Senegal: In 2023 and 2024, the country will become an oil and natural gas exporting country

In 2023 and 2024, Senegal will become an oil and natural gas exporting country respectively. In the report “ The Management of Oil and Gas Revenues in Senegal ” by the Natural Resource Governance Institute (NRGI) published last December, revenue from the marketing of these fuels will represent on average 1.5% of GDP or 6% of the economy. total public revenue for 25 years.

Significant inflows, but which the New York-based organization considers insufficient to have a transformative effect on the national economy on their own. It should be noted that the average revenue from the extractive industry in African countries represented approximately 15% of the GDP of these countries over the period 2006-2014, according to an IMF report published in January 2019 and entitled: “Senegal: Selected Issues : Natural Resources in Senegal Before and After the Recent Oil and Gas Discoveries”. This is far beyond Senegal’s prospects.

However, the NRGI points out that if these revenues are well managed, they have the capacity to significantly improve the standard of living of the population. For this, he suggests to the Senegalese government to abandon its plan to invest the revenues from the exploitation of hydrocarbons in a sovereign wealth fund and a stabilization fund.

“We argue that the authorities should consider focusing on the investment of natural resource revenues at the national level and channeling these investments through the general budget, in order to strengthen control of public finances”, it read. in the NRGI report.

In addition, it is announced that the sovereign fund will be managed by the Sovereign Fund for Strategic Investments (FONSIS), an organization responsible for strategic investments on behalf of the State. In order to avoid a scenario similar to those of many mismanaged sovereign wealth funds on the continent, the NRGI calls for an in-depth reform of FONSIS, the only way to promote transparency and the good management of financial resources.

In terms of sharing part of the revenue with the local communities in the production areas, in particular the fishing communities, the NRGI proposes a new approach to the authorities. This consists of focusing on offsetting the negative impacts of production, through the projects’ environmental and social management plans.

In Senegal, the mining sector is currently the only active branch of the extractive industries. For the past 40 years, it has represented 1 to 3% of GDP. The added value that the oil and gas announced with great fanfare over the past few years will bring will be marginal compared to the figures for the mining sector.