Is African Piracy A Business?

Is African Piracy A Business?

12 months ago, Bloomberg Businessweek reported that between 2005 and 2012, Somali pirates generated as much as $413 million in ransom payments from an enterprise that is highly structured and profitable.

The business operates like many more recognisable and less dangerous operations. They have investors, an organisational hierarchy with reporting structures and detailed record keeping.

The businesses are run by financiers who invest in boats, pirates who execute the raids and managers who do the negotiation. During the course of a highjack, services are brought into operation which include militia, catering facilities for the crew and pirates, alcohol and prostitution, all receipted transactions. Financiers are said to reap as  much as 75 per cent of the total ransom after expenses, which is largely invested in Somalia in new operations, real estate and hotels.

There have been substantial reductions in piracy within the horn of Africa. The BBC puts that down to  a combination of private security on board the ships, improved shipping vessel management, pre-emptive action by combined navies in the area and an increasing lack of tolerance for piracy within Somalia itself.

Today, the waters off the West African coast are some of the most dangerous in the world as the incidents of piracy have shifted from the Indian ocean and Somali pirates to the Gulf of Guinea as depicted in this graphic from The Economist showing Pirates on the move.

The 2013 Maritime Piracy Report cited by, Oceans Beyond Piracy a privately funded organisation geared to developing responses to maritime piracy point to fundamental differences between the piracy model used on the west coast and the east.West African piracy is based on: robbery, kidnap & ransom and oil theft. Oil theft as an example off the cast of Nigeria  is valued around $200 billion annually. Vessels are hijacked, the oil siphoned off, financially-cleaned and sold into legitimate markets.

The driver for piracy in Nigeria for instance is orchestrated in the main although not exclusively  by groups in the Niger Delta area as a result of economic disenfranchisement based (in their own words) on the government taking too great a share of the wealth from the local area and putting very little back, according to the Combating Terrorism Center At West Point (CTC).

The net returns from piracy, particularly in the way it previously existed in East Africa, clearly had the structure of a business. The West African model appears much less clear although it is thought to involve an extensive network of high ranking personnel according to the CTC.

Image credit: R Kurtz, CC BY-NC-ND