THE MOTIVATIONAL EFFECT OF OIL EXPLORATION IN SOMALI AND THE HABITUAL AFRICAN RESOURCE CURSE

Abstract

Purpose: The abundance of natural resources is usually considered the blessing for the countries that own such resources. However, such wealth is often associated with poverty and a slower economic growth. This phenomenon is called the resource curse, and it shows that most countries that are rich in natural resources have markedly reduced economic growth and development, and it shows that the wealth of natural resources adversely affects their economies, although it is intuitively expected to be the opposite i.e. that such wealth would have a positive impact on the country's economic development. The general objective of the study was to find out the motivational effect of oil exploration in Somali and the habitual African resource curse.

Methodology: The paper used a desk study review methodology where relevant empirical literature was reviewed to identify main themes and to extract knowledge gaps.

Findings: The study found out that Oil resource exploration has led to progress in some developed economies such as Canada which was able to avoid the resource curse. This is because oil revenues helped Canada among other countries make investments in capital, build employment and grow. Other countries such as Russia and Japan have not been able to avoid the resource curse. African countries in general where the majority of oil producing nations are, have an inverse correlation between oil production and industrial development. Examples of African countries that have been affected by the resource curse are Nigeria, Angola, South Africa and Zimbabwe. Empirical results indicate that, Somalia motivation for oil exploration is for economic development. However, it has not been spared the resource curse because the presence of oil has led to civil wars and terrorisms as groups seek to control the areas with oil fields. In addition, Somali and Kenya have involved diplomatic warfare over oil reserves that are located in the Indian Ocean near their borders.

Recommendations: The study recommends that the government should enact laws which will govern petroleum operations, as well as empowering the Somali Petroleum Authority,(SPA) which will act as a regulatory body overseeing oil and gas activity.