Today from Hiiraan Online:
Somali people to benefit following ratification of Petroleum Law
Ibrahim Ali Hussien
Tuesday February 18 2020
The ratification of the Petroleum Law on 8 February by his Excellency President Mohamed Abdullahi Farmajo is another significant landmark in the development of Somalia. The development of our oil and gas industry can accelerate forward, as we look for international partners to help unlock this potentially enormous resource on behalf of the Somali people. The pioneering Revenue Sharing Agreement embedded in the Law mandates how future revenues will be shared between the Federal Government, Somalia’s constituent Member States and their local communities. The Law makes clear that any hydrocarbons discovered are the property of the Somali people.
The development of human capital is the critical determinant of our long-term growth and prosperity. As our nascent oil and gas industry develops, significant international investment into Somalia will provide opportunities for local businesses to participate in the supply chain and field support the industry will certainly require. We are endowed with entrepreneurs who have been able to flourish despite all the challenges and this new industry will give them huge opportunities to develop and grow their capabilities. With 70% of our population under the age of 30, our young people are also anxious to take direct advantage of the high-quality jobs that our international partners will bring.
An important focus for the Federal Government and Member States, is to achieve the United Nations’ 17 Sustainable Development Goals, to which we committed as part of the 2030 Agenda for Sustainable Development. So, we will allocate a significant proportion of any oil revenues to healthcare, agriculture and (most critically) education, from which all else ultimately flows. Three million Somali children are estimated to be out of school and only half the population is literate. The Government has made progress in recent years and The Ministry of Education, Culture, and Higher Education has initiated a range of positive steps, including the rollout of a national curriculum based on the Somali language. Collaboration is key for the future of Somalia and we will work closely with the other Ministries and Member States to develop high skill jobs for Somalis. In addition, we will look to the newly established Somali National Oil Company to provide university sponsorships for those benefitting from the investment made in education and health.
Somalia has the potential to be a regional economic hub due to its strategic geographic location and having the longest coastline in Africa. Once we unlock our natural resources, the funds will be used to focus on expanding and investing in many areas, including health, water, education, energy, and transport. This will be done working alongside our international partners such as the African Development Bank. The Petroleum Law will play a key role in all of this with representatives from Member States having oversight of where resources will be invested for the long-term benefit of their local communities.
Whilst we cannot attain all the Sustainable Development Goals without international support, even with a developing economy we know that we have a responsibility to our people and the environment for the sustainable and responsible exploration and production of any potential hydrocarbon reserves. Somalia has extensive environmental and marine assets with the opportunity to significantly develop the fishing industry. Therefore, any development of our potential hydrocarbon assets will be carefully managed with the protection of marine life and the environment one of the top priorities. Alongside this commitment, the revenue sharing agreement recognises the potential disruption to those close to the exploration sites and has allocated a higher percentage of revenues to those affected.
In 2019 Somalia’s economy grew by 3.8%, with growth projected to continue at 3-4% (World Bank). Indeed, the World Bank’s Country Partnership Framework with Somalia will help us consolidate the great progress we have made in recent years by providing the funds to restore economic resilience and reduce poverty as well as developing key social services. We have a long way to go, but Somalia is making progress to deliver for all Somalis and this Law is another milestone on this journey.
This is an opinion article by Ibrahim Ali Hussein, Economic Adviser to The Minister of Petroleum & Mineral Resources of The Federal Republic of Somalia.
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