Saturday, February 9, 2008

Uganda and Nepal: Two different tracks in utilizing natural resources

Good news that Uganda is trying to harness its own natural resources to spur economic growth rather than relying on foreign aid and assistance. The country has allowed private companies to start produce electric plants and it is estimated that within one generation Uganda will become a middle income country and will be self reliant on energy and, importantly, export energy to neighboring countries. Currently, Uganda's GDP per capita is $360 and it aims to make it between $1000 to $6000 within one generation. Good news that the country is well in its path to its goal.

Resource rich poor countries like Nepal should be proactive in harnessing its natural resources to spur economic growth and reduce poverty. A case in point is the wrangling going on in the country regarding awarding contracts to companies. Corruption and petty political interests always come into foray and political leaders are not insulated from rent-seeking activities. Nepal should proactively award contract to credible and committed international companies or domestic companies to start generating hydropower electricity. It loses nothing but gains a lot of things. The country is already is reeling under 8 hours of load-shedding per day and is set to lose one-third of the estimated revenue due to factory closures and scaled down activities as a result of power shortage.

It is heartening to see that Nepali leaders are ignoring the importance of natural resources in spurring growth and they are increasing relying on foreign aid to bridge budget gaps. Meanwhile, in Uganda the leaders have realized the importance of natural resources and are set to exploit them to benefit its people. This way Uganda is well on track to becoming a middle income country, ceteris paribus, and unfortunately Nepal is way off track. It is not even thinking of raising per capita income. All the leaders are doing right now is wrangling on political modality for upcoming CA election, which has already been postponed two times. Nepali leaders should proactively award contracts to credible international and domestic companies so that the current of our raging running rivers is harnessed to lit not only the country but neighboring states of India.