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The Deadly Impact of Piracy on Trade

15th September 2011

By: ISS, Institute for Security Studies

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Trade in Sub-Saharan Africa is slowly but surely starting to suffer the dire consequences of the stranglehold piracy has placed on the shipping lanes on both the east and the west coasts of Africa.

While, during the recent past, most of the efforts to curb piracy were focussed on the Gulf of Aden and the larger Somalia coastline, a new threat was developing on the continent’s west coast. Although still in its infancy stage, this new development may have serious implications for the continued economic development in Sub-Saharan Africa. The sustained escalation of incidents of piracy has the potential to strangle international trade around the African coastline, inadvertently causing significant collateral damage to developing countries and countries that have only recently emerged from long civil wars and internal strife.

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Shipping companies will have to begin considering alternative shipping routes if their assets are threatened on both the east and west coasts of Africa. It might be more cost effective to take the longer route through the Panama canal. It might even be safer to take the route through the Suez Canal, even if there is a threat of piracy on entering the Gulf of Aden - at least there will be an international fleet to deter some of the pirates, and this threat will only occur once. The long route around the Southern tip of Africa increases the vulnerability of cargo and personnel on both the east and west coasts, thus presenting a greater chance of attacks from pirates.

Africa must urgently put efforts into the development and deployment of anti-piracy naval and air resources and technical expertise. If Africa wants to ensure that it continues to grow and prosper, this threat has to be addressed head-on. Southern Africa must expedite its response to piracy if it would like to protect its inhabitants from the financial impact of a sustained “War on Piracy” and the associated drain on resources that should have been used to alleviate poverty in the region.

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From an economic point of view, having Africa’s access to internationally developed materials such as nuclear reactors, vehicles, tractors, imported and exported food, and other materials reduced will be devastating. More worrying is the impact of a decrease in exports of natural resources from African countries. How will countries generate income to build their nations if there is no opportunity to export their scarce products to the international markets? How will these countries gain access to international funding and loan institutions? And more to the point, how will countries generate funds to pay back existing loans and agreements if they are unable to sell their resources?

Countries with oil and gas resources might feel that they are exempt from the impact of piracy. These countries, however, have to consider that the infrastructure to harvest their natural resources was shipped in from international markets. The expertise to develop, improve and maintain these systems on a technical level, in most cases, does not reside within the countries where these products are used. A pro-active approach against piracy is thus urgently needed to prevent its potential negative impact on much-needed imports.

Written by Ben Coetzee, Senior Researcher, Arms Management Programme, ISS Pretoria Office

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