By Crusoe Osagie

Crusoe Osagietakes a look at the new agricultural policy announced by the Minister of Agriculture and wonders why farmers have to pay government to protect them

Finally, it is official. Nigeria, the largest black nation on earth and the biggest economy in Africa has slid into recession.

This basically means that the economy is in a period of temporary economic decline during which trade and industrial activity are reduced, this is essentially indicated by a fall in Gross Domestic Product (GDP) in two successive quarters.

At the rate at which the country is going however, more danger may lurk, with the possibility of the economy drifting into depression with all the attendant socio-economic discomfort.

When a nation suffers the nature of predicament, which Nigeria’s economy currently faces, one area to watch closely to prevent the condition from degenerating is food security.

With foreign exchange flow into the country declining rapidly and businesses scrambling for the limited dollar in circulation, hunger and starvation will be the inevitable consequence if Nigeria’s 160 million people would have to depend on imported food.

According to statistics from the Federal Ministry of Agriculture, the country currently imports about 50 per cent of the rice consumed locally.

The Minister of Agriculture, Chief Audu Ogbeh, noted: “We still import 70 per cent of the wheat, about 5 million eggs per day from South Africa and some other countries. Fish worth $600 million is imported per annum, the number is reducing because local fish production is increasing. We still import a lot of tomato paste.

“We import honey to the tune of about $100 million per annum, we still import cookies and biscuits and even toothpick but all these did not happen in one day. The idea is to reduce these imports. We import a lot of milk.”

With the figures given by the minister, it is obvious that a lot remains to be done in the nation’s agricultural sector to bring the country and its citizens closer to food security and gives farmers an even more important role in the nation’s economy.

Recognising that farmers and agricultural enterprises should be the first priority of this government, it is therefore a no-brainer that huge support should flow to the green sector but comments and policy from the federal government seem to suggest the exact opposite.

A good example of the government’s insensitivity to the plight of farmers, the very people that hold the nation’s last line of defence, is the announcement of a new agricultural policy, which may likely mandate farmers to pay government extra levies for their protection and the security of their farms.

After the announcement of this mind-boggling policy, many Nigerians have asked if it has become part of the responsibility of tax-paying Nigerians to defend and protect themselves.

New Policy

Ogbe said he had already held a meeting with the Minister of Interior, Abdulrahman Dambazau, saying that government was considering various measures to protect farmers probably at the cost of the farmers themselves.

The minister said kidnapping would not stop but that government was determined to protect investors.

He said:‎ “I had a meeting with the Minister of Interior, we were looking at security situation in agriculture. Sometime last year, some gunmen went to ‎Olu Falae’s farm, a Nigerian in status, in age and ranking and took him away and marched him around, forced him to trek ten kilometres, even carried him on their backs.

“Many more farmers are coming in, including foreign investors and they stand the risk of being subjected to this kind of humiliation.

“So, we are talking with Ministry of Interior that we have to put measures in place. These things are happening in other countries too, where the civil defence corps may have to train a special department to protect huge investors and investment in their farms for a fee, because kidnapping will not stop.

“From the security point of view, we have to take measures ‎to make sure that people who invest are protected.

“In other countries of the world you may have noticed that people live on their farms, you hardly see a farmer who lives in the city, he lives on the farm with his family, you cannot do that here. They will come and take you, your wife and children in the name of kidnapping, we have to stop it and we have to use the legitimate instrument of state to do it legitimately because the farmer has no right to buy an AK47 to protect himself.”

Self-sufficiency

He also announced that the government has taken a bold step to achieve its plan to reduce Nigeria dependency on oil, as the Federal Executive Council, has approved the ‎Agriculture Promotion Policy (2016-2009).

Ogbe said the policy outlined all that needed to be done to achieve self-sufficiency in agriculture.

He said: “The document is titled ‘The Green Alternative’ and it outlines virtually everything we need to do, every policy we need to undertake to achieve self sufficiency in agriculture and also to become major exporter of agriculture products.

One is the roadmap for agricultural operations in the next three years, whi‎ch we presented to council . Is a detailed document, it outlines our policies and our objectives in trying to see agriculture as the next biggest alternative in our drive to diversify the economy of this country.

“We are working hard on the staples to satisfy local production and we are fully aware that there is a major concern in the country for food self-sufficiency in the country and that there is crisis in many families as a result of serious shortage of food.

“But we are working hard ‎and thank God that ours has not become as bad as one South American country, which was also a major oil producing country, by that I mean Venezuela which situation is definitely a 100 times worse than ours.

“But the point is that where we are going we believe that in a short while, another year and half in the maximum we should be reasonably self-sufficient in grains like rice, maize, beans, we may not achieve everything in wheat but we will be very close to our targets. Other things are also there in the roadmap. That is what council endorsed this afternoon.‎”

“The council also appealed to other state governments that can afford to take over federal roads to lessen the burden on federal government, to enable them repair and maintain road as quick as possible, so that they don’t go into total deterioration.‎”

Speaking further on the ‎the crisis between herdsmen and farmers, the agric minister said a pilot programme was being planned in the Federal Capital Territory to stop cows being moved around.

He said: “We have got very good seeds of grass which we are going to start planting. Eventually and in the next one year, I hope we shall move‎ most of our cows into ranches and reserves depending on different terminologies people want to hear.

“Some people don’t want to hear about grazing reserves and government has no intension of forcing anyone to surrender one inch of land.

“Some states are willing, we shall develop these things in their domain, cows, will move in there, they will be given best grass for cattle. Most of these grasses contain 18 per cent protein and amino acid, so the cows can feed well, have the good water to drink and give us the best milk and beef.”

By Dawit Endeshaw

The total area of farmland implicated in the latest warnings equates to approximately three-quarters of the size of Addis Abeba

Seven commercial farm developers, who occupy a total of 37,500ha of land in three regions, have received warning letters for leaving the land unutilised for so long. The area of farmland is almost equivalent to three quarters of Addis Abeba city or three times the size of Bole district.

During the early weeks of July 2016, the Agricultural Land Investment Administration Agency wrote a final warning letter to one of the developers and first warnings to the remaining five. This comes after a four and six-year wait, respectively, for the developers to show significant produce from their estates. The investors who leased the land, which ranges from 500ha up to 10,000ha in the SNNP, Gambella and Benishangul-Gumuz regions, have failed to bear fruit. In this respect, the total land leased in SNNPR takes the lion’s share.

Among the seven companies, five including the Omo Valley Farm Corporation Plc, Gutit Farm Development Plc, Ayka Addis, Dasani Farm, Teame Farm and Dasench Farm, are located in the southern region of the country – specifically across Omo. These farms occupied a total land area of 35,500ha. From these farms, Ayka received a final warning, while the rest only the first warning.

Ayka Addis, the textile giant owned by Turkish investors, leased 10,000ha of land from the region two years ago. The company leased the land in a joint venture with a local investor to source cotton material for its textile plants. As per the contract, the company was expected to develop 4,000ha of the land.

However, there is nothing there, said Daniel Zebene, communication director of the Agency.

“The problem emerged after a disagreement with our clients from Europe,” Wondem Getahun, advisor for Ayka, told Fortune. “There was a report compiled by news agencies that suggested that people had lost their land because of Ayka’s contract with the region, which was intended to erode Ayka’s reputation.”

Wondem went on to explain that after this, the client put a precondition of not buying Ayka’s products if the cotton came from that particular land.

“Following this, we ceased our activity on this farm,” he said.

Just this year, the Southern region administration moved the mandate of overseeing farm land for investment from its Investment Commission to a specific department under the Agriculture Bureau. A couple of months ago, the officials of the region discussed with the investors. During the discussions, problems revolving around such investments were highlighted. The investors were implicated in using the land for other purposes, as well as the impact this had on the environment.

The region is now getting ready to conduct a further study to identify the specific status of commercial farms.

“We have just started to collect data about the farm,” an official from the region told Fortune.

An Indian company called Verdanta Harvests Plc located in the Gambela Region, who have received a first warning from the company, leased 3,000ha of land six years ago. From this plot, however, the company has only managed to develop 143ha of land, with 158ha of land prepared for farming.

There were times when the company got into conflict over how it was managing the environment.

“We have tried to sort out the problem,” said Daniel. “The company’s focus on tea plantation was also accused of leading to the deforestation of a protected forest area.”

The last company to face a first warning was the Yomed Farm Development. The company leased 1,000ha of land from Beinshagul-Gumuz two years ago. Yet out of the expected 333ha, which has to be developed, none has so far materialised.

Again, it was reported three years ago when the farm was attacked by locals over resettlement issues. Following the warning, Verdanta has already appealed to the Agency.

The latest measure by the Agency came in another fierce action taken earlier this year, which resulted in termination of the lease contract of the developers. Back then, the Agency had taken measures on 18 farms. Yet the Agency has also temporarily suspended its mandate of transferring land for commercial farms. This firm decision was also followed by the launch of a study by a high level committee.

“Our study is still in process,” said Daniel. “I am sure the findings will help us to decide how the country should go ahead as far as commercial farms are concerned.”

By Aggrey Mutambo

President Uhuru Kenyatta on Monday tore into critics questioning the rationale of building the standard gauge railway and other infrastructure projects, telling them the construction will go on “regardless of what everybody says.”

At an infrastructure summit held in Nairobi, the President defended the massive investments in the projects which have also caused the country to incur huge debts, saying they are necessary to boost the economy.

“Infrastructure is a necessity if our economy is to grow and if we are to achieve the prosperity we desire as a people and as a nation. We cannot run away from it,” he told an audience at State House.

The spark had been touched off by a member of the audience who had posed a question to Transport and Infrastructure CS James Macharia on whether it was economically viable to borrow Sh327 billion to construct a railway when it would have been cheaper to renovate the current one.

The question was inspired by a recent article in the Economist magazine which questioned the economic returns in such a venture.

In response, Mr Macharia had argued the new railway will be useful as it will reduce the volume of cargo transported on Kenyan roads, reduce congestion and ease movement of goods.

But the question had also irked President Kenyatta who said he had heard it numerous times.

ASIAN TIGERS

The President cited the case of the Asian Tigers; a group of countries like South Korea and Singapore, in the Far East who rose from poverty to wealth.

“I just want to pose a question to those who challenge us when as a country or as a continent [we] are investing in infrastructure. Where are they today? Where are those nations today? They are probably among the fastest growing, most prosperous nations in the world.

“They ignored the World Bank, they ignored the IMF. Today they actually have their own banking institution, a development bank growing their economies,” Mr Kenyatta said.

The Infrastructure Summit is the President’s idea to meet stakeholders and get their views on matters of roads, ports, railways, airports and related issues ranging from tenders, budgetary allocations to payments.

STANDARD GAUGE RAILWAY

Kenya had to borrow Sh327 from China to construct the standard gauge railway from Mombasa to Nairobi and extended to Naivasha.

But the Economist, citing World Bank officials, said the investment was more indebting than beneficial to Kenya’s future generations.

President Kenyatta disagreed, saying the magazine had published the view of institutions with no Kenyan or African interests at heart.

“We know what we need, we know what we must do and we are no longer going to be the dumping ground for products while our people have no jobs, while our people are suffering in poverty.

“We are going to move to the next level regardless of what the Economist says, regardless of everybody says. We are going to the next level.”

“The challenge we have is to ensure that we invest appropriately, to ensure that we invest without corruption, to ensure that we utilise the resources in that sector in the best possible manner. It is not whether we should do it or not, because to do it we shall. And we encourage other countries in the region… all these corridors will be interlinked,” President Kenyatta said.

Ghana began pumping its first commercial oil in 2010, three years’ after the discovery of the Jubilee Field. Now, GE Oil & Gas’ new Takoradi services facility in Ghana is nearing completion as part of preparations by the company to support energy production in the country.

The facility will support the Offshore Cape Three Points development, a large integrated oil and gas development operated by Eni Ghana, together with its partners Vitol and Ghana National Petroleum Company (GNPC). In addition to producing oil for export, the project will supply gas for power generation in Ghana.

While the waters offshore Ghana have substantial oil and gas deposits buried under the seabed, extracting this resource from thousands of metres deep underwater, in unpredictable weather, requires major machinery, specialised technology, and a highly skilled workforce. GE’s support in this venture will help ensure Ghana has both the technical skills and infrastructure, as well as the capacity needed for the successful development of this area.

GE’s Takoradi facility is scheduled for completion by the end of August, with the first two subsea trees (also known as Christmas Trees, or XTs) for the OCTP development due at the facility in September.

The XTs are being tested in the UK prior to shipment to Ghana. A mission critical piece of equipment, their primary function is to control the flow – usually oil or gas – out of the well. GE will deliver a total of 21 XTs for the project – 18 for installation and three for backup. GE Oil & Gas will also support the customer’s aftermarket needs, with the facility largely responsible for site receival testing and providing support to Eni’s equipment installation campaign for the OCTP project. Site receival testing involves ensuring the safe arrival of equipment, flushing systems and replacing hydraulic fluids, and making sure the controls “speak” to each other once offshore.

At the same time, GE Oil & Gas has committed to long-term capacity building in the region. Recently a team of Ghanaian field service engineers underwent training in the UK following six months of industry-specific training in Ghana. The UK training gave them the opportunity to familiarise themselves with the various subsea products manufactured by GE, and test and assembly (T&A) procedures involved in making the equipment.

GE Oil & Gas Ghana Ltd. is adding to its capacity and capabilities in readiness for the expected expansion as interest picks up in Ghana’s offshore oil and gas fields. When the boom arrives, not only will there be robust infrastructure, but there will also be a pipeline of local talent.

President Uhuru Kenyatta on Monday tore into critics questioning the rationale of building the standard gauge railway and other infrastructure projects, telling them the construction will go on “regardless of what everybody says.”

At an infrastructure summit held in Nairobi, the President defended the massive investments in the projects which have also caused the country to incur huge debts, saying they are necessary to boost the economy.

“Infrastructure is a necessity if our economy is to grow and if we are to achieve the prosperity we desire as a people and as a nation. We cannot run away from it,” he told an audience at State House.

The spark had been touched off by a member of the audience who had posed a question to Transport and Infrastructure CS James Macharia on whether it was economically viable to borrow Sh327 billion to construct a railway when it would have been cheaper to renovate the current one.

The question was inspired by a recent article in the Economist magazine which questioned the economic returns in such a venture.

In response, Mr Macharia had argued the new railway will be useful as it will reduce the volume of cargo transported on Kenyan roads, reduce congestion and ease movement of goods.

But the question had also irked President Kenyatta who said he had heard it numerous times.

ASIAN TIGERS

The President cited the case of the Asian Tigers; a group of countries like South Korea and Singapore, in the Far East who rose from poverty to wealth.

“I just want to pose a question to those who challenge us when as a country or as a continent [we] are investing in infrastructure. Where are they today? Where are those nations today? They are probably among the fastest growing, most prosperous nations in the world.

“They ignored the World Bank, they ignored the IMF. Today they actually have their own banking institution, a development bank growing their economies,” Mr Kenyatta said.

The Infrastructure Summit is the President’s idea to meet stakeholders and get their views on matters of roads, ports, railways, airports and related issues ranging from tenders, budgetary allocations to payments.

STANDARD GAUGE RAILWAY

Kenya had to borrow Sh327 from China to construct the standard gauge railway from Mombasa to Nairobi and extended to Naivasha.

But the Economist, citing World Bank officials, said the investment was more indebting than beneficial to Kenya’s future generations.

President Kenyatta disagreed, saying the magazine had published the view of institutions with no Kenyan or African interests at heart.

“We know what we need, we know what we must do and we are no longer going to be the dumping ground for products while our people have no jobs, while our people are suffering in poverty.

“We are going to move to the next level regardless of what the Economist says, regardless of everybody says. We are going to the next level.”

“The challenge we have is to ensure that we invest appropriately, to ensure that we invest without corruption, to ensure that we utilise the resources in that sector in the best possible manner. It is not whether we should do it or not, because to do it we shall. And we encourage other countries in the region… all these corridors will be interlinked,” President Kenyatta said.

Government has set up a cabinet subcommittee to pursue the matter of Ugandan traders who supplied goods and services to the government of South Sudan but were not paid due to outbreak of war.

Frank Tumwebaze, the minister of ICT, Information and Communication said in a statement the subcommittee will comprise of the attorney general and the ministers of Finance, Trade and Industry, and Foreign Affairs.

Tumwebaze said cabinet during a sitting on August, 3, 2016 noted that many Ugandan exporters to South Sudan market were not paid due to instability.

“The ministries of finance and foreign affairs were directed by cabinet to establish with the government of South Sudan modalities for repatriation of proceeds of Ugandan companies held in commercial banks and also pursue government of South Sudan to expeditiously form a joint cooperation commission to arbitrate the pending claims of Ugandans against South Sudan,” Tumwebaze’s statement read in part.

Cabinet’s decision follows President Museveni’s remarks during a recent cabinet retreat at Kyankwanzi where he said firms that supplied goods and services to the South Sudan government and have not been paid should be bailed out.

LOANS

Cabinet also approved a loan request from the ministry of finance amounting to $71m to finance the power grid expansion and reinforcement project. The loan, to be provided by the World Bank shall benefit the districts of Gulu, Lira, Nebbi, Arua, Kole, Oyam and Nwoya.

However, in the meeting, cabinet deferred a loan request also presented by the ministry of finance on refugee-hosting areas support.

The loan amounting to $50m also from the World Bank is meant to finance and support the development response to displacement particularly targeting refugee hosting districts and communities.

Cabinet further resolved that any future borrowing or loans should never finance components of administration and capacity building.

“Loan amounts procured should only go to finance substantive activities of the loan objectives. In addition, cabinet added that loan beneficiary entities and ministry of finance, the contracting entity, should never procure or sign off any loan before all the preparatory activities are in place to avoid delayed implementation that results into financial penalties on unutilized loans,” he noted.

OIL PRODUCTION LICENSES

Meanwhile, the cabinet gave a green light to the minister of Energy and Mineral Development, Irene Muloni, to issue three petroleum production licenses to Total E&P UGANDA B.V over discoveries in exploration area 1 of the Albertine graben.

The production licenses to be issued are expected to run for 25 years, subject to renewal of an additional five years as provided for in the production sharing agreements (PSAs) and the Petroleum Act.

By Steve Omondi

The Kenyan delegation at the Olympic Games in Rio de Janeiro has remained non-committal even as Team Kenya grapples with a fresh doping scandal.The scandal is likely to jeopardize the country's participation in the Games.

Top National Olympic Committee of Kenya (Nock) officials have remained tight-lipped on the ejection of athletics team manager Major (rtd) Michael Rotich following allegations that he offered to protect cheating athletes in exchange for money.

Reports in British paper, Sunday Times, and German broadcaster ARD claim that Rotich was recorded on camera negotiating for payment with undercover British journalists posing as coaches.

Journalist, Hajo Seppelt, of German TV ARD also posted a tweet on Saturday quoting Athletics Kenya (AK) spokesman Evans Bosire on the decision to recall Rotich.

But while all the top Nock officials here in Rio have remained unavailable for comments, the media liason officer, Peter Angwenyi has said the issue is being looked into.

"The timing of this story is suspect, but the issue is being handled carefully with Team Kenya at heart," Angwenyi said on Sunday.

Angwenyi also said that Rotich has not expressly lost his position in the team.

"Major Rotich will be back as the team manager. Kenya remains focused on the Games," he said without further elaboration.

These allegations implicating Kenya are the latest that the team is facing.

Last month, the German TV aired a secretly recorded film showing some athletes admitting their involvement in doping.

By C.Y. Kwanue and David A. Yates

An overnight shooting which engulfed Sasstown Community on Sunday was as though a large scale fighting had erupted between military actors from opposing sides, according to residents.

The sounds of guns were so sporadic that residents in the area fled their homes under the cover of darkness, shortly before midnight on Sunday, August 7.

By daybreak the following morning, the Armed Forces of Liberia (AFL) had dispatched a squad of counterinsurgency unit to the 'troubled spot' and coordinated joint security operations with Liberia National Police officers who were earlier deployed to the area.

It was reported that a late-night insurgency involving an unidentified helicopter had entered Liberian territory, prompting a manhunt for those who reportedly carried out the shooting along the Monrovia/Bomi highway in Western Liberia.

Based on the reports, Defense Minister Brownie J. Samukai, Jr. told the Daily Observer that the country's joint security forces were in firm control of that, and any, situation.

"There is no need to panic because the reported shooting incident was being investigated by the joint security forces," Minister Samukai assured the public.

He described the report of 'sporadic shooting' and the landing of an unknown helicopter on Liberian soil as "scheme of wildcat campaign of speculation, which has no grain of truth to instill fear in the minds of anybody due to the fact that we are on top of every security situation."

He, however, explained that a male villager and his two children had earlier discovered an unspecified quantity of spent-shells, which he claimed might have been left in the bush by fighters of the country's warring factions during the 14 years of civil war.

In Sasstown, Meanwhile, Daily Observer reporter, who visited Sasstown yesterday upon hearing the report, said calm was restored to the community immediately after the security forces arrived.

"They arrived in their numbers and went in search of the shooter, but returned and said there was nothing serious and that we should go about our normal activities," Boima Perry, a resident said of the security forces.

Mr. Perry said on Sunday night, residents did not see any strange movement of people in town prior to the shooting incident.

Surprisingly, he said by 9:00 p.m., while residents were preparing to go to bed, a "very large gun sound" took over the entire town, but we did not know which way the sound came from, and also who carried it out and for what reason.

"Right now, we don't know who shot the gun, therefore, we are afraid of the next course of action," he said.

The incident took place about 9:00 p.m. Sunday night, according to eyewitnesses.

Up to press time last night, the security forces did not make any arrests, but did confirm there was shooting in the town. The Defense Ministry said that several shots were fired from a pistol, which was later found in a nearby bush. No further explanation was given.

But an eyewitness told this newspaper in the town that an unidentified gunman carried out the shooting, but that was only in the air.

Some of the residents also denied ever hearing of any shooting in the town as their kinsmen had claimed.

Our investigation continues.

ANALYSIS

While a trendy priority for new oil producers, sovereign wealth funds can easily be manipulated if their internal governance and oversight are not strong enough.

The Libyan Investment Authority (LIA) has taken two international banks to courtseeking to recover over $3.3 billion (11 trillion shillings) that the oil-producing country lost in 'bad deals' that were initiated by the banks during former President Muammar Gaddafi's reign.

LIA is attempting to recover $1.2 billion (about 4 trillion shillings) from a U.S investment bank, Goldman Sachs and another $2.1 billion (almost 7 trillion shillings) from French bank, Societe Generale. The country's Sovereign Wealth Fund alleges that the two banks advised it to enter risky deals in 2008 that ended up being worthless. The hearing of one of the cases resumed in London in June 2016, with LIA's lawyers accusing Goldman Sachs executives of taking its officials on luxurious trips to Morocco and Dubai in order to influence their investment decisions. One witness in court claimed that the trips were laden with 'heavy drinking and girls'.

Key in the case is Goldman Sach's relationship with Haitem Zarti, a brother to Mustafa Zarti who was LIA's second-in-command at the time. The bank is said to have paid for Zarti's lavish trip to Dubai and later offered him an internship placement at their headquarters in New York. The Fund's lawyers now argue that the Bank's treatment of Haitem Zarti biased his brother to stake the fortunes of the $67 billion Fund in a series of bad deals.

Happier times: Late Col. Gaddafi's son, Saif-Al-Islam Gaddafi.

The second case against Societe Generale is expected to commence in early 2017 but there are indications that the Fund's lawyers will attempt to link the bad deals to bribery and influence peddling involving the first family, particularly Gaddafi's son, Saif Gaddafi.

But what made Libya's Sovereign Wealth Fund so susceptible to manipulation? During Col. Muammar Gaddafi's four decade reign, opacity dominated management of the country's Petroleum Fund, allowing unchecked corruption to thrive. Patronage, family links and political influence were much more important than institutionalised, competence-based investment decision making. Hence, the Fund was often manipulated into investing billions of US dollars in risky assets managed by political friends or allies of the regime. Transparency, independent oversight, clarity of rules and political will eluded Libya, resulting in mismanagement of the resources and potentially causing avoidable losses that form the basis of the cases in court today.

The Libyan case provides a good example of how Sovereign Wealth Funds can be vulnerable to abuse by overbearing governments, unless they have strong, independent governance structures and sufficient corruption control mechanisms. For Uganda, the case comes at an opportune time, since the country is operationalizing the Petroleum Fund as established by The Public Finance Management Act, 2015(PFMA). In some ways, the law attempts to address key issues necessary to ensure good governance of revenues expected from Uganda's nascent oil and gas sector.

However, a number of loopholes exist in the law which, if not addressed, would expose Uganda to the perils Libya has witnessed. Unless regulations for the Act, once issued, offer more clarity, Uganda's Petroleum Fund could end up like that of Libya.

Firstly, reading through that Act, it is not clear what the objectives of the Petroleum Fund are. While the Act alludes to the Fund helping to support budget stability [Section 58 (a) and Section 63 (2)] as well as providing heritage for future generations [Section 64 (3) & (4)], neither of these is clearly stated as its objective. This lack of clarity of objectives presents difficulty for policy makers in terms of giving policy direction in form of operational rules for the fund. It also remains difficult to decide the sort of assets the savings can be invested in and therefore the nature of restrictions that should be put in place for government to access the Fund.

If, on one hand, the Fund is to play a stabilising role, a significant chunk of the money should be invested in liquid assets that can easily be accessed in case of budget shortfalls, like bonds. On the other hand, if the Fund is to serve as a heritage for future generations, restrictions for accessing it have to be made tighter, for example by requiring that the money be invested in long term assets like real estate. Where the Fund has a dual function, this should also be clearly stipulated in law or the regulations.

Secondly, the PFMA presents a possibility of conflict of powers between the Minister of Finance and Bank of Uganda or an external Fund Manager appointed by the Bank over the choice of investments into which the Fund's money may be committed. Whereas section 63 (2) (C) gives power to the Minister to prescribe an instrument into which the Fund's finances may be invested, section 64 (1) vests operational management responsibilities in the Bank of Uganda. Again, Section (64) (6) also leaves it to Bank of Uganda to establish risk management arrangements for the instruments to be used in the management of funds in the Petroleum Investment Reserve. This could result in conflict in the case of Bank of Uganda rejecting an instrument prescribed by the Minister for investment of the Fund's money, even if that may have been done on a technically sound basis.

In addition, the Act falls short of clarifying, in terms of jurisdiction, where funds in the Petroleum Revenue Investment Reserve shall be invested. Although Section 63(2) mentions that the money shall be invested in internationally convertible currency deposit or a debt instrument denominated in internationally convertible currency, it remains silent on whether these investments are to be made in the domestic economy or abroad. Different lessons from the Management of the Government Pension Fund of Norway show that investing petroleum revenues abroad protects domestic industries (and economy), diversifies risk and maximises returns.

However, the choice of that 'international investment' and how the decision to invest in it is made, are very crucial and that is where the Libyans got it wrong. They now claim that they were hoodwinked by street smart bank executives to invest in risky ventures that resulted in billions of dollars in losses.

Yet the Fund should have had their own professional advisors to assess the risks and decide accordingly. In any case, Norway invests the bulk of monies in her Fund in stock markets in the USA. However, because of a more streamlined investment decision making mechanism, when Norway lost hundreds of millions of dollars in the 2008 economic downturn, it was easier to attribute the losses to the global economic downturn and not mismanagement. Uganda should, therefore, consider investing in more developed financial markets abroad to secure the best returns and protect her economy against over-heating, while ensuring that independent investment decision making procedures are followed.

However, Uganda's PFMA (2015) lacks provision for independent third party oversight over the Fund's operations, a cardinal principal in ensuring transparency and accountability in the way funds are managed. Third party oversight is critical in exerting public pressure on policy makers and fund managers to ensure open decision making as a guarantee for integrity in the way natural resource funds are managed.

In Ghana, the Public Interest and Accountability Committee's (PIAC) May 2012 report revealed that the Ghana National Petroleum Company (GNPC) was retaining large amounts of petroleum revenues that threatened to grow the petroleum sector at the expense of other sectors. The report also revealed that the Ministry of Finance had overestimated corporate income taxes by nearly 100 percent in order to create extra fiscal space for government and legitimise greater spending under the country's laws.

Although Ghana's PIAC has been constrained by lack of funds and mandate to implement its recommendations, its experience underscores the need for Uganda to ensure third party oversight if our revenues are to be managed in a transparent manner.

Globally, Norway offers the best lessons given that they have been exemplary in running their extractives sector. Several similar funds around the world have been successful as well. It is estimated that worldwide, sovereign wealth funds hold assets in excess of three trillion dollars. Information on some of the natural resource funds globally is shown in the table below:

Country Fund name Year established Estimated value of assets

Norway Government Pension Fund Global 1990 $850 billion

Saudi Arabia SAMA Foreign Holdings 1952 $730 billion

Public Investment Fund 1971 $5.3 billion

Abu Dhabi (UAE) Abu Dhabi Investment Authority 1976 $773 billion

International Petroleum Investment Authority 1984 $68.4 billion

Mubadala Development Company 2002 $60.9 billion

Kuwait Kuwait Investment Authority 1953 $400 billion

Qatar Qatar Investment Authority 2005 $175 billion

Russia National Welfare Fund 2004 $87.9 billion

Reserve Fund 2004 $87.3 billion

Algeria Revenue Regulation Fund 2000 $70.9 billion

Dubai (UAE) Investment Corporation of Dubai 2006 $160 billion

Ghana Ghana Heritage Fund 2011 $0.13 billion

Ghana Stabilization Fund 2011 $0.32 billion

Botswana Paula Fund 1994 $5.7 billion

Nigeria Nigeria Sovereign Investment Authority 2011 $0.98 billion

Adapted from Andrew Bauer, 'Managing the public trust: How to make natural resource funds work for citizens', 2014.

Uganda too can join this elite club in a decade or so. However, the politicians need to let the proposed Petroleum Fund function independently and only allow for independent third party oversight over its operations.

Chris Musiime is the Managing Editor, Oil in Uganda while Gerald Byarugaba is a Research Associate, Advocates Coalition for Development & Environment (ACODE) and a 2014 PETRAD Fellow.