The declining value of oil wealth – the case of Uganda

Similar to other technological changes that have quickly taken over the whole world such as advances in uptake of solar lighting and mobile telephone technology, the transit to electric cars and alternative energy sources could happen so fast, to the detriment of oil owners.

It is therefore obvious that lucrative production of oil and gas is being overtaken by events in the science space. Uganda will attain its goals of producing oil and gas but the returns may not be as impactful as initially thought.

It is possible that the Ugandan government is borrowing monies to accomplish its development plans basing on anticipated oil revenues. Since 2009, the country’s debt has been growing, and debt to GDP ratio has adjusted upwards by up to 19 percentage points since then.

With decline in demand of oil imminent, the future could unfold with great difficulties for the country to meet debt obligations. If the country’s actual oil production delays significantly, this scenario will be worse.

Source: Daily Monitor



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