Oil Could Save Uganda's Ailing Economy Top story

2251 Views

In short
Experts suggest that oil revenues could have a cooling effect in economic activity squeezed by slackening domestic demand and rising cost of finance.

Uganda's economy could pick up in the next three years if governments fast-tracks plans to have oil out of the ground by 2020.  Experts suggest that oil revenues could have a cooling effect in economic activity squeezed by slackening domestic demand and rising cost of finance.

The International Monetary Fund in May projected that Uganda's growth rate for the 2016/17 fiscal year will be between 3.5 to 4 percent.

But Patrick Mweheire, the chief executive officer of Stanbic Bank says oil could make Uganda grow at a much higher rate even about 6 percent. He adds that recent developments in the oil and gas sector prove the earlier widespread expectations that oil will transform Uganda's economy.
 
//Cue in; "I think the catalyst….
Cue out… we have a very big opportunity."//
 
Mweheire is however cautious to add that such transformation will happen if the sector is managed under international best practices like transparency and accountability.

Uganda and Tanzania recently signed an agreement for the construction of the 1400-kilometer pipeline for transporting crude oil to the port of Tanga at the coast. There are also plans to construct an oil refinery at Kabale in Hoima. The refinery is expected to refine over 230, 000 barrels of oil a day.

The building of the pipeline and refinery is expected to cost up USD 14 billion. There is expectation that the construction stage will create some jobs and therefore increase demand for goods and services. Mweheire says the combined investment is the sector is promising.
 
//Cue In "If you look at….
Cue Out ….the party is over."//
 
He says estimates by Stanbic bank indicate that oil will have a catalyst on other sector. He says estimates show that fast-moving consumer goods will grow five times between now and 2020.

Mweheire's estimates are not so different from those of the International Monetary Fund prediction about the effect of oil production on Uganda's economic growth.
 
Clara Mira, IMF representative in Uganda in May said Uganda will reach an economic growth rate of between 6 and 6.5 percent by 2020 when oil is expected to be flowing..