By Morrison Rwakakamba, Akankiza Samson Mpiira and Joshua Turyatemba  
Forward By  Amos Wekesa

Overview

This study explores the potential impact of Uganda‘s new petroleum industry on the country‘s tourism  sector.  Uganda  is  naturally  endowed  with  many resources,  and also  has bottomless potential  to  become  a  premier  tourist  destination.  Although images of  past  political  instability have affected the country‘s reputation, and in spite of meager budget allocation to tourism, the sector has been growing and the new oil  industry offers great opportunities to boost  it further.

Indeed, tourism in itself relies heavily on oil, not only for its transportation components but also for  many  other  aspects  like  accommodation,  recreational  activities  and hospitality. 

However, Uganda‘s oil resources are onshore and near rich tourist sites.  There  is  thus  a danger  that  the  nascent  oil  industry  will  have  negative  and  destructive  effects  on  tourism enclaves,  the environment  and the economy. For example, most of the new oil operations are taking place in the highly valued Murchison Falls National Park. There are  over  400  identified species  of  mammals  in  the  park,  including  elephants,  buffaloes,  giraffes,  lions  and  leopards.

Excursion activities  consist  of  game  drives,  bird  watching,  boat  rides  to  Murchison  Falls,  and sport fishing (UWA, 2001). This park alone collected Uganda shillings 6.8billionin revenue in the 2011-2012 fiscal year (UWA 2012). Overall, the tourism sector contributed USD 662 million in 2011, representing 11.4 percent of the total country‘s foreign exchange earnings. 

This paper highlights the risks that are involved and measures that can be taken to optimize the benefits of the oil industry while minimizing its effects on the tourism sector (achieving sustainable tourism). The  paper  also  articulates  necessary  actions  that  will  help the  tourism  sector  surge  (deal)  as well as the costs of inaction that will sink the tourism sector (no deal).  The paper starts with an overview of tourism and oil exploitation in Uganda.  The performance and prospects of the tourism sector are investigated. Next, the negative impacts of petroleum on tourism  are  explored,  including  the  impact  of oil extraction  and  oil  refining  operations,  the potential  for  conflict  escalation,  and  other  common  concerns  such  as  the  Dutch  Disease  and resource curse syndrome. Thereafter, the regulation of the petroleum industry is considered, in view of promoting and protecting the country‘s tourism sector. Finally, some success stories and lessons from international best practice are given, from which Uganda can learn, plus some key policy recommendations for the way forward.