Senegal’s Oil Boom: Can It Avoid the Resource Curse?

Photo source: The Africa Report

Senegal has entered a transformative phase of economic growth following the launch of its first oil project. In June 2024, Australia’s Woodside achieved first oil production at the Sangomar offshore oil field, marking the country’s first major oil milestone. The economy is set to receive an additional boost in early 2025 with the first liquefied natural gas (LNG) exports from a BP-operated project. While these developments promise prosperity, they also raise questions about how Senegal can avoid the pitfalls that have turned resource wealth into a curse for many nations.

To ensure its oil wealth benefits all citizens, Senegal must establish transparent governance structures. An independent regulatory body to oversee the oil and gas sector, coupled with public disclosure of contracts and revenues, can minimize corruption and foster trust. Transparency will be crucial in managing expectations and ensuring equitable distribution of wealth.

Diversifying the economy is equally vital. Over-reliance on oil exposes the nation to global price fluctuations. Senegal should reinvest oil revenues into sectors like agriculture, manufacturing, and technology to create jobs and build a more resilient economy.

Environmental sustainability cannot be overlooked. Offshore oil projects carry significant ecological risks. By enforcing strict environmental protections and exploring renewable energy investments, Senegal can ensure that economic growth does not come at the expense of its natural ecosystems.

Finally, oil revenues must prioritize social development. Investments in education, healthcare, and infrastructure can improve living standards and reduce inequality. Training programs to develop local expertise in the oil sector can also empower Senegalese workers and reduce reliance on foreign expertise.

With careful planning and a commitment to equity, Senegal can harness its oil boom as a foundation for sustainable and inclusive growth, avoiding the resource curse that has afflicted many resource-rich nations.