Senegal Has Joined The “League” of Significant Global Oil Producers: What Does it Mean?

By Fidel Amakye Owusu

1. In 2011 Ghana was among the fastest growing economies in the world. The economy grew at almost 14% of GDP.

2. One major contributor to such significant growth was the fact that the country had started producing oil from its Jubilee oil field after the discovery of hydrocarbons in commercial quantities in 2007.

3. Additionally, the country was doing well with other export commodities at the time. It maintained its position as the second-largest producer of cocoa beans at more than 1 million tonnes. It was still a robust gold producer. The prospects for the country were impressively positive. Its energy needs as the second largest economy in West Africa was going to be covered by the huge reserve and a planned plant.

4. After a decade, Ghana’s growth is struggling to reach 4%, inflation is above 23% and its external creditors have lost confidence in the economy. Unemployment remains high and cocoa production has less than halved.

5. And so what?

6. This week Senegal started producing oil in commercial quantities. With the last elections consolidating the country’s stability, the prospects for the country, as was Ghana in 2011, remain high. Already, the current administration has vowed transparency in the oil and gas sector. It has commenced investigations into suspicious deals.

7. Most importantly, West Africa’s fourth-largest economy is going to have a new stream of revenue and related investment that could enhance the standard of living of its growing youthful population. However, some lessons need to be learned.

8. What are these?

9. Firstly, Senegal must abstain from decisions and actions that could let it evade the dangerous “Dutch Disease”—the tendency to over-rely rely on oil and gas resources at the expense of traditional commodities that have sustained the economy over the years. Ghana is suffering from that. If you doubt this, check the country’s cocoa sector.

10. Senegal must sustain and support its peanut and other agricultural activities while creating new opportunities in the oil and gas sectors. Already it has a comparative advantage over its West African competitors to supply gas to Europe based on its location.

11. Regardless, oil and gas are not infinite resources and must, therefore, have revenue therefrom invested in consequential and sustainable sectors. Superfluous consumption will hurt the economy in the future.

12. Investment in quality education, infrastructure, health, and agriculture should be prioritized. Corruption should not be tolerated.

13. Also, the oil resource should not inform reckless borrowing. Yes, the country’s over 17.3 million people could have their lives changed for the better if its resources are well managed and accountability is non-negotiable.

#africa #Senegal #oilandgas Riley Risk Inc. DefSEC Analytics Africa Ltd unival group GmbH