ESID Research Director Sam Hickey presented the centre's ongoing research into The Politics of Oil in Ghana and Uganda at the Development Studies Association meeting, 1 November 2014

1. The Effective States and Inclusive Development
Research Centre (ESID)
The Politics of Oil in Ghana and Uganda
Kojo Asante (Manchester) & Giles Mohan (Open University)
Sam Hickey (Manchester) & Angelo Izama (independent)
DSA Conference, 2014
1 November, London

2. ESID
www.effective‐states.org
 Based at the Institute for Development Policy and Management
(IDPM), University of Manchester
 DFID‐funded until end 2016
 Sub‐Saharan Africa and South Asia
Over‐arching research question
 What kinds of politics can help to secure inclusive development
and how can these be promoted?
More specifically:
 Under what conditions do developmental forms of state
capacity and elite commitment emerge and become
sustained? In particular, what role do power relations and
ideas play?

3. ‘It’s the politics, stupid!’

4. Institutionalist analyses of the resource curse
• Economic performance determined by the quality of
institutions (Acemoglu & Robinson ‘01, North ‘90)
• Successful governance of natural resources depends
on the quality of institutions in place at the time of
discovery (Karl 2007)
• Building ‘good governance’ institutions as the key
policy response….BUT
– “Behind policies, institutions, and state building
lie political coalitions” (Amy Poteete 2009: 455‐6)

5. Political settlements
 “…the balance or distribution of power
between contending social groups and social
classes, on which any state is based” (di John &
Putzel ‘09: 4, from Mushtaq Khan 2010)
 The character of the ruling coalition as critical
 Are powerful actors excluded?
 Are lower‐level factions too powerful?
 Shapes vision and implementing capacity
 BUT, rational‐actor bias and methodological
nationalism are problems here
 Ideas and transnational factors matter too

6. Political settlements: a typology (Levy 2014)
• Cells as distinctive regime types, with distinctive rules of the game
and thus distinctive incentives, constraints, opportunities, risks
Organizational and Institutional Complexity
Low:
Personalized
Elite Bargain
High:
Impersonality
#1
Conflict
Political
Settlemen
t
Dominant
Party /
Leader
Ethiopia,
Rwanda,
Uganda,
Cambodia
South Africa
#6
Sustainably
competitive
markets and
polities)
Electoral
Competition
Bangladesh,
Ghana,
Malawi
India

7. Oil in Ghana and Uganda

8. Ghana Uganda
Major discovery 2007 (offshore) 2006 (onshore)
Start/end (est’d) Nov 2010‐c.2030 2018/9‐c.2040
Volume 2bn+ barrels
103k bpd as of June
2014
1.2‐1.7bn barrels
recoverable (6.5bn
barrels in total)
Value 3‐4% GDP
$1‐1.5bn pa max
Only $533mn in 2013
6‐7% GDP pa
Key players Kosmos, Tullow
GNPC
CNOOC, Tullow, TOTAL
New NOC…

9. Ghana Uganda
Development
indicators
$1,570 GDP per capita
135/187 HDI (medium)
Growth: 5.6% (2001‐10)
$500 GDP per capita
161/187 HDI (low)
Growth: 7‐8% (2001‐10)
Democracy Multi‐party since 1992
Democratic: 8 Polity IV
Multi‐party since 2005
Semi‐authoritarian:‐1 Polity IV
Governance
indicators (WGI,
2006)
Voice & Acctbty: 0.37
Govt effectiveness: 0.11
Rule of Law: 0.00
Control of Corruption:0.02
Voice & Acctbty: ‐0.42
Govt effectiveness: ‐0.48
Rule of Law: ‐0.34
Control of Corruption: ‐0.75
Type of political
settlement
Competitive clientelism,
presidentialised system
Highly personalised public
institutions
Dominant leader, competitive
pressures increasing
Highly personalised public
institutions

10. How will oil be governed?
Competing propositions
• Institutionalism:
– According to the quality and character of the institutions
• ESID’s ‘Political settlements‐plus’ approach;
– According to the organisation of the ruling coalition and
the incentives/interests that flow from this
– Ideas and transnational influences will also matter

11. Initial propositions
• Oil will deepen the role of patron‐client politics in both cases
– Increases the stakes for maintaining/gaining power
– Increased role of rentier capital and foreign investment
– Excluded factions that contest will be co‐opted and/or repressed
• Dominant leader/party settlements tend have longer‐term
horizons than under competitive clientelism: should enable
stronger protection of national interests
• ‘Islands of bureaucratic excellence’ may emerge within either
setting, based on a mixture of bureaucratic capacity and
national political commitment

12. The Political Settlement and Oil in Uganda
Sam Hickey (UoM) and Angelo Izama (independent)
DSA Conference, 2014
1 November, London

13. Structure
 Uganda’s dynamic political settlement
 From a ‘developmental’ to a ‘weak’ dominant party
settlement?
 How is the political settlement influencing the
governance of oil in Uganda?

14. The political settlement in Uganda
• Ruling coalition: concentric circles of power
– The initial broad‐based coalition narrows (horizontally at the centre)
whilst broadening (vertically, at the base)
– From dominant party to dominant leader (with a vision)
– Increased vulnerability re factions inside and outside the coalition
– Military plays a critical role
• State‐business relations
– State nurtures pro‐regime capitalists; collusive rather than productive
• Institutions: personalised and patronage‐based
• High‐level corruption goes largely unpunished, poor performance
• Isl’ds of effectiveness where essential to econ, pol & security interests
• Dynamic: competitive pressures, inflationary patronage

15. Uganda’s Oil Assemblage

16. The ruling coalition and oil
• The securitisation and personalisation of oil
– Military (national & local), Foreign Policy Review
– President: ‘rightful custodian’ of ‘my oil’
• The narrowing inner circle
– Dealings with oil companies: increasingly exclusive
– Shaped by corruption scandals, including China
• ‘Developmental patrimonialism’?
– The centralisation of rent‐seeking
– ‘Closed but ordered deals’, apparently in national interest

17. The 2012 PSA
“Government of Uganda’s revenue share is one of the highest in
Africa – see IMF report on that. Uganda’s cost recovery is 80%
per barrel, but it is only 60% in Ghana (with the same company).
We have very small profit margins here. GoU VAT imposition is
impossible in this context will add $4bn to a $22bn deal”.
Interview with Oil company source, November 2013
“The improved financial terms in the contracts could earn the
state hundreds of millions of dollars in additional revenue and
secure the Government a very high percentage of the oil profits.
Uganda is likely to receive between 80% and well over 90% of
revenues, after costs have been recovered…”
Global Witness 2014: 6‐7

18. The 2014 Memo’ of Understanding
• GoU secures larger refinery, first call on oil
– To be supplied by IOCs with existing contracts
• Projects to proceed at pace set by GoU
• IOCs secure option to use international arbitration
GoU reveals the capacity and commitment to promote
the national interest within certain limits

19. “The Government (of Uganda) has good, well trained
civil servants, good external support and a
President who has been very strong, very patriotic”
Oil industry source, November 2013
“He took real interest in the
negotiations. Never have they (oil
company colleagues) seen negotiations
which involved a President sitting in
negotiations around an MoU for ten
hours, it has never happened. He has
been involved very directly and
personally in negotiations, because it is
a key issue for the country, as he
considers it”
Oil company source, June 2014

20. PEPD as an ‘island of effectiveness’
“PEPD is definitely the agency that is running the oil
business” Oil company source, June 2014
• Major achievements: data, contracts, legislation
• State capacity in two key dimensions
– Organisational capacity
• Technical expertise, salaries, equipment (donor support)
• Meritocratic recruitment and promotion
• Organisational culture/esprit d’corp
– Embedded autonomy: close ties to President, who relies
heavily on and respects their advice
• But: being replaced by new best‐practice institutions

21. The entwining of interests and ideas in Uganda
• Oil has helped reignite a more ambitious
development agenda: ‘structural transformation’
• Elite commitment
– President: national interest? Regime continuity? Legacy?
– Bureaucratic professionalism
• Oil is being governed in line with a form of
‘developmental patrimonialism’, which goes against
the grain of recent tendencies in Uganda’s weakening
dominant party settlement
– …although when oil actually flows…?

22. Emerging comparisons
Competitive clientelist
Ghana
Dominant Party
Uganda
Ruling coalition Shorter‐term horizons Longer‐term vision
Political
institutions
Early deals before legislation
MPs toe party‐line under tight
electoral competition
Legislation before main deals
Autonomy/resistance from
dominant party; co‐opt/repressed
State capacity Deals: open, nat’interest?
Latent IoE: formal capacity, limited
embedded autonomy, politicised
Future: best‐practice solutions?
Deals: closed, nat interest secured
Actual IoE: formal capacity ,
embedded autonomy, merit‐based
Future: best‐practice solutions?
Revenue
allocation
Patronage prioritised over
development; populist targets
?? Commitment to transformation,
no populist promises
Ideas Shapes choice of oil companies
Trumped by interests
Shapes choice of oil companies
Ideas overcoming some interests

23. Emerging findings
 Political settlements trumps the good governance approach
 Different type of PS shape oil governance in specific ways
 Dominant party settings may offer a more favourable context for oil
being governed in the national (economic) interest
 Ideas matter too
 Oil re‐shapes how political communities and development are
imagined (Watts 2004)
 Support for an alternative policy agenda?
 State capacity versus transparency and accountability?
 Best‐fit, not best‐practice?