August 18th, 2011
10:38 AM GMT
Kampala, Uganda (CNN) Along the Entebbe Road, that bustling, traffic-ridden street that links the airport to Uganda’s capital city Kampala, is a small hairdresser called “Obama Salon.”
The name conjures up an ode, a prayer, a little bit of wishful thinking on behalf of the salon owner, who no doubt wanted some of Barack Obama’s yes-we-can-do-it magic to wear off on this neglected avenue in Africa.
For the beleaguered residents of Kampala, a run-down city that tries hard to create some order out of the chaos of poverty, life remains hard. Food prices and transport prices continue to spiral higher and higher, making residents angry that those with so little have to pay so much for the basics.
It will not be like this for much longer, say the optimists.
That’s because beneath Uganda’s soil, in the northern parts of the country in the Lake Albert region, lies an extraordinary oil bounty.
Uganda is about to come online with Africa’s newest resource bonanza; the country has the potential to become a mid-size producer of oil, on a par with Mexico. The riches are potentially a game-changer. Some hype suggests the country will be awash with $2 billion of cash a year in oil revenues.
Powerful, connected people in Kampala talk about the staggering changes that are about to come to Uganda, how the Ugandans don’t realize the implications of the windfall that sits beneath their land. There is a sense from some that the good times are about to start rolling. But are they?
The continent is littered with examples of how the riches beneath Africa’s soil have done little to uplift its people. One only need look to the Congo or Nigeria, two massive treasure troves of natural resources that have been squandered by greed and bad leadership.
How does Uganda avoid that so-called “oil curse?”
The responsibility lies with President Yoweri Museveni, a man who has been in power since 1986. The decisions he is taking right now will define this East African country, and its neighbors, for the rest of this century.
It’s important to not get bamboozled by the potential for development and upliftment of ordinary Ugandans because, many believe, that is not President Museveni’s first priority.
To ensure his political future, observers suggest, Museveni has to control access to the oil wealth, which is why no “oil minister” or “oil ministry” has been formed yet in Uganda. That sector will, according to people familiar with the situation, stay in the presidency.
Secondly, Museveni has to manage the expectations of Uganda’s powerful kingdoms that believe more power should be given to traditional leaders. There are also tribal pressures about where the majority of the oil wealth should be spent – in the local areas where the oil is being drilled, or in the urban areas, where Museveni’s ruling party is based?
Thirdly, there is already criticism that Museveni has “sold-out” Uganda’s oil wealth to the companies that control the major blocks - Total, the French oil giant, Tullow, the Irish player heavily involved in Africa, and CNOOC, the Chinese monolith.
Human-rights campaigners say the Uganda oil contracts are designed towards a “resource extraction program” aimed at company profit and not country development. They insist that the contracts are structured in favor of these companies and not the Ugandan state. Tullow denies that and says that the Kampala contracts are some of the best in the world.
The other challenges are practical as well as political. There are apparently still negotiations on how to extract Uganda’s oil, how to transport it and where to get it refined.
Some want to build a pipeline - a heated, underground transport line out of Uganda. Others want to expand on already-existing railway tracks to the east. Many want the oil to be refined in Mombassa, Kenya. Some worry it will be refined in China or elsewhere.
Decisions and responsibilities that lie ultimately with Uganda’s ageing president. Is it too late? Or is he ready to make bold decisions that will bring a possibility of hope to the hairdressers in the Obama Salon?
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