Effective States and Inclusive Development

The Politics of Governing Oil in Africa

In this project we investigate the governance of new oil finds to date in Ghana and Uganda, with the explicit intention of comparing between a ‘competitive clientelist’ and a ‘dominant party’ type of political settlement.

We examine three main aspects of oil governance: securing deals with oil companies, establishing and enforcing institutions and legislative arrangements for governing oil; and the role of civil and political society in making demands around transparency and accountability.

The imperatives created by closely fought elections in Ghana has clearly helped to accelerate the pace of oil production, to the extent production began and deals were made with international oil companies before getting new legislative and institutional arrangements in place. Uganda placed its negotiations with international oil companies on hold whilst it established what would become the National Oil and Gas Policy in 2008. Uganda wanted to ensure that it gained the best possible deal for itself.

We find that political elites perceive the oil sector to be critical to their political projects whether of development and securing popular legitimacy and/or rent seeking. The lines of influence run in both directions, with the new political economy of development in each country reshaping and/or re-enforcing particular tendencies of each country’s political settlement.

A mixture of dominance and ideological commitment has enabled long term investments and political protection around the oil department in Uganda. In Ghana, deal making has been compromised by electorally-induced haste, partisanship and politicians trumping bureaucrats in the process, with oil companies able to play the multiple principals involved off against each other.

Ideas have played a significant role in shaping oil governance in our two cases, both at the level of the political settlement and within the policy domain or oil assemblage itself. In Uganda, oil has stimulated Museveni’s political imaginary and rejuvenated his long-standing concern with Uganda achieving structural transformation and respect for technocratic modes of governance. The resource nationalism of both President and senior oil technocrats is apparent in dealings with oil companies and insistence on a refinery. Ghana has in general adopted a more neoliberal form of oil governance than Uganda. Countervailing ideas around accountability and transparency have been promoted, mainly by donors and civil society organisations and have gained some formal traction. However, in both cases, the interests of the governments concerned have meant that they have trumped pressure from civil society organisations on the most important aspects of oil governance. We find that interests can trump those ideas that are less entwined with and paradigmatic to the political settlement. The idea of Ghana as a unitary state was mobilised by national political elites to rule out sub-national claims for a certain proportion of oil revenues to be returned to the oil producing Western region.

It is possible that dominant political settlements are more inclined to resource nationalist approaches whereas competitive clientelist settlings are more likely to employ neoliberal modes of natural resource governance.

The shift to weak dominant party settlement in Uganda with growing pressures from excluded elites and an increasingly populist approach to managing lower-level factions, leads us to predict that oil will be less well-governed when it comes to managing and allocating oil revenues. In Ghana, oil has helped deepen rather than transform competitive clientelistic tendencies.

Oil discoveries have generated intensified processes of central-local bargaining. However, despite efforts amongst sub-national elites to mobilise around ethno territorial demands, national elites have been able to deploy superior levels of holding power, including ideas, to overcome and re-channel local claims.

Policy implications include the following:

  • Political economy analysis is needed to examine the politics and power relations that shape oil governance.
  • Best-fit governance solutions that involve deals rather than rules and which require high levels of state capacity which flow from a degree of collusion between political and bureaucratic actors may be more effective than the best-practice solutions promoted from a good governance perspective.
  • The critical role played by bureaucratic pockets of effectiveness means that there should be more focused support at the level of specific public agencies.
  • Investing in the hierarchical governance arrangement of the oil sector in a dominant/developmental setting is a safer bet than in a competitive clientelist setting where a multi-stakeholder approach makes more sense.
  • High degrees of technical expertise are required to support countries in this sector.