Piracy on the Indian Ocean continues to have an adverse impact on the economies of East Africa and beyond.
According to a recent study Somali pirates are earning up to $79,000 a year, 150 times the average annual income in Somalia of $500.

The study by political and economic intelligence consultancy firm Geopolicity reveals that the area under the threat of piracy has steadily extended to some 2.5 million nautical square miles off Somalia’s coastline, an increase of one million nautical miles from two years ago.

The total costs of piracy in 2010 are estimated to be between $7 billion and $12 billion, which includes ransoms, insurance payments, the cost of naval operations, prosecutions and of rerouting ships.

The Indian Ocean accounts for half of the world’s container traffic, while 70 per cent of total global petroleum traffic passes through the Indian Ocean.

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 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 one-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.

Incidence of piracy has soared from 276 in 2005 to 445 in 2010. According to the International Maritime Bureau, there were 142 attacks between January and March 2010 — 97 off the coast of Somalia — up from 35 in the same period the previous year.

Pirates seized 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.

Oceans Beyond Piracy, an anti-piracy research organisation, estimates that the total excess costs of insurance due to Somali piracy are between $460 million and $3.2 billion per year, which have steadily increased since the Gulf of Aden was classified as a war risk area in May 2008.

The cost of piracy trials and imprisonment in 2010 was around $31 million, and the excess cost of re-routing ships to avoid risk zones is estimated to be between $2.4 billion and $3 billion per year.

This, coupled with the cost of naval forces and protection, puts the total bill at between $7 billion and $12 billion.

The study reports that the continued growth of piracy could see the numbers of pirates, estimated to be at least 1,500, rise by up to 400 a year. As a result, the costs of piracy could reach more than $15 billion by 2015. 

A number of inter-governmental organisations dedicated to working towards a solution for maritime piracy have a total budget of around $24.5 million.