The economy of Somalia, in particular that of Galmudug, could undergo remarkable changes in the near future especially with the possible emergence of oil exploration. The following is a brief discussion of some of the areas worth analyzing.
Revenue Generation: Oil production is likely to be a major contributor to the national revenue. As a result, there will be an influx of funds that can be used to improve public services, increase the development of infrastructure, and social programs raising the standards of living.
Investment and Infrastructure: The revenue from oil is likely to attract foreign investment which will enhance infrastructure such as roads, ports, and telecommunications. This will in turn facilitate increased economic activity and regional integration.
Diversification Challenges: It is true that oil development opens up great opportunities for economic growth but depending on one resource may in one way or another be hazardous. Somalia will have to find ways of growing other sectors of the economic in which they do not rely on specific resources such as oil to be able to escape the dangers of owning one resource only like fluctuations in prices and the ‘oil curse’.
Low Unemployment: Oil activities can employ people, not only in the oil industry, but in other activities tied to it. However, there is no promise that such jobs will be the type enjoyed by the local residents and even be available over the years.
Environmental Issues: There are generally adverse effects on the environment that accompanies oil extraction, such pollution, oil spills and destruction of resources. It will be important to integrate such strategies into the economy for sustainability purposes.
Institutional Framework: The governing body responsible for the oil sector may attract political focus and disagreements. Ensuring the proper administration of oil resources and fair sharing of the profits, will be imperative in avoidance of conflicts.
Regional Integration: If not countered, the extraction of oil may encourage economic development in other industries such as agricultural and fisheries as the relevant finance and facilities will be available.
International Relations: All countries line up
