By Mohamed M. Ibrahim
In 2015, I met with Mohamud Muse Hersi, also known as Adde Musa, the former president of Puntland State, at Rugsan Hotel in Garowe. During our conversation, he shared a poignant reflection on Somalia’s untapped oil potential, recounting how his father began working for Sinclair Oil Corporation in 1956. This was part of efforts dating back to the 1950s when Sinclair first initiated studies on Somalia’s petroleum geology. He spoke with passion and conviction, urging me, “Produce one liter of oil before I die.”
Unfortunately, this aspiration remained unfulfilled, as he passed away in 2017 before seeing it realized. Somalia’s history with oil exploration stretches even further back, with evidence of oil seeps near Dagah Shebel, near Berbera, dating as far back as 1912. Yet, more than a century later, the nation has not progressed beyond the exploration phase, with no commercial production of oil. This prolonged stagnation underscores the urgent need to build infrastructure and governance frameworks to unlock Somalia’s oil potential.
On 25 October 2024, the arrival of the Turkish seismic vessel Oruc Reis at Mogadishu Port marked a significant step in Somalia’s pursuit of offshore oil exploration, signaling the beginning of 3D geological surveys. However, this milestone underscores the substantial preparation needed to develop infrastructure, regulatory frameworks, and capacity-building measures to manage the socio-economic and environmental transformations an emerging oil industry needs to thrive. To fully capitalize on its oil resources, Somalia must develop strong backward linkages, investing in industries like education, transportation, and agriculture that can supply goods and services to the petroleum sector, fostering a more diversified and resilient economy.
Backward linkages in the oil industry refer to the economic relationships between oil extraction and the local industries that provide critical inputs such as raw materials, specialized services, and infrastructure necessary for oil production and exploration. These linkages are fundamental for fostering broader economic development, as they stimulate local industries, generate employment, and create a diversified economy.
Key sectors involved in backward linkages include construction, which provides the infrastructure needed for oil extraction sites; and transportation, which ensures the delivery of supplies and movement of extracted oil.
Here are some essential areas Somalia should focus on to create a resilient network of backward linkages.
1. Education and Training
The Annual Statistics Book 2021–2022, published by the Ministry of Education, Culture, and Higher Education of the Federal Government of Somalia, identifies key opportunities and challenges in the country’s higher education sector. It reports that Somalia is home to 111 universities, although the quality and standards of these institutions vary. Despite the promising number of universities, “the quality of education varies significantly across institutions due to factors such as limited resources, outdated curricula, and inadequate infrastructure, with many failing to meet international standards.[i]”
As Somalia strives to develop a homegrown oil sector, addressing the education quality gap becomes critical to ensuring the country has a skilled workforce capable of supporting the industry’s growth. Building this workforce requires substantial investment in both general education and specialized technical training programs, particularly in fields like petroleum engineering, environmental science, data management, and practical trades such as welding and machinery repair, which are essential for the oil sector. Establishing vocational training centers to prepare Somalis for essential roles in the oil industry—such as construction, equipment maintenance, and health and safety—is crucial for developing the infrastructure and workforce needed to support the sector’s long-term success and sustainability.
2. Communication and Information Technology
According to the Somali Investment Promotion Agency, Somalia’s ICT sector is a dynamic and rapidly growing part of the economy, contributing up to 11% of GDP and playing a key role in economic reconstruction. Characterized by some of the lowest calling rates in the region, the sector benefits from strong private operator involvement and support from the Somali diaspora. Mobile penetration is high, with 90% of the population covered by 2G, 76% by 3G, and 67% by 4G, though internet services like satellite and fiber are mostly confined to urban areas and remain costly. Fixed and broadband connections accounted for 42.5% of mobile connections in 2021.[ii] However, to fully meet the demands of the oil industry, Somalia must focus on improving its digital infrastructure by expanding high-speed, reliable fiber optic networks and internet backbone systems.
Additionally, substantial investments are needed to develop specialized oil exploration, drilling, and logistics software and enhance cybersecurity measures to protect critical infrastructure.
Furthermore, fostering a skilled ICT workforce through targeted training programs and partnerships with industry stakeholders will ensure that the ICT sector can effectively support the complex, data-intensive operations required in the oil industry. Infrastructure and human capital investment are key to building a robust digital ecosystem sustaining Somalia’s emerging oil sector and contributing to long-term economic growth.
3. Transportation
The Transport Sector Needs Assessment and Investment Program for Somalia (2016) indicates that Somalia currently has approximately 60 airports, airstrips, airfields, and four deep-water ports[iii]. Garacad has recently joined this list, with Hobyo port likely to follow. The country’s road network spans 21,933 kilometers, with less than 15% of it paved and much of it in poor condition. In addition, Somalia’s sea transport infrastructure remains underdeveloped, which poses a significant challenge for the oil industry. To meet the sector’s demands, Somalia must invest in modern ports with shipping lanes and navigational aids capable of handling large-scale oil exports and importing critical oilfield equipment.
Furthermore, developing reliable warehousing facilities near these ports is crucial for efficiently moving supplies, equipment, and personnel. Strengthening air and road transport links will also be necessary to facilitate swift and secure access to oil fields and production sites. These infrastructure enhancements will not only support the oil sector but will also stimulate broader economic growth by improving connectivity and logistics across multiple sectors of the economy.
4. Food and Agriculture
A Policy Brief – State of Agricultural Production and Food Security in Somalia – by the National Economic Council underscores the critical role of agriculture in Somalia’s economy, with approximately 50% of the population dependent on it, particularly in the fertile regions between the Juba and Shabelle Rivers[iv]. Despite its importance, the sector faces significant obstacles, including low crop yields and limited access to modern farming technologies, irrigation, and high-quality seeds. With the development of Somalia’s oil industry, the demand for food will increase to sustain the growing workforce, highlighting the need for improved agricultural productivity.
Investment in modern farming practices, irrigation infrastructure, and enhanced access to seeds and technology is crucial for ensuring food security, supporting local farmers, and reducing reliance on food imports. Additionally, revitalizing the fishing and aquaculture sectors will help diversify food sources and strengthen Somalia’s traditional industries, contributing to broader economic stability.
5. Financial Services
Somalia’s financial sector is still nascent, primarily reliant on informal channels like Money Transfer Operators (MTOs) and mobile money. Despite recent international achievements, including debt relief and regional integration efforts, the penetration of formal banking services remains limited. Only about 15% of the population, and even fewer women, have bank accounts, and active usage is even lower. However, recent trends indicate a growing interest in formal banking services, with approximately 28% of the population now holding bank accounts.[v]
To accommodate the future needs of the oil sector, Somalia must substantially strengthen its financial infrastructure by improving banking services, investment options, and trade finance while also developing financial products tailored specifically to the oil industry, its workforce, and emerging businesses.
Establishing a robust, transparent, and inclusive financial system is critical for effectively managing oil revenues, stimulating economic growth, and ensuring that the sector’s benefits are widely distributed.
Read more: Fueling Somalia’s Future with Oil and Strong Backward Linkages
Mohamed Mukhtar Ibrahim,
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Mr. Ibrahim is a former minister of petroleum and minerals in Somalia, he can be reached by email at mohamed323@hotmail.com
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