Politics and policy
Total cost of Somali piracy menace hits $12bn
Posted Monday, May 9 2011 at 00:00
The total cost of piracy in the Indian Ocean in 2010 — almost all of it by Somali pirates — is estimated to be between $7 billion (Sh560 billion) and $12 billion (Sh960 billion), and could top $15 billion by 2015, according to analysts.
This bill includes ransoms, insurance payments, the cost of naval operations, prosecutions and of rerouting ships.
A recent study reported that Somali pirates are earning up to $79,000 a year, 150 times the average annual income in Somalia.
The study by political and economic intelligence consultancy firm, Geopolicity, revealed that the area under the threat of piracy has steadily extended to some 2.5 million square nautical miles off Somalia’s coastline, an increase of one million nautical miles from two years ago.
Another study by anti-piracy organisation, Oceans Beyond Piracy, forecasts piracy could cost $15 billion in the next four years, as more pirates sign up and bigger intervention measures are consequently rolled out.
The Indian Ocean accounts for fully half of the world’s container traffic, and 70 per cent of total global petroleum traffic passes through it.
The gulfs of Aden and Oman are among the world’s major shipping lanes: About 21,000 ships, and 11 per cent of global crude oil traffic, cross the Gulf of Aden every year.
The ports of Mombasa and Dar es Salaam handled a combined cargo of 25 million tonnes in 2008 — not just for Kenya and Tanzania respectively, but also for inland countries such as Uganda, the Democratic Republic of the Congo, Southern Sudan, Rwanda and Burundi.
Together, East Africa’s ports account for approximately a fifth of sub-Saharan Africa’s container traffic, with an average annual growth of 6 per cent since 1995.
The Indian Ocean is particularly significant for the region in terms of communication: A 17,000 km undersea fibre-optic cable connects South Africa, Tanzania, Kenya, Uganda and Mozambique to Europe and Asia.
Incidents of piracy have soared from 276 in 2005 to 445 in 2010. According to the International Maritime Bureau, there were 142 attacks between January and March 2011 – 97 off the coast of Somalia – up from 35 in the same period the previous year and an all-time high.
Pirates managed to seize 18 vessels worldwide, capturing more than 340 hostages in attacks in which seven crew members died and 34 were injured.
Over the past five years, Somali pirates’ ransom demands have increased a staggering thirty-six fold, from an average of $150,000 in 2005 to $5.4 million in 2010.
The largest known ransom payment was for the South Korean oil tanker Samho Dream, for which a record $9.5 million was paid in November 2010.
Somali pirates’ income for 2010 was around $238 million.