INFLUENCE OF OIL AND GAS DISCOVERY ON THE GROWTH AND DEVELOPMENT OF SMALL AND MEDIUM ENTERPRISES IN THE ALBERTINE REGION: A CASE STUDY OF BULIISA DISTRICT, BUTIABA SUB-COUNTY
CHAPTER ONE
INTRODUCTION
This chapter presents the background to the study, the problem statement, purpose, objectives, research questions, scope, and significance of the study.
1.1 Background of the Study
Oil exploration dates back to 347 AD in China, where the first oil well was drilled (Song, 2016). Since then, oil exploration and production have become significant global economic activities. In East Africa, oil exploration began in the early 1930s under British colonial administration, although progress was slow due to various challenges until the 1990s when initial discoveries were made (Purcell, 2014).
Gumede (2008) argues that Western countries often apply selective pressure on African states regarding democratization, particularly overlooking oil-rich countries such as Chad and Equatorial Guinea. Similarly, Ross (2001a) links oil and mineral wealth to authoritarian governance. Boonstra et al. (2008) further note that international pressure for reforms in oil-rich countries tends to weaken as global demand for energy resources increases. In Nigeria, Bloomfield (2008) observes that oil has not only degraded the environment of the Niger Delta but has also negatively influenced the country’s political system. Likewise, Boonstra et al. (2008) associate increased oil revenues in Azerbaijan with declining democratic gains.
Oil, often referred to as “black gold,” has also been linked to political instability in many developing countries. Its discovery and exploitation have, in several cases, negatively influenced governance systems.
In East Africa, oil discovery gained momentum following discoveries in Sudan and South Sudan in 1987, which encouraged exploration in countries such as Kenya, Uganda, and Tanzania (Yabs, 2015). In Uganda, commercially viable oil deposits were discovered in the Albertine Graben in 2006. Since then, the Government of Uganda has planned for their development, including construction of oil refineries, pipelines, and related infrastructure.
These developments are expected to stimulate economic growth, create employment opportunities, and contribute to poverty reduction. However, they require substantial capital investment, technical expertise, and large tracts of land, often leading to displacement of local communities (Ogwang, Vanclay, & van den Assem, 2018).
The discovery of oil in the Albertine region has significantly affected local livelihoods. Uganda’s oil reserves were estimated at 3.5 billion barrels in 2013, with projected revenues of approximately USD 2 billion annually over 30 years (Kuteesa, 2014). Additionally, total reserves are estimated at about 6.5 billion barrels, with 1.4 billion considered economically recoverable.
Major international companies such as Total, China National Offshore Oil Corporation (CNOOC), and Tullow Oil have been licensed to develop these resources. Uganda also plans to establish a refinery to supply petroleum products to domestic and regional markets.
1.2 Statement of the Problem
While oil exploration presents numerous economic opportunities, including job creation, increased trade, exchange rate stability, and economic growth (Sharma & Arora, 2012), it also has significant negative effects. These include environmental degradation, social disruption, and economic instability, particularly where governance and social concerns are not adequately addressed (Omorede, 2014).
In the Albertine region, oil exploration has produced both positive and negative outcomes. However, its specific influence on the growth and development of small and medium enterprises (SMEs) remains unclear. This study therefore seeks to examine how oil and gas discovery has affected SMEs in the region.
1.3 Purpose of the Study
The purpose of this study is to examine the influence of oil and gas discovery on the growth and development of SMEs in the Albertine region, specifically in Buliisa District, Butiaba Sub-county.
1.4 Objectives of the Study
- To determine the influence of oil and gas investment on the growth and development of SMEs.
- To examine the relationship between the oil and gas industry and SME growth.
- To identify strategies for improving SME performance.
1.5 Research Questions
- What is the influence of oil and gas investment on SME growth and development?
- What is the relationship between the oil and gas industry and SMEs?
- What strategies can improve SME performance?
1.6 Scope of the Study
Geographical Scope:
The study will be conducted in the Albertine region.
Time Scope:
The study will cover the period from 2015 to 2026.
Content Scope:
The study will focus on the benefits and challenges of oil and gas discovery, as well as strategies for improving SME performance.
1.7 Significance of the Study
- The study will provide valuable information for future researchers on the impacts of oil and gas discovery.
- It will help the government understand the challenges associated with oil exploration in the Albertine region.
- It will contribute to academic knowledge on strategies for improving SME performance.
1.8 Conceptual Framework
Independent Variable: Oil and Gas Discovery
Dependent Variable: Growth and Development of SMEs
Moderating Variables: Policy, infrastructure, and governance
CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This chapter reviews literature on the benefits and challenges of oil and gas discovery and strategies for improving SME performance.
2.1 Influence of Oil and Gas Investment on SME Growth
The discovery of natural resources presents opportunities for socioeconomic transformation. Mawejje (2019) notes that oil in the Albertine region can significantly promote development if associated risks are effectively managed. Oil exploration in Uganda has led to infrastructure development and employment opportunities, but it has also resulted in challenges such as displacement, inflation, environmental degradation, and reduced food security (Ogwang et al., 2018; NAPE, 2016).
Large-scale oil projects require extensive land acquisition, often leading to displacement and land conflicts. Poor governance and mismanagement may result in a “resource curse,” as experienced in countries such as the Democratic Republic of Congo and Sudan (Mosbacher, 2013).
2.2 Relationship Between Oil and Gas Industry and SMEs
Oil exploration has significantly influenced social and economic structures in the Albertine region. Increased migration, land conflicts, and inequality have disrupted local livelihoods. Women, in particular, face challenges due to limited land ownership rights and reduced access to resources (NAPE, 2016).
Additionally, food security has been negatively affected due to declining agricultural activities and increased population pressure. Environmental risks such as oil spills and biodiversity loss further threaten livelihoods and SME operations.
2.3 Strategies for Improving SME Performance
SMEs differ from large firms in terms of management, ownership structure, and access to resources (Storey, 1994). Strategies for improving SME performance include:
- Adoption of modern technologies such as ERP systems
- Expansion of market share through marketing and diversification
- Increasing sales volume and profitability
- Improving logistics and supply chain systems
- Enhancing communication and information flow
- Reducing operational costs through automation
These strategies enhance efficiency, competitiveness, and long-term sustainability.
CHAPTER THREE
METHODOLOGY
3.0 Introduction
This chapter outlines the research design, study population, sampling techniques, data collection methods, data analysis procedures, and ethical considerations.
3.1 Research Design
The study will adopt a descriptive survey design using both qualitative and quantitative approaches to provide a comprehensive understanding of the research problem.
3.2 Study Population and Area
The study will focus on respondents in Buliisa District, Butiaba Sub-county.
3.3 Sampling Techniques
Both probability and non-probability sampling techniques will be used, including simple random sampling, stratified sampling, purposive sampling, and snowball sampling.
3.4 Sample Size
A sample size of 30 respondents will be selected using Krejcie and Morgan’s (1970) approach.
3.5 Data Collection
Data will be collected from both primary and secondary sources using questionnaires and interviews.
3.6 Data Analysis
Quantitative data will be analyzed using SPSS, while qualitative data will be analyzed thematically.
3.7 Ethical Considerations
The study will ensure confidentiality, informed consent, and voluntary participation of respondents.
3.8 Limitations of the Study
- Respondents may fear providing information
- Limited time for data collection
- Some respondents may expect incentives
Conclusion
This study aims to assess the influence of oil and gas discovery on the growth and development of SMEs in the Albertine region. The findings will contribute to policy development, academic research, and improved business practices.
