What changes might happen in the country

Senegal is Officially became On Tuesday, June 11, 2024, the oil producer announced that a foreign company had produced the first barrel of oil in the Sangomar field (Sangomar project). Operator Woodside, an Australian company based in Perth, holds an 82% stake, while the Societe des Pétroles et du Senegal (Petrosen) holds 18%.

according to Multi-Year Budget and Economic Planning Document (DPBEP) According to the 2025-2027 forecast released by the Minister of Finance and Budget of Senegal in June 2024, the Senegalese government predicts rapid economic growth in 2024, expected to reach 7.3%, thanks to oil production from the Sangomar field, about 100 kilometers off the coast of Dakar. The country hopes to obtain $30 billion The value of the dollar increased by $30 in 30 years due to the exploitation of hydrocarbon deposits.

Bertrand Schanche Researched Energy Systems and Energy consumption Originally from Senegal, he explains to Dialogue Africa the advantages, risks and ways to mitigate these risks of oil extraction in Senegal.

There are certainly benefits for a country to develop its natural resources, but everything depends on the existing governance and the existing power. The geopolitical context is also important. Africa has made many discoveries in recent years: Niger, Uganda, Mozambique, Côte d’Ivoire… The African continent is very rich.

However, these findings are consistent with “Energy transition” Developed countries are trying to push or impose it on the rest of the world. This shift is not happening in reality as the data shows the opposite… Fossil energy is still making progress and still has a bright future. According to the data International Energy Agency Headquartered in Paris, France, we see that demand for fossil fuels is still growing. Oil demand has increased from 70 million barrels per day in 2000 to about 100 million barrels per day in 2023. Natural gas (260 to 420 billion cubic meters) and coal (320 to 560 billion cubic meters) have also increased. Million tons of coal equivalent (million tons of standard coal)).

In terms of income, it is approximately 700 billion CFA francs per year (nearly US$ 1.147 billion) announcement. In the short term, the government announced revenues of approximately 576.3 billion CFA francs for the period 2025-2027, allocated over the next three years as follows: 127.7 billion CFA francs in 2025, 205.4 billion CFA francs in 2026 and 243.2 billion CFA francs in 2027.

One of the advantages could be the long-term rebalancing of the trade balance and the budget, which are both deficits and budgets, from new revenues from the exploitation of gas and oil deposits. But the budget deficit appears to be very high, close to 800 billion CFA francs (3% of GDP). The start of oil extraction coincides with pressure from the International Monetary Fund (IMF) urging African governments to remove subsidies for hydrocarbons.

Note that part of the budget deficit is due to these subsidies, which make it possible to maintain a certain level of social justice. Complying with the IMF ban means prioritizing debt repayment and exacerbating inflation, with the inevitable consequence of a high cost of living, a detrimental effect on the population, and social tensions. Nigeria is currently in an unprecedented economic crisis. Similar measures By the new president Bola Tinubu who was elected in March 2023. Most Nigerians are trapped in poverty due to poverty. Inflation rate exceeds 30%.

The impact on direct employment is not significant, hiring a few thousand people is just a drop in the ocean. The unemployment rate is 22%. But the figure is much higher when it comes to youth employment.

We can expect investments in different sectors, especially those that are considered priorities, such as health, education, energy, sanitation. However, the new government still has to work on identifying these projects and putting them into multi-year planning. There are clear investment deficits in areas such as health, transportation and education.

There are political advantages: new partners, more foreign policy resources, increased national attractiveness. Regional geopolitics are changing due to the sharing of certain mineral deposits with neighboring countries such as Mauritania. Senegal will play a role in view of the international sale of liquefied natural gas and the possible connection of gas pipelines from Nigeria to Europe.

The extraction of oil and gas can also constitute a real reason to claim or assert sovereignty. We must understand it through this prism Renegotiate a contract The new leaders want it. In this context, the question of the CFA franc arises, because without a central bank, any policy is difficult to implement. You have to have a safe key.

Important question: How does a country manage its economy without monetary sovereignty? We remember that 1994 CFA franc devaluationOvernight, currencies were devalued, and the economies of countries in both regions have been weakened ever since. Trade deficits have widened almost everywhere. This has hampered the economic development of these countries, which have just implemented structural adjustment programs (SAP).

Profits can come quickly. It all depends on government policy. If we ask to wait when the first oil is already here, it’s like we are asking Senegalese not to be dependent on oil. We don’t have to wait, there are many emergencies. We must create mechanisms that allow profits to be reinvested in the economy and the modernization of the country.

However, it should be noted that oil production began in a country that already had oil production capabilities. UN deficit budget importantabout 1.2 billion euros. The government has planned to borrow up to 3.5 billion euros per year over the next three years. In this case, there is a risk that the expected revenue will be used to repay the debt, hurting investment.

No risk! You mean the theory? Resource Curse. But you see, in the Persian Gulf countries, Norway, Russia, we cannot say that there is really a risk of exploiting their oil. This curse is what we want to put in the minds of Africans. We need to understand one thing, life is a struggle, there is no day of rest. We must learn to manage our resources on the one hand and to defend our interests on the other. So far, this has not been the case.

African countries mostly do not fully exploit their natural resources. Examples are everywhere. When it comes to oil, we can cite Libya, Nigeria or Congo. The same is true for uranium in Niger or gold in Mali or Burkina Faso. Africa plays its role in the global economic architecture, as well as in the South as a whole, providing raw materials for the factories of developed countries, which in turn play the role of manufacturers. Since then, everything has been in place so that this imbalance persists and capitalism survives at this cost.

If we are talking about the risk of war, political tensions internally or with neighbors, or misappropriation of revenues, this should come as no surprise. Because a huge windfall is involved, the protagonists will fight to get what they want. Politicians and all internal forces should put the national interest first. Only by unity can Senegalese benefit from its underground resources.

Internal actors must be able to understand the problem and unite in the interests of the state. Only when a state is united can it face its enemies, and without internal complicity, no external force can impose itself. Many conflicts around the control of resources are caused by external actors who act in the form of intermediary groups to destabilize and plunder territory.