more contextual information
which ensures comprehensiveness in disclosure.127 The EITI Standard has a robust yet
flexible methodology which countries adopt to address the specific issues they are facing,
including but not limited to licensing information, monitoring production, tax collection,
revenue expenditure and infrastructure management.128
The EITI standard requires information about the contribution of the extractive sector to the
economy, a description of the fiscal regime, an overview of relevant laws, and a description
of how extractive industry revenues are recorded in national budgets. 129 Members are also
encouraged to disclose production contracts, and countries are encouraged to make all their
EITI data available in machine-readable formats so that citizens, journalists and analysts can
use the information to analyse, visualise and compare it with other data sources so as to
ensure its efficacy in helping combat the resource curse.
5.2 THE DODD -FRANK FINANCIAL REGULATION ACT

Just as the Africa Commission has stated ‘the responsibility for fighting corruption and
supporting good governance does not lie with the resource-rich countries alone’. 130 The
United States approved Section 1504 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, and the Securities and Exchange Commission (SEC) drafted the rules to
develop the Act.131 Section 1504 is aimed at combating corruption and increasing corporate
transparency.132 However, ‘the SEC’s developing rules have been recently vacated by a
federal court in the District of Columbia’. 133 Notwithstanding this latest development, this
requirement for disclosure by companies of payments they made to the host governments for
125
It has responded rapidly to unforeseen obstacles for example has come up with Protocol on Civil Society
2011) and also to criticisms (e.g. 2013 reforms regarding contextual information and more detail on government
expenditure.
126
<http://eiti.org/document/standard> accessed on 14 August 14.
127
See 2013 EITI standard.
128
EITI Progress Report 2013 <www.eiti.org/documentaccessed>accessed on 3 July 2014.
129
ibid.
130
Global Witness, ‘Extractive Industries Transparency Initiative on the right track: let's go further and faster’
march 2005.
131
SEC Final Rule of the Section 1504.
132
Barry Russell, ‘USA commits to greater transparency with implementation of EITI’ (2014) 7 Journal of
World Energy Law and Business 1.
133
American Petroleum Institute v Securities and Exchange Commission, 2013 WL3307114 (D D C 2013).
21
the extraction of oil, natural gas and minerals could help shore-up transparency initiatives in
Uganda’s extractives industry and help avoid the failures in governance that have exposed
other countries to the resource curse.134 ‘Total S.A and CNOOC are both listed on the New
135
York Stock Exchange’, and these are some of the commercial players in Uganda’s Oil
industry. The efficacy of transnational transparency-based mandatory regulation like the
Dodd-Frank Act should help solve some otherwise intractable problems associated with
corruption and rent-seeking in developing countries like Uganda.136
5.3 EU DIRECTIVE AND THE EITI.
The European Union Parliament has approved Directive 2013/50/EU which is to be

transposed by 20 July 2015.137 The EU Directive and Section 1504 compel the extractive
industry to disclose, country by country and project by project, payments made to
governments in the countries where they operate. 138 The vast majority of large privately-
owned extractive companies will be under a microscope due to these regulations. 139
Consequently, the EITI is strengthened, and this should give Uganda more reasons to apply
for membership in order to ensure compliance and transparency.
Under the Directive, a breach in compliance incurs pecuniary sanctions. 140 More importantly,
companies will be liable under anti-fraud provisions if they disclose false information. 141 It is
interesting to note that companies that support the EITI have filed the judicial process against
the SEC rules, indicating that they are more serious about transparency requirements backed
by law, rather than the EITI. 142 Additionally, corrupt behaviours are less attractive and the
incentive to bribe local officials will be less attractive for companies. 143 The more information
disclosed creates the possibility of facing criminal charges under legislation enacted
following the signature of the Convention on Combating Bribery of Foreign Public Officials
134
<http//www.wri.org/publication/avoidin-resource-curse>accessed 19 May 214.
135
<http://www.oilinuganda.org/categories/oil-timeline>accessed on 3 August 2014.
136
Firger (n 19).
137
Carl D Hughes and Oliver Pendred, ‘let’s be clear: compliance with new transparency requirements is going
to be challenging for resource companies’, Journal of World Energy Law and Business, 2014, vol.7 No.1
138
ibid.
139
Sinead Hunt, ‘Refining Black Gold: The Dodd-Frank Act and Corruption in the Oil Industry’ (2011)16
UCLA Journal of International Law and Foreign Affairs 58.
140
Directive 2013/34/EU, art 51.
141
Firger (n 19) 1093.
142
Chevron, ExxonMobil, Total and others.
143
Firger (n 19) 109.
22
in International Business Transactions.144 It will be more difficult for corrupt officials to

encourage corporations to bribe them. Also, as companies will have a legal obligation to
publish information, they are less likely to deter governments to join the EITI or to improve
transparency.145
The major difference is that The EU Directive and the Dodd- Frank Act are mandatory legal
rules that focus on companies, whereas the EITI is a voluntary soft law initiative that focuses
on natural resource rich States. However, this could result in a dual cause for ensuring
disclosure and transparency that will help to tackle the resource curse from both fronts.
The adoption of the United Nations Convention against Corruption emphasises the
international community’s determination to prevent and control corruption. 146 It reaffirms the
importance of core values such as honesty, respect for the rule of law, accountability and
transparency in promoting development and making the world a better place for all. 147 This is
now a global initiative facing a challenge that requires international unity to end the resource
curse.148 Uganda is a signatory, but as yet it has not ratified this convention. 149 Therefore by
joining the EITI, it will be fulfilling its international obligations and consequently avoiding
the “curse” through both transparency and accountability measures.
6 CHAPTER FOUR
6.1 UGANDAN LEGAL FRAMEWORK AND OIL AND GAS POLICY
Article 244 of the Ugandan Constitution states that the entire property in and the control of
petroleum in its natural condition in on or under any land or waters in Uganda is vested in the
Government on behalf of the Republic of Uganda. For the avoidance of doubt, the
Government of Uganda shall hold petroleum rights on behalf of and for the benefit of the
144
ibid.
145
ibid.
146
United Nations convention against corruption (adopted 31 October 2003) (New York).
147
ibid.
148
Kofi Annan Secretary General (the then secretary general) General Assembly resolution 58/4
Of 31 October 2003.Other regional bodies specifically African Union could follow The EU and The USA in
putting a similar legislation to tackle corruption from all fronts.
149
https://www.unodc.org/unodc/en/treaties/CAC/signatories.html>accessed on 24th July 2014
23
people of Uganda.150 The PEPA 2013 is the latest and relevant as it seeks to ensure
transparency in relation to the activities of the petroleum sector and the Authority. 151
Section 5(1) of the National Oil and Gas policy lays down the guiding principles in the
development of the oil and gas in Uganda to include:
(a) Using finite resources to create lasting benefits
(b) Efficient resource management, and
(c) transparency and accountability152
The Government passed the Oil and Gas Revenue Management Policy in February 2012, the
policy focus on a Fiscal Rule for Managing Oil and Gas Revenues and Oversight and
Controls.153 The Minister is mandated with establishing and promoting the development,
strategically managing and safeguarding the rational and sustainable exploitation, of
hydrocarbons as the head of the Ministry of Energy and Mineral Development (MEMD)154.
The MEMD, as a Petroleum Authority and a National Oil Company, will oversee the entire
Ugandan oil sector, from exploration and production through to the eventual sale of the oil or
gas on the international market.
6.2 CONFIDENTIALITY OF DATA
The Constitution of Uganda confers upon every citizen the right of access to information held
by the State or any other organ or agency of the State, 155 except where release of such
information is likely to prejudice the security or sovereignty of the State or the right to
privacy of another person.156 There is always a blame game between the government and the
oil companies as to who is insisting on non-disclosure, in reference to the confidentiality
clause as is the in the Ugandan PSA. However it is upon the government to exercise its own
150
Section 4, the Petroleum (exploration, development and production) Act, 2013.
151
Section 11(d) PEPA
152
National oil and gas Policy 2008.
153
http://www.energyandminerals.go.ug/accessed 12 August 2014.
154
ibid.
155
Article 41Ugandan constitution.
156
ibid.
24
sovereign power and determine that such information shall be publicly disclosed to ensure
transparency and accountability. Accordingly, a self-imposed confidentiality argument has no
weight in the debate on a forward-looking law.157
Subject to the Access to Information Act 2005, all data submitted to the Minister by a
licensee shall be kept confidential and shall not be reproduced or disclosed to third parties. 158
However the Minister may in accordance with the Access to Information Act 2005, make
available to the public details of all agreements, licences and any amendments to the licences
or agreements whether or not terminated or valid; 159 thus the need to disclose the contents of
such contracts to its citizens that conferred upon it such powers and ensure adequate checks
and balances are in place.160 In the case of Paul K Ssemogorere and 2 others v. Attorney
General,161 the Supreme Court of Uganda held that the Constitution (Amendment) Act 13 of
2000 was unconstitutional and emphasized that Ugandans are entitled to information as a
right guaranteed by the Constitution which is the supreme law of the land. 162 The amendment
was to exempt parliamentary minutes and documents from the application of Article 41
which guarantees every citizen the right of access to information in possession of the State,
its organs or agencies.163
Transparency in contractual arrangements is an important step towards revenue transparency,

as confidentiality harbors secrecy and corruption.164 The rationale is that Government
contracts on behalf of its citizens need to disclose the contents of such contracts to its citizens
who conferred upon it such powers and ensure adequate checks and balances are in place. 165
Transparency in contractual arrangements should be enacted within a country’s legislative
procedure and factored in transnational companies’ dealings with governments.166
157
Joseph Bell and Teresa Maurea Faria, ‘Critical issues for a revenue management Law’, in Escaping the
Resource curse (eds) Sachs and Joseph E Stiglitz.
158
Section 152 (1) PEPA.
159
Section 151 (1) PEPA.
160
Rabah Arzeki, Thorvaldur Gylfason and Amadou Sy, Beyond the Curse: Policies to Harness the Power of
Natural Resources (2011) International Monetary Fund 66.
161
Constitutional Appeal No 1 of 2002 [2004] UGSC 10.
162
Ssemogorere (n 155) 12.
163
ibid.
164
Abdullah Al Faruque, ‘Transparency in Extractive Revenues in Developing Countries and Economies in
Transition: a review of emerging best practices’, (2006), Vol. 24 No.1, Journal of Energy and Natural Resources
Law 69; I Bannon and P Collier, 71.
165
Hilaire Barnett, ‘Constitutional and Administrative Law’ (4th edn, London: Cavendish 2002) 134-135, In
Arzeki, Gylfason and A Sy, ‘Beyond the Curse: Policies to Harness the Power of Natural Resources’
(International Monetary Fund 2011) 66.
25
There is no doubt that ‘keeping oil contracts secret enables increased environmental
degradation, human rights abuses, conflict, displacement of communities, corruption and
mismanagement.’167 Confidentiality protections in the current PSA should be limited to
patent, copyright, and trade secrets. No other information should be granted protection under
the contracts between the government of Uganda and the oil companies. As Financier and
philanthropist George Soros, in support of PWYP campaign, noted:
Secrecy over states revenues encourages the ruling elite to mismanage and
misappropriate money rather than invest in long-term development,
transparency might not be able to resolve the problem but publicizing
governments and extractive industries will deter leaders from corrupting the
resource wealth.168
Increasing evidence has shown that the lack of transparency and secrecy at the country level
and within the companies facilitates tax avoidance, evasion and huge revenue losses for
governments inevitably leading to the resource curse. 169
6.3 THE PUBLIC FINANCE BILL 2012
The Bill provides for the establishment of the petroleum fund and the general management of
petroleum revenues, but there are many unanswered questions regarding the Bill, in as far as
transparency and accountability are concerned. What are the rules for deposits, withdrawals
and investments? What safeguards are in place to avoid abuse if government can access
principal petroleum funds for budget financing? What is the basis of due process and
standing? How do we hedge these funds against current political and socio-economic
rigours?170 Clause 71(1) provides that ‘Government shall retain ninety three percent of the
revenue from petroleum production, and the remaining seven percent shall be shared among
166
Ian Bannon and Paul Colier, Natural Resources and Violent Conflict: Options and Action (World Bank 2003)
5 26.
167
Taimour Lay and Mika Minio-Paluello, ‘Contracts Curse Uganda’s oil agreements place profit before people’
<www.carbonweb.org/uganda>accessed on 21 July 2014.
168
Mingcong Li, ‘Corruption, Transparency and the Resource Curse’ (November 2013) International Journal of
Social Science and Humanity < http://www.ijssh.org/papers/305-CH247.pdf>accessed 6 August 2014, page
173.
169
Sarah Muyonga, ‘Extractives sector transparency: Are we getting there?’
http://www.oilinuganda.org/features/opinion/extractives-sector-transparency-are-we-getting-there.htmlaccessed
on 3 August 2014.
170
Peter Wandera, Executive Director Transparency International, a Ugandan NGO.
26
the districts located within the petroleum exploration and production areas’171 The author
suggests that the fund is an ideal policy, but the questions above still tend to leave more room
for corrupt tendencies to persist.
6.4 THE ANTI CORRUPTION ACT 2009
Parliament has been called upon to ‘expedite the process of passing the Anti-Corruption
Amendment Bill 2013; the Bill will provide the judiciary with powers to investigate and
confiscate the proceeds gained from corruption which should help arrest criminal related
tendencies of oil revenues.172 The need to amend the Leadership Code Act to make public the
details of the declaration of wealth of public officials to prove their truthfulness is
paramount.173 Government should continue to demonstrate political will to fight corruption by
adequately funding anti-graft institutions like IGG, CIID, the Auditor General and the
judiciary.174 With the respect of the rule of law, transparency and good governance will
ultimately flourish as a means of combating the resource curse.175
7 CHAPTER FIVE
7.1 POLICY RECOMMEDATIONS.

Oil revenues should be targeted to enhance the productive capacity and efficiency of non-oil
sectors like agriculture and agro-processing, so as to avoid a mono-economy that will be
crucial in avoiding the ‘Dutch disease’ that constitutes the resource curse. Uganda’s export
capacity must be maintained, and in this regard inflation should be contained and the
171
The Public Finance Bill 2012.
172
Wandera (n 170).
173
John Odyek, ‘Judiciary commended for fight against Corruption ‘The New Vision (Kampala)
<http://www.newvision.co.ug/news/658124-judiciary-commended-for-fight-against-corruption.html>accessed
on 29 Jul. 2014.
174
ibid.
175
Abdullah Al Faruque, ‘Transparency in Executive Revenues in Developing Countries and Economies in
Transition: A Review of Emerging Best Practices’ (2006) 24(1) JENREL 66, 72.
27
exchange rate prevented from appreciating.176 Oil revenue should be integrated into the
budget thereby subjecting it to both legislative oversight (constitutionally-mandated
accountability) and the discipline of the budgetary process. 177 Uganda is developing a
National Vision 2035, which will include five year development plans that lays out what the
country hopes to achieve and how it proposes to get there. 178 In this regard, the new oil policy
must be seamlessly aligned and integrated with the Vision and development plans to ensure
that the oil industry assists Uganda in reaching its development goals. In addition oil revenue
investments must be guided by strict criteria to ensure that projects deliver high social and
economic returns.179
Criminal sanctions aimed at disclosure of oil revenues do not aid transparency and should be
done away with in future amendments.180 Uganda is set to apply for membership in the
Extractive Industries Transparency Initiative (EITI) in order to promote good governance and
management as they build the oil industry according to Peter Lokeris the State Minister of
Energy, ‘…Nobody is refusing us to sign these things, for sure we will sign the EITI’, but
government has stifled citizen participation in the management of the natural resources. 181
The sooner Uganda attains membership in the EITI, the greater the possibility that the
Country will avoid the resource curse.
In recognizing that a petroleum fund is no substitute for sound fiscal management, and that a
poorly designed fund can inflict more damage than good, Norway adopted the following
measures;
a) A budget process that integrates oil revenues
b) Expenditure priorities that are set within an open budget process
c) A sound project management cycle that includes planning and budgeting, execution,
accounting, reporting, and monitoring and evaluation
d) A long-term fiscal policy strategy (integrating oil revenues)
e) A strict savings policy (that is how much to spend, how much to save)
176
Managing Oil Revenue in Uganda, A Policy Note, March 2009, Extracted from the proceedings of a National
Seminar on Managing Oil Revenue in Uganda Held at Munyonyo Commonwealth Resort, Kampala July 2008.
177
ibid.
178
ibid.
179
ibid.
180
Section 153(4) PEPA provides for conviction to a fine not exceeding five hundred currency points or
imprisonment not exceeding five years or both for disclosure.
181
Gerald Tenywa, ‘Uganda for global transparency measures on oil’ The New Vision (Kampala 10 April 2014)
<http://www.newvision.co.ug/news/654424-uganda-for-global-transparency-measures-on-oil.html> accessed on
4 August 2014.
28
f) An informed public.182
Institutions tasked with managing the oil sector and associated revenues should be
strengthened, develop a clear communication strategy for the oil and gas sector, to provide
information to the public on petroleum exploration, extraction and utilization and host regular
consultative meetings and discussions with all stakeholders like civil society organizations. 183
The principles laid down by EITI to publish in detail all oil revenue payments and their
accountability should be strictly enforced when Uganda joins the transparency Initiative.
Uganda should introduce regulations that require all companies operating in the country to
make public all information relevant to revenue transparency. This will warrant an
amendment to the already existing model production sharing agreement that provides for the
confidentiality clause, but the cost of not amending the law may be disastrous for the people
of Uganda. Transparency initiatives will undoubtedly help close the gaps in the anti-
corruption and criminal laws that already exist in Uganda in helping arrest the corrupt
tendencies at various stages of the revenue stream.
Presenting the relevant data in local languages and investing in training initiatives to
strengthen citizens’ capabilities to use the data is a worthwhile endeavour. 184 A case in point
is the NEITI in Nigeria where roadshows were used to disseminate audit reports to
community based CSOs community leaders, state government officials, subnational
government officials, and traditional leaders within the zones. 185 The Minister has the
mandate by statutory instrument to enact regulations generally for the management of
hydrocarbons, and these regulations can be relate directly to confidentiality among other
things.186 This may warrant the need of an oversight body to ensure that new legislation to
allow transparency, mainly in the revenues paid by the government to local districts, is
permitted to develop.
Uganda would benefit if a set percentage of revenues were moved annually to a savings and
investment fund for future development projects, for emergency stabilization purposes, and
182
Tenywa (n 173)
183
Becky Carter, ‘Transparency and accountability’, GSDRC Helpdesk Research Report 1067 01.2014, <
http://www.gsdrc.org/>accessed on 5 August 2014.
184
Aguilar and others (2011) Nigeria has made strides in this case.
185
Becky Carter, ‘Transparency and accountability’ (2014) GSDRC 1067 < http://www.gsdrc.org/>accessed on
5 August 2014.5(Aguilar et al, 2011; see also Bellver & Kaufmann, 2005).
186
Section 183 (3) (b) PEPA.
29
as a hedge against economic downturns in case of a future decline in oil prices. 187 In as far as
the petroleum fund is concerned, its stability could also be enhanced by the involvement of
regional or international institutions such as NEPAD or the World Bank.188
Chad provides a good example of the power of such involvement and the limitations of that
power.189 Even though such institutions have simply observer status or nonvoting
membership, they can provide an additional degree of professionalism, transparency and
accountability that could save Uganda from the resource curse. 190 This is important to Uganda
to consider having worked in a much similar social economic conditions as a developing
country like Chad. In addition, International Alert, a global non-governmental organization
operating in Uganda, calls for a resource and information office to be set up in the Ministry of
Energy to disseminate information in more languages and through various media.191
Civil society in Uganda has been criticised for not providing the ‘counter voice’ necessary for
a ‘politics of accountability’ to emerge. 192 The use of social media and community based
organisations by civil society organisations is a suggested way forward for disclosures under
transparency to make sense of confusing information to the local people. This is already
under way mainly through CBOs in the oil rich region of Bunyoro and is encouraged to
continue.193 Civil society should seek to use the published data to better ensure sustainable
development through the prudent use of natural resource wealth. 194 Civil society activism is
important in avoiding the resource curse; Dr. George Lugalambi the Media Programme
Officer for Revenue Watch Institute Uganda criticised the political structures:
187
Jack Mosbacher, ‘Fighting the Resource Curse: Uganda’s Pivotal Moment’ The Washington Quarterly,
(2013) < http://dx.doi.org/10.1080/0163660X.2013.861710>accessed 16 Jun 2014.
188
ibid.
189
Joseph C Bell and Teresa Maurea Faria, ‘Critical issues for revenue management law’, in Escaping the
resource curse, Marcartan Humphreys et al, page 312.
190
ibid.
191
Jacob Kathman and Megan Shannon ‘Oil Extraction and the Potential for Domestic Instability in Uganda’
(2011) African Studies Quarterly, 12, 3 <http://www.africa.ufl.edu/asq/v12/v12i3a2.pdf 37>accessed 3 August
2014.
192
Richard Calland and Kristina Bentley, ‘The impact and effectiveness of transparency and accountability
initiatives: freedom of information’ (2013) Development Policy Review, 31, s69–s87
<http://dx.doi.org/10.1111/dpr.12020>accessed on 21//2014.
193
ibid 73.
194
Barry Russell , ‘USA commits to greater transparency with implementation of EITI’,35
30
Oil and gas in Uganda has been branded as a security matter and that this closes out
certain questions when oil is regarded as a security matter, adding that ‘a dangling
stick was hanging over CSOs and the media’.195
The presence of civil society is assumed to be a sufficient enough check on transparency and
accountability.196 However, without coordination and a shared frame of reference, civil
society groups will not develop the ‘counter discourse’ needed for accountability to occur.197
7.2 CONCLUSIONS
Today a consensus seems to exist that suggests that it is not just the presence of natural
resources that leads to the resource curse, but it is governance structures and institutions
around the extraction, processing and management of the generated revenues that determine
whether natural resources will be a ‘blessing’ or a ‘curse’. 198 Transparency and
accountability, and other variables like a vibrant civil society and an educated society are the
foundations for staving off the resource curse. Uganda should be able to escape the resource
curse. Increasing transparency makes corruption more risky, as it increases the chances of
detecting fraud and as a result reduces rent-seeking activities as well as government
accountability.199 Transparency therefore helps in minimizing corruption and consequently
the resource curse.200
This paper highlights the emerging spaces of resource governance within a new petro-state in
Uganda. It identifies how transparency initiatives, at both the national and international level,
are potential pathways through which resource mismanagement can be averted. The paper
has assessed how transparency and accountability initiatives and the law will help create
robust resource governance in Uganda. Despite a lack of strong education and institutions, a
commitment to transparency is the first step if Uganda is to effectively utilise its resources
from commercial production in two years’ time for the good of the people.
195
Tenywa (n 173)
196
Van Alstine (n 84)
197
ibid 46.
198
Uwafikum Idemudia, ‘the resource curse and the Decentralisation of oil revenue: the case of Nigeria’, Journal
of Cleaner Production 3(2012)183.
199
Ivar Kolstad and Arne Wiig, ‘Is Transparency the Key to Reducing Corruption in Resource-Rich Countries?’
(2009) 37(3) World Development 521, 524.
200
Julien Topal and Perrine Toledano, ‘Why the Extractive Industry Should Support Mandatory Transparency:
A Shared Value Approach’ (2013) 118(3) Business and Society Review 271, 279.
31
Transparency is crucial in addressing the resource curse in hydrocarbon-rich countries by

improving revenue management and minimizing corruption,201 notwithstanding that
corruption and mismanagement have been identified as the key causes of the resource
curse,202 and particularly in sub-Saharan Africa. Uganda therefore cannot afford not to
embrace the international resource curse avoidance mechanisms like the EITI and its
guidelines. It is only in this way that Uganda can raise its people up from abject poverty, as
well as ensuring sustainable development of the natural resources.
In the long term, transparency and accountability will be critical for the efficient functioning
of a modern economy in Uganda, not only in the oil and gas sector but for also in fostering
social welfare and meeting the country’s MDGs.
Petroleum revenues have a potential to turn Uganda into a prosperous and vibrant democracy.
It is therefore critical to have a legal and regulatory framework that is fair, equitable and
progressive to guarantee the maximal economic benefits for the country both today and in the
future. Uganda like a few African countries that have succeeded in the management of
extractives revenue should emphasise stakeholder participation, transparency, good
governance and respect for the rule of law. 203
The case of Botswana and Norway demonstrates that natural resource do not have to be a
curse for all resource-rich countries, and that good governance, transparency, accountability
and a balance between short term needs and long term goals can mitigate the detrimental
effects of the resource curse in Uganda.
With the G8’s Lough Erne Declaration, the Open Government partnership, the United
Nations Convention against Corruption, the United Nations Global Compact, a re-invigorated
Dodd-Frank Act, the EU Transparency Directive, Publish What You Pay and the EITI, there
exists a combination of both mandatory and soft law options to “open the door” in the one
201
Abdullah Al Faruque, ‘Transparency in Executive Revenues in Developing Countries and Economies in
Transition: A Review of Emerging Best Practices’ (2006) 24(1) Journal of Energy ,Natural Resources and
Environmental Law, 66, 68.
202
Peter Eigen, ‘Fighting Corruption in a Global Economy: Transparency Initiatives in the Oil and Gas
Industry’ (2007) 29(2) Houston Journal of International Law 327, 330.
203
Shem Byakagaba, ‘Petroleum Revenue Management, comment on The Public Finance Bill 2012’ (June
2013).
32
direction of greater transparency and accountability a crucial first-step for Uganda. But like
every “Great Journey”, in Africa and elsewhere, it begins with a single first-step!
Word count: 10,810.
8 BIBLIOGRAPHY
Primary Sources
Ugandan Statutes and Legislation
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2. The Petroleum (Exploration, Development, and Production) Act 2013
3. The oil and gas Revenue Management Policy, February 2012
4. The National oil and Gas policy February 2008
33
5. The Uganda Anti-Corruption Act 2009
6. The Public Finance Bill 2012
International Statutes
7. The United Nations Convention Against Corruption (General Assembly resolution

58/4 adopted 31 October 2003)(New York)
8. The Dodd Frank Act 2010
9. The EU Disclosure Transparency Directive 2013/50/EU
Cases
10. American Petroleum Institute v Securities and Exchange Commission 2013

WL3307114 (D.D.C.2013).
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34
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Governance, the World Bank Draft, (1999)
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Uganda’ (2013) 6 <http://www.acode-u.org/documents/oildocs/OIL
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accountability initiatives: freedom of information’ (2013) Development Policy
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The Extractive Industries Transparency Initiative (2012)18,171, Global
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38

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Student ID No.

AFT………………..Action for Transparency

CBOs……………………..Community Based Organisations

CIID………..Director of Criminal Investigations Division

CSOs ………………………… Civil Society Organisations

Eds ……………………………. Editions

EITI ……………………….. Extractive Industries Transparency Initiative

FDI………………….Foreign Direct Investment

IGG……….Inspector General of Government

NGO …………………… Non-Governmental Organisation

MEMD……………….Ministry of Energy and Mineral Development (Uganda)

NRM…………..National Resistance Movement

NEITI…………………..Nigerian Extractive Industries Transparency Initiative

PSA…………………..Production Sharing Agreement

PWYP…………………Publish What You Pay

TAIs ……………Transparency and accountability Initiatives

UEITI………………Uganda Extractive Industries Transparency Initiative

UNCAC……United Nations Convention against Corruption

3.2 RESOURSE CURSE CONCEPT

According to economist Michael L Ross, Resource Curse is:

...the process that causes a boom in a country’s natural resource sector to

4.1 TRANSPARENCY AND ACCOUNTABILITY AT A GLANCE/OVERVIEW

Natural resources provide an opportunity for a country to generate wealth, and

In many resource abundant countries especially developing countries, little information is

The appropriate political motivations or will and resources to empower

Transparency is the key to improving the governance of Natural Resource revenues as it

4.2 NATURAL RESOURCE GOVERNANCE IN UGANDA.

4.3 LESSONS FROM OTHER JURISDICTIONS FOR UGANDA

institutions-this-year.html>accessed on 3 August 2014.

diamonds,88in recognition of transparency and other good governance mechanisms toward

5.1 THE EITI

5.2 THE DODD -FRANK FINANCIAL REGULATION ACT

5.3 EU DIRECTIVE AND THE EITI.

The European Union Parliament has approved Directive 2013/50/EU which is to be

in International Business Transactions.144 It will be more difficult for corrupt officials to

6.1 UGANDAN LEGAL FRAMEWORK AND OIL AND GAS POLICY

6.2 CONFIDENTIALITY OF DATA

Transparency in contractual arrangements is an important step towards revenue transparency,

6.3 THE PUBLIC FINANCE BILL 2012

6.4 THE ANTI CORRUPTION ACT 2009

7.1 POLICY RECOMMEDATIONS.

Transparency is crucial in addressing the resource curse in hydrocarbon-rich countries by

Word count: 10,810.

Ugandan Statutes and Legislation

1. The Constitution of Uganda 1995

2. The Petroleum (Exploration, Development, and Production) Act 2013

3. The oil and gas Revenue Management Policy, February 2012

4. The National oil and Gas policy February 2008

5. The Uganda Anti-Corruption Act 2009

6. The Public Finance Bill 2012

7. The United Nations Convention Against Corruption (General Assembly resolution

8. The Dodd Frank Act 2010

9. The EU Disclosure Transparency Directive 2013/50/EU

10. American Petroleum Institute v Securities and Exchange Commission 2013

4. Barnett H, Constitutional and Administrative Law (4th edn, London: Cavendish

5. Drysdale J, Timor Leste-Sustainable development or resource cursed? An

8. Vishwanath T and Kaufmann D, Towards Transparency in Finance and

Journal and online Articles

1. Aaronson S, ‘Oil and the public interest’(2008)7 <

3. Bainomugisha A, ‘Escaping the Oil Curse and Making Poverty History in

5. Byakagaba S, ‘Petroleum Revenue Management, comment on The Public

6. Calland R and Bentley K, ‘The impact and effectiveness of transparency and

7. Carter B, ‘Transparency and accountability’, (2014) GSDRC 1067 <