Escaping the Resource Curse: The Case Study of Somalia's Natural Resources

Abstract

Somalia has recently witnessed significant developments in oil and gas exploration, particularly in offshore and onshore blocks, revealing substantial hydrocarbon reserves. Despite this potential, the country faces profound challenges due to fragile governance, political instability, and institutional weaknesses, which risk exacerbating the negative impacts commonly associated with resource wealth, such as the resource curse and economic volatility. This research adopts a qualitative analytical approach, reviewing exploration data, governance frameworks, and socio-political dynamics in Somalia. It synthesizes existing literature on natural resource management and examines case studies of resource-rich developing countries to contextualize Somalia’s institutional capacity and policy environment. The findings highlight Somalia’s promising oil and gas reserves but reveal critical governance and institutional gaps that hinder effective resource management. Political mistrust, weak regulatory bodies, and federal-member state tensions increase the risk of mismanagement and socio-political conflict. Lessons from other resource-rich nations emphasize the need for strong governance to avoid economic and political instability. Somalia’s natural resource wealth presents both significant opportunities and risks. To harness this potential sustainably, the country must develop robust institutional frameworks, transparent governance, and equitable revenue management policies. Implementing targeted reforms can help Somalia mitigate the resource curse and transform its hydrocarbon discoveries into inclusive, long-term development gains.