French oil company Total and the China National Offshore Oil Corporation (CNOOC) plan to extract more than a billion barrels of commercially recoverable oil from the Lake Albert region of western Uganda. The long-awaited development, including construction of a 1,443km pipeline to the Tanzanian coast, is set to begin this year, with first oil expected in 2025. The project will bring $15bn of investment into Uganda, a country with a GDP of $38bn in 2020. The government says that over $4bn of that money will flow into the coffers of Ugandan companies, supplying everything from construction materials and transport to legal services and food. The oil industry – technical, specialized, and capital-intensive – has a track record of operating in enclaves, extracting resources without building strong linkages to local economies.
Nationalist rhetoric motivates a slew of laws and regulations which try to promote local content in the oil industry. Oil companies must submit plans outlining how they will employ Ugandans, procure local goods and services and transfer technology. Ahead of the next phase of development Total and CNOOC have presented contracts worth nearly $1.4bn to the regulator, of which $167m goes directly to Ugandan companies. Behind those statistics is a debate about what counts as a “Ugandan company”. The regulations classify a business as Ugandan if it is incorporated in Uganda, adds value in the country, uses local raw materials and employs Ugandans as at least 70% of its workforce. New entrants face a host of challenges, from eye-watering interest rates to stringent international standards. During the exploration phase, for example, no domestic catering firms were able to meet the health, safety and quality requirements to win contracts. The signing of agreements in April has now put oil development back on track. For Ugandan businesses, the next five years will be crucial: four-fifths of the jobs that oil creates will be short-term positions during the peak of construction.