African Perspectives on Social Justice; Oil and Gas Revenues for Inclusive Development

With the discovery of oil and gas in East Africa, comes the hope that expected revenues from the oil and gas sector will be utilised towards well-articulated sustainable development agendas, that are socially just and all-inclusive. For example, East African countries could reach their development potentials in record time by allocating oil and gas revenues towards developing and strengthening human resources within the education and health sectors, or by re-investing in labour-intensive but vulnerable sectors such as agriculture and cottage industries, by way of subsidies on high start-up costs and interest rates.

Having the potential to use this natural wealth for overall development and progress raises a number of fundamental questions: How best can oil and gas revenues be transformed into sustainable profit for the whole society? How effective and efficiently can a government plan and employ natural wealth revenues to ensure it reduces already existing inequalities? And, importantly, how can this be done while avoiding the resource curse1 and mineral-based poverty2 since in resource-rich countries in Africa and elsewhere resource wealth has “[often] led to poverty, inequality and violent conflicts”3.

Inclusive Development – what does it mean?

“Making growth inclusive is about enabling stakeholders to share the benefits of increased affluence and promoting well-being” 

To address poverty and income nequality in Africa, development must be all inclusive. Development based on the exclusion of people based on their gender, ethnicity, age, disability or economic stance creates stagnation and deepens inequality. In addition, the perception that economic expansion increases the living standards and the well-being of the people has been highly questioned by eminent economists like Joseph Stiglitz and Amartya Sen, among others. Besides, experiences and current developments in the global south, as well as the financial crises in the United States of America and Europe, prove that economic growth does not automatically challenge the uneven distribution of wealth in society. Yet, it is exactly this unequal profit of progress and growth for different social classes that is seen as a root cause for economic, social

and political crises around the globe. By focusing on progress in terms of an increasing GDP, the impact of economic expansion – namely a fragmentized society, which consists of a minority powerful elite with enormous economic capital vis-à-vis a poor and dependent majority – is not considered. As such, the focus for development has to shift from only increasing the per capita income of a nation, towards a more holistic understanding of development and progress by adapting the concept of inclusive development within policies and plans. The concept of inclusive development is closely linked to, if not based on, the ideas of social justice. The question of how to reduce poverty and inequality on a national as well as on an international level “[…] by means of a fairer distribution of incomes” is a core question within the international discourse on social justice. Inclusive development is closely linked to Amartya Sen’s understanding of development and therefore includes, but is not limited to, poverty eradication and reduction of material deprivation.

“Inclusive development is a pro-poor approach that equally values and incorporates the contributions of all stakeholders - including marginalized groups - in addressing development issues. It promotes transparency and accountability, and enhances development cooperation outcomes through collaboration between civil society, governments and private sector actors.”

As a multi-dimensional concept, inclusive development looks at the interrelated causes of inequality from a broader perspective, and tries to analyze and alleviate them. Inclusive development understands inequality not only from an economic perspective, but also includes aspects of well-being, political participation and participation in social life, public discourse as well as decision-making processes. Furthermore, the concept does not only focus on intersectional aspects of exclusion in order to identify instruments to achieve a holistic, multi-dimensional and inclusive development for all members of society, but also includes environmental and generational aspects of development. In essence, it aims to achieve sustainable development for current and future generations, taking into consideration the limitation of natural resources and the vulnerability of environmental wealth. 

Therefore, the question arises of how to achieve inclusive development by using oil and gas revenues. How can we generate social justice in such diverse societies where the discourse seems to focus on growth-related issues such as market expansion, increased human resources and infrastructure, and where inequality can be identified along different lines such as ethnicity, gender, class, age, and religion, among others? 

To address these questions, the Friedrich-Ebert-Stiftung (FES) Uganda in 2014/15, embarked on a research project to explore whether member states of the East African countries are well positioned to avoid the dangers associated with the resource curse; and to assess whether they have the necessary political, legal/ regulatory/policy, and institutional frameworks in place, to ensure that oil and gas revenues are appropriated justly for inclusive development. To assess this, the research cross-referenced the existing frameworks with the principles or elements of inclusive development, such as transparency and accountability, stakeholder participation and empowerment, revenue distribution and sharing of benefits and environmental sustainability and intergenerational justice. Where gaps were identified, recommendations were suggested. This publication is a compilation of the studies conducted in Kenya, Tanzania and Uganda, which also draw lessons from Ghana, Botswana and Timor-Leste respectively.

Some of the key findings of this research establish that there is need for East African countries to comply with the Extractive Industries Transparency Initiatives (EITI), boost linkages, value addition and diversification, and to ensure societal relevance in political governance and equity in public spending, to name a few. Specifically for Kenya, it is recommended that there is a need to proactively initiate stronger public participation via dialogue before the oil flow commences. For Tanzania, it is recommended that the unclear land ownership laws currently raising disputes on onshore fields between local communities and oil and gas operators need urgent attention. And for Uganda, there is a need to empower institutions to be independent from political influence. These recommendations are among many others noted for oil and gas revenues to contribute to equitable and just national growth and development.

This publication hopes to be a useful companion to students pursuing various disciplines in oil and gas management, active stakeholders, other researchers and policy-makers seeking to contribute in their various capacities to the subject matter.

Friedrich-Ebert-Stiftung, Uganda
August 2016

The potentials of oil and gas revenues for inclusive development in Africa

Berlin, 2017

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