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EACOP will disenfranchise local communities in Uganda, Tanzania

Charity Migwi, Edwin Mumbere and Evelyn Acham by Charity Migwi, Edwin Mumbere and Evelyn Acham
March 26, 2021
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EACOP will disenfranchise local communities in Uganda, Tanzania
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The East African Crude Oil Pipeline is expected to reach a Final Investment Decision as soon as the end of March 2021.This will pave way for the commencement of the construction phase of the pipeline. South Africa’s Standard Bank, Japan’s Sumitomo Mitsui Banking Corporation and Industrial and Commercial Bank of China are among the lead financial advisers intending to secure $3.5bn to fund the construction of this pipeline projected to release 34.3 million tonnes of carbon into the atmosphere each year once complete. This comes at a time the entire world iaiming to remain within the minimum recommended level of less than two per cent and abide by the principles of the Paris Agreement.

In a statement to an inquiry by Uganda’s Daily Monitor, Standard Bank claimed to have suspended its financial support to the disastrous project as it awaits an independent Environmental and Social Impact Assessment. This process is, however, standard practice under the Equator Principle and it seems that Standard Bank is merely pointing to its routine due diligence process with little regard to the call by numerous Civil Society Organisations and local communities to withdraw their support to such an irreversibly damaging project.

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High risks and meagre earnings for both countries

The EACOP is touted as the project that will unlock East Africa’s future by taking Uganda’s oil to the rest of the world. This will supposedly increase the Foreign Direct Investment for both countries by over 60 per cent during the construction phase. Conversely, the value of Uganda’s oil reserves has already fallen by approximately 70 per cent since 2013. This value is expected to fall even further as the world transitions into a low-carbon economy. Even from the Tanzania ESIA, it is estimated that the government will only get $240m from the project after its construction, which is peanuts compared to the environmental and social implications faced.

Further, the Ugandan government is bound to incur losses of up to $1.4bn, much more than the $130m that the Ministry of Finance intends to borrow from the domestic market. Public debt is already projected to rise to 54.1 per cent by 2023 in Uganda. The EACOP project, thus, risks driving East Africa further into unsustainable debt at the mere prospect of reaping meagre earnings with the only entities bound to benefit being the foreign oil companies such as Total. No government should take such dire economic risks and push the lives of its already struggling citizens into deeper poverty. Standard Bank, in cahoots with other major EACOP proponents, is, however, resolutely keen on baking debts, the kind that future generations will still be tasting.

East Africa does not need oil or any fossil fuel to unlock its future, especially when there are viable, affordable and clean alternative sources of energy such as solar and wind, which are renewable and have better prospects when it comes to long-term job opportunities. East Africa needs to focus on a just transition to renewable energy that guarantees the extensive deployment of millions of clean jobs.

 

EACOP bound to destroy lives and natural habitats

The proponents of the pipeline have claimed that EACOP will create short-term employment for highly skilled and semi-skilled professionals, as well as casual labourers over a period of two to three years. It is estimated that 10,000 jobs would be created during the construction phase, boosting the income of the households along the pipeline. However, what we have witnessed in Uganda, Tanzania and other East African countries, is that very few jobs are usually allocated to the locals, thus leaving them even more vulnerable and disenfranchised.

The project will result in the physical displacement of local communities from their ancestral and communal lands. It is anticipated that EACOP will directly affect approximately 14,000 households in Tanzania and Uganda, leading to loss of income and livelihoods. Moreover, the pipeline risks polluting water resources of which over 40 million people in nine countries depend on; an unacceptable human rights violation. Beyond ruining people’s lives, the pipeline will tear through some of the world’s most significant habitats, home to endangered species, including African elephants, chimpanzees and lions, pushing them ever closer to extinction.

 

What can Standard Bank and other financial institutions do?

By playing an advisory role and without a clear commitment to withdraw its financial support from the EACOP project, Standard Bank will be fuelling the transition of billions of dollars from public coffers into the pockets of a few fossil fuel proponents, who are undoubtedly ready to create tonnes of emissions that will lead to a planet choking on carbon and exacerbate the already worsening climate crisis, making it extremely difficult for an already vulnerable continent experiencing the adverse effect of climate change.

Standard Bank has a responsibility to take care of the people and the planet by leading a new pathway for Africa through spurring investment in renewable energy that will guarantee access to cheaper and cleaner power across Africa, and in the process create jobs for millions of youths across the continent.

At a time millions of petitioners have protested against the EACOP, Standard Bank needs to follow in the footsteps of Barclays Bank and Credit Suisse, which have publicly committed to not financing the disastrous EACOP project. The future needs banks that are committed to having a fossil fuel exclusion policy and an investment plan that unlocks Africa’s future with 100 per cent renewables.

*Migwi is of 350Africa.org, Mumbere of the Centre for Citizens Conserving, and Acham is of the Rise Up Movement

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Charity Migwi, Edwin Mumbere and Evelyn Acham

Charity Migwi, Edwin Mumbere and Evelyn Acham

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