The politics of governing oil effectively: A comparative study of two new oil-rich states in Africa

Sam Hickey, Abdul-Gafaru Abdulai, Angelo Izama and Giles Mohan
2015

Summary

This paper challenges the mainstream understanding that the quality of institutions within resource-rich countries is the key to how successfully they will manage to avoid the ‘resource curse’. While this understanding would expect democratic Ghana to more effectively and accountably manage its oil than semi-authoritarian Uganda, the findings of this paper suggest otherwise.  It argues that distinctive forms of patronage politics in different settings relate much more to the underlying political settlement – the deeper forms of politics and power relations – than the character of institutions. Such an understanding may underpin a more realistic agenda for good governance in Africa than efforts to move ‘straight to Norway’.

This comparative analysis takes a political economy perspective with a focus on the notion of ‘pockets of effectiveness’ in Ghana and Uganda’s natural resource management. These pockets are public organisations that are “relatively effective in providing public goods and services the organisation is officially mandated to provide, despite operating in an environment in which effective public service delivery is not the norm” (Roll 2014). Data collection took place between 2013 and 2014. It involved over 30 interviews with key stakeholders from government, oil companies, parliament and civil society in each country.

Key findings

  • The Ghana National Petroleum Corporation has gained a great deal of technical expertise over the years and played an influential and often progressive role within the sector. However, high levels of political collusion and interference have, arguably, reduced its effectiveness. This is evident in Ghana’s weaker performance in negotiations with oil companies which have resulted in deals less beneficial to the country than those secured in Uganda.
  • Formal taxation and accountability systems do not appear to be the variables that help shape more developmental forms of patronage. Instead, key differences emerge from the dominant incentives and ideas that flow from the different political settlements in each case, which has led to different forms of ‘embedded autonomy’ for the key public agencies responsible for governing oil.
  • There is little evidence in this study that undertaking good governance reforms around transparency and accountability is either realistic or has had much positive impact.
  • The generation of a vision, and the capacity to act on it, are more likely to emerge within a dominant party settlement like Uganda than in a competitive clientelist setting like Ghana. The latter is likely to have more short-term vision and a reduced likelihood of principal-agent relationships which privilege performance over patronage due to multiple and shifting political principals.
  • Uganda’s willingness to move slowly in order to ensure that institutional arrangements were in place to secure the best deal possible contrasts markedly with the record-breaking rush to production without the appropriate legislation in place in Ghana. It remains to be seen whether this will work in Uganda’s favour or, given the downturn in oil prices, prove costly.

Implications

State capacity plays a critical role in the good governance of natural resources, and particularly the role of bureaucratic “pockets of effectiveness”. This capacity is shaped directly by the character of the prevailing political settlement and the key actors involved. The establishment of incentives and ideas in this process cannot be fully understood through the ‘good governance’ agenda.

Transnational factors also play a critical role in shaping the success of pockets of effectiveness through well-targeted capacity-building support from highly experienced nations, and through the broader incorporation of technocrats into wider professional circuits that can help build both technical excellence and professional norms.  The more immediate policy challenge concerns how to sustain the levels of capacity required to protect the national interest in a context of having to adopt ‘best-practice’ institutional reforms – and may also provide a cautionary tale against moving to an open and rules-based order too soon.

Source

Hickey, S., Abdulai, A., Izama, A., & Mohan, G. ( 2015). The politics of governing oil effectively: A comparative study of two new oil-rich states in Africa (ESID Working Paper No. 54). Manchester: Effective States and Inclusive Development Research Centre (ESID)