BY Abdulkadir Abiikar Hussein
Somali’s extractive deposits potential is as diverse and extensive as its shoreline This is according to a 2015 Investment report published by the Ministry of foreign Affairs. The report also collates information from partner nations and past investors.
Hydrocarbons, uranium, rock salt, sepiolite, a number of base metals, auriferous (containing gold) and copper are just some of the underground wealth that is waiting to be proven and tapped into. The government is undertaking a detailed evaluation and assessment process to ascertain the minerals’ marketability and readiness for exploitation.
The ministry is urging investors to be ready for bidding of production sharing agreements once an ongoing survey is completed. According to the report, an offshore Indian Ocean portion of Somalia’s coast has shown tremendous potential for hydrocarbon exploration and investment after the recent discoveries in Mozambique, Tanzania and Kenya.
The country is pegging part of its development to lie squarely on the shoulders of its underground wealth. This report has rent the country’s air with high hopes as many citizens are banking on this potential to spur rapid economic reforms that will place the country on the path to recovery and development.
Bur Area and the Golis Mountains Range have the main occurrences of metallic manifestations. The government has its fingers crossed that the deposits will prove to be commercially viable.
Central Somalia and South West State has also registered potential for various minerals that are required by multinational companies manufacturing products used in day-to-day live. The report, louds Somalia as “the last frontier country in the world” for hydrocarbon and notes that new seismic studies acquired in 2014 demonstrated structures existent under the sea-floor as containing prospects that justify further exploration, drilling and production. Not to lie on its laurels, the government intends to complete 2-D seismic studies on offshore areas not covered by the 2014 survey. Somali’s geology has long fascinated industry players. Well-documented data shows the existence of working petroleum systems: source rocks in multiple layers, reservoir rocks, seals and traps. This is evidence of potential hydrocarbon deposits.
The potential in the extractive industry remains mainly underexplored if not unexplored all together. The government is alive to the fact this is a capital-intensive venture and it is rallying investors to come pouring in so as to spark this profitable industry into motion. In this regard it is working towards creating attractive incentives for the extractive industry players and generally making its investment environment conducive for all.
Improving its infrastructure and sustaining security is an ace card that the Somali government is confident if they deal it well they will endear themselves to investors who are alive to the country’s past and present.
In 2013, several European Union countries, the United States, the World Bank and the African Development Bank pledged close to $3B towards peace and state-building efforts. Used well, this amount could hold the key to tipping off the balance in favour of the country.
So far, owing to the country’s past and current sporadic spats of terrorism, the country has only managed negligible extracts of gemstones, gypsum and salt in the last few years. Artisanal mining (small scale) is growing rapidly but the whole lucrative mining sector in Somalia needs investments to develop to full capacity.Extractive industries are as lucrative as they are volatile. In as much as they are capital intensive they are not pro-poor, they do not employ many people so the riches they provide might not necessarily permeate to the masses, hence the need to diversify the economy.
One area that the country has equal riches that is awaiting exploitation is in its marine life. Somali boasts the longest coastline in Africa, a whooping 3025 kilometers. With this comes diverse marine life hence a lucrative fish industry. This is major. It can employ many as well as address rampant food shortages in the country. The so-called Dutch disease has been known to bring down economies heavily reliant on extractive industries.
Fishing industry should provide one way of providing an antidote. However this live-saving industry, owing to lack of fisheries management, is embroiled with challenges following many years of unregulated fishing by foreign vessels. These vessels fish more annually than does the country. As Africa gears up to attract more direct foreign investment in the continent as the last frontier of investment, the horn of Africa State will be banking on its latest profile of lucrative minerals to climb the economic ladder. Manufacturing and processing is known to promote a country’s economic standing through foreign exchange revenues and job creation. Security and critical infrastructure will play a big role in facilitating these investments but being a virgin mineral territory, the benefits may override the difficulties for pioneer investors.