Safeguarding the extractive industry

By Agnes E. Nantaba

Henry Mugisha Bazira is the executive director of Water Governance Institute (WGI). He spoke to Agnes E. Nantaba about their operations and the potential of the extractive and mining industry in the country.

What are the key elements in your management philosophy as a manager?

My attitude towards management aims at working as a team with a target of achieving the same vision for the organization. It’s why I have people with the right qualifications to support me.  Although I try to delegate to get work done, I don’t always abdicate my work. I keep an eye to make sure that everything goes as planned, which reduces stress and work on my desk and gives me an opportunity to focus on thinking and developing new proposal concepts.  However, there are times I am engaged in the donkey work on the ground to set an example for the team. As part of building the capacity of the team, internal trainings are conducted. For the same cause, I take full concern about employee remuneration and benefits to rule out the incidence of high staff turnover.

What is your rating of the status and performance of the extractive industry in Uganda?

Uganda’s extractive sector is still highly under-developed and it’s not in line with the extractive potential that the country has especially in terms of mining. Over the last five years, our focus as WGI has shifted from only oil and gas because there is more fish to fry.  As a country, we have come up with fairly good laws that are acceptable worldwide save for a few loopholes because we borrow lessons from different countries. This is a good foundation but considering the mining sector including Wolfram, copper, tin etc, which have some form of an industrial scale of development, they remain under-developed and extracted in an artisan manner.  The government doesn’t earn a tax from such artisan operations. For instance, gold has been mined for many years but when you look at the tax revenues from it, it is mainly charged on the tail end products. We are focusing on understanding more and appreciating the mining sector as a highly potential tax area and also be able to help the people who are mining to establish more economically viable groupings and operate in a more professional manner. If we are to earn this, the community should understand the modalities and issues of social economic safeguards.

What challenges hamper the growth of the extractives industry in Uganda?

From a perspective based on individual assessment of the sector, there has been a lot of secrecy in the mineral potential of the country. For instance on the cadastre map that was recently advertised, there is no single license that is not owned but if investigation is to be done, it wouldn’t be surprising to discover that the holders of the licenses had an advantage towards information. If the information had been exposed and made public, we would probably have a different picture and framework on the cadastre map. Many times the holders of the license tend to ask for too much money that doesn’t make the sector attractive. The licenses themselves are a problem. While the exploration area may appear large, the actual viable unit is often very small in the big area and so a lot of investment is required to curb it out and the technology is not yet available in Uganda yet other options require heavy machinery and not many people can afford them.   The ministry did an aero-magnetic survey to map out the potential mineral areas but still it requires more work to spot out the viable areas.

How are you working to address those challenges?

Our greatest solution getting people know the potential of their country. For instance, Kisoro is sitting on a lot of minerals considering the cadastre map but people don’t know. The question is why?  If all the mining areas were to be operationalized, a lot would be gained. As part of the planning process through discussions with National Planning Authority (NPA), we recommend that they look at Uganda in a holistic manner rather than only the operational sectors.   For instance, as regards NDP II and issues of human population planning, there is nothing intended to prepare this country for the extractive sector. There is so much development-induced displacement, which would otherwise be avoided by planning ahead.  Many of the government ministries are operating in isolation and as NPA does the planning, follow up is left to the Office of the Prime Minister. NPA needs to seek an additional mandate to be able to monitor the progress of implementation for the specific ministries. For NDP I, much of it was not achieved because of abdication by NDA, giving the whole responsibility to individual ministries. That is why we are failing to realize the development plans. If only such loopholes are bridged, we can explore the potential of the country.

How effectively can your strategies be incorporated by the government and other partners to unveil and tap into opportunities in water, oil and gas sector in Uganda?

Unlike other resources, water is used in everything, but we should also pick interest in its quality to ensure that there is efficient use, pollution is avoided and no extra subtraction. For instance, the breweries should be in position to recycle water so we can move away from one cycle use of water to multiple cycle use of water because in order to be water satisfied as a country, we need 200 times the amount of water we have at the moment and yet the rain patterns are not changing and water bodies are being depleted. The only way to make water relevant is to recycle it to high quality standards through strategies like reverse osmosis much as it may be very expensive.

WGI recently scooped the USAID Securing Water For Food (SWFF) Award. What is the implication of the award on your work portfolio?

Our partners have bought into our idea of changing the tradition of accessing fish outside the lake and food outside the soil through our aqua-ponics project (aquaculture and hydroponics). We want to take fish farming outside the lake to people’s homes focusing on the urban poor, peri-urban poor and in rural areas to women and girls who have no rights to land ownership. We are able to use the same concept to grow food using the same strategy especially vegetables to address nutritional problems.

Global oil prices have steadily been falling to as low as $27 currently. Why isn’t the drop reflected at the pump in Uganda?

It is true pump prices have remained relatively high around the country over the last two years despite the fact that global oil prices have steadily been falling in the same period of time from as high as $68 a barrel reaching a record low of $27 a week ago. Many people are concerned about the failing impact on Uganda oil prices but the explanation is simple. There are contracts that were signed prior to the falling of crude oil prices, which can’t be changed overnight. There are also transporters who were contracted to transport the fine product to Kampala and their rates have not changed. The people who are refining crude oil for Uganda, S. Sudan, Tanzania, Rwanda, DR Congo and Burundi haven’t lowered their selling price for refined products. They already have a bulk stock of crude oil that they bought months ago at a higher price, which they must refine and sell before the lower priced crude comes into the refining line.  That said, we hope that the refiners will be kind enough to reduce the price when the higher priced oil is sold out such that the impact is felt at the pump.

What lessons can Uganda learn from other countries that discovered oil to benefit from the extractives industry especially oil and gas as a blessing rather than a curse?

We should not focus so much on oil and gas as a key solution to our poverty solution. We should rather use the resource to stabilize the economy through developing economic sectors that will take us longer beyond even when the oil has run out.  Such areas include agriculture because we have a comparative advantage there and the water sector such that if possible we can trade water to other countries such as Eritrea, South Sudan and Somalia – who have water scarcity.  We have a manufacturing sector that is underdeveloped and yet it can take us beyond the lifespan of oil. We can also develop subsidiary industries from oil like pharmaceuticals, paints, lubricants and tar among others.  It’s more about the attendant industries than focusing on the crude oil although the oil extractors may be interested in taking crude oil out because it makes more money as crude than the refined products. And with the rampant unemployment, it’s an opportunity to create more jobs because the government can’t create jobs unless there is production.

What is your projection of the extractive industry in Uganda in the next few years?

In respect to the oil and gas industry, I don’t see ourselves having commercialized oil anytime soon. It’s going to take us approximately four years to build the pipeline to the coast, assuming they are working 24 hours, and it will take more four years to build the refinery. The reality is it’s impossible to have commercialized oil by 2018 or 2020 as many people project.  In terms of oil and gas, we shall be reaching the threshold of commercialization of oil while for hard metal mining; we are still very far from 20 to 30 years to appreciate the standards.