By Mohamed Mukhtar Ibrahim
Wednesday August 23, 2023
As the sun rises on August 27, 2023, it marks not
only a new day but resonates with historical significance. Exactly 164 years
ago, the unassuming railroad conductor, Colonel Edwin Drake, struck oil in Oil
Creek near Titusville, Pennsylvania. Little did he realise that this modest
achievement would set the stage for a global industry that now powers our
contemporary world. Much like the pioneering spirit that marked that historic
day, Somalia now stands at a juncture of its own, contemplating the exploration
of its oil potential.
Oil, the lifeblood of modern civilisation, has
driven industries, facilitated trade, and sculpted economies. Its roots trace
back to a pivotal juncture in history – a chapter that I find both captivating
and personally relevant. The narrative begins on August 27, 1859, as petroleum
gushed from the first wells in what we now know as Oil Creek near Titusville,
Pennsylvania. This seminal moment marked the inception of an industry that
would revolutionise the global landscape. Colonel Edwin Drake, an
unconventional figure in the oil story, was hired by the Pennsylvania Rock Oil
Company to conduct the drilling. His title of "Colonel" was a clever
ploy designed to impress locals. Despite having no military background, Drake's
successful drilling of a 69-foot well on a salt dome rock formation yielded 15
barrels of oil daily.
Fast forward 164 years and the echoes of
Drake's legacy reverberate in unexpected corners of the world. Historically
known for its geopolitical challenges, Somalia is contemplating exploring its
oil potential. Much like Oil Creek, Somalia's journey into the realm of oil
comes with its complexities and opportunities.
As Somalia grapples with the prospect of
tapping into its oil reserves, it faces the spectre of the "resource
curse" that has plagued other nations. Countries vulnerable to
experiencing the resource curse often share a set of distinct characteristics.
Weak institutional frameworks, limited revenue sources, and pre-existing
economic instability. Corruption, lack of transparency, and social inequality
compound the risk, potentially leaving only a fraction of the population
benefiting from the newfound riches. Inadequate investment in human capital
development, a need for more regulatory frameworks, and political instability
can hinder the responsible management of resource revenues, contributing to an
environment ripe for the resource curse to take hold.
Moreover, the historical context of foreign
interference, environmental vulnerability, and dependence on narrow industries
can further amplify these nations' challenges. Without comprehensive strategies
to address these vulnerabilities, countries may find themselves ill-equipped to
navigate the complexities of newfound resource wealth, ultimately perpetuating
the cycle of underdevelopment and inequality that the resource curse embodies.
Navigating the Path Forward: Somalia's
As Somalia stands at the crossroads of
resource exploitation, it can learn from the mistakes and successes of other
nations that have grappled with the resource curse. To avoid the pitfalls that
can accompany newfound wealth, several strategic steps are crucial:
1. Political Agreement
Bringing together political stakeholders,
especially the Federal Government and Federal Member States, to form a
consensus on resource management is paramount. A united approach can minimise
internal conflicts and ensure that the benefits of oil reach the population.
2. Finalizing the Provisional Constitution
A clear and comprehensive legal framework is
essential for regulating the oil sector. Finalising the country's constitution
can provide the foundation for effective governance and resource management.
3. Master Plan
Developing a well-structured master plan for
resource utilisation is vital. This plan should encompass economic
diversification, infrastructure development, and social welfare programs to
ensure sustainable growth.
4. Strengthening the Regulatory Regime
Robust regulatory mechanisms are necessary to
ensure environmental, safety, and ethical standards compliance. A strong
regulatory framework can prevent resource mismanagement and corruption.
5. Introducing Necessary Laws and Institutions
Enacting laws that promote transparency,
accountability, and equitable distribution of oil revenues is crucial.
Establishing institutions capable of overseeing these processes is equally
6. Private Sector Participation
Empowering Somali companies to engage in the
industry actively can bolster local economic growth and foster a sense of
ownership and responsibility over the nation's resources.
7. Developing the Required Skills
Investing in education and vocational training
to develop a skilled workforce is essential. This will empower Somalis to
participate in all aspects of the oil industry actively.
8. Increase Capacity for Negotiation: Getting
skilled negotiators, who understand the industry's intricacies, can ensure that
resource contracts are fair, transparent, and mutually beneficial.
9. Active Civil Society
Encouraging civil society participation and
providing platforms for public engagement can ensure that the population's
interests are represented and safeguarded.
The journey from Oil Creek to Somalia's
potential is a testament to the transformative power of oil. As Somalia
contemplates harnessing its oil resources, it must heed the lessons of history
and actively address the challenges plaguing resource-rich nations. By prioritising
transparent governance, investing in human capacity, and fostering stakeholder
cooperation, Somalia can turn its oil wealth into a force for positive change.
The parallels between Colonel Edwin Drake's unconventional journey and
Somalia's future potential serve as a reminder that deliberate choices and
responsible stewardship mark the path to prosperity.
Mohamed Mukhtar Ibrahim
Former Minister of Petroleum and Mineral
Resources of the Federal Government of Somalia