WEST AFRICA LEADS IN MARITIME PIRACY

The Hollywood movie "Pirates of the Caribbean" was well-received and it won many awards with its depiction of the criminals on the high seas. But in East and West Africa, the incidence of maritime piracy is no Hollywood fiction.

Somalia in the Gulf of Aden has become notorious for its vessel hijacks and ransom payments. News about hijacks off the coast of Somalia makes international news headlines. 

PIRACY NUMBERS
But according to the International Maritime Bureau (IMB), the body that tracks data on the phenomenon, global piracy has reached a 5 year low. Cases off the coast of Somalia reduced in the first half of 2011. It fell from 163 to 69 year-on-year while hijackings also fell from 21 to 13. A confirmation that Somalian piracy has declined by 54% and continues to do so.

However while piracy off Somalia is declining, in the Gulf of Guinea on the West African coast it is rather on the increase.

 In an article titled "Managing the Global Response to Maritime Piracy", the Atlantic Council reports that in the in the first half of the year 2012, 34 attacks were reported in West African waters and 24 of which were successful. This is more than twice the number of attacks compared to the same period in 2011. The IMB's Piracy Reporting Center reports that in 2012 a total of 58 incidents were recorded in West Africa. This included 10 hijackings and 207 persons taken hostage.

The latest statistics released by the IMB shows that 966 sailors were attacked in West Africa in 2012, compared with 851 off the Somali coast. It has thus confirmed for the first time that West Africa now leads in maritime piracy on the continent.

The report, entitled The Human Cost of Maritime Piracy 2012, was released by the International Maritime Bureau (IMB), the Oceans Beyond Piracy (OBP) project and the Maritime Piracy Humanitarian Response Programme (MPHRP).

James M. Bridger, a Maritime Security Consultant at US-based Drexel Systems Inc., disagrees that piracy in the Gulf of Guinea (GG) is on the rise in absolute terms as been reported. Bridger believes that data set from the Danish consultancy firm Risk Intelligence actually show a reduction in overall pirate attacks in GG. He says what is on the rise is a new trend of attacks on fuel tankers and vessels. 

Bridger believes there is a re-emergence of piracy because Somali pirates started only in 2007 whereas pirate attacks off Nigerian coast started in 2003.

WHY THE GULF OF GUINEA?
The region is home to huge hydrocarbon deposits. Almost 70% of Africa's oil production is concentrated in the region. The GG contains 50.4 billion barrels of proven oil reserves and according to the United States (US) Department of Energy, produces 5 million barrels per day annually. This partly explains why West Africa is one of the hottest regions in Africa for oil production.

This backdrop raises the region's geo-maritime trade importance. A busy trade route filled with fuel tankers and cargo ships.

A second reason for pirate attacks particularly in Nigeria is bad governance, according to Freedom Onuoha, a maritime expert and Research Fellow at the National Defence College in Abuja, Nigeria.

Onuoha notes that despite the GG's endowment of mineral wealth, it fares worst in global indices of human development. Countries in GG are still poor and the most affected are youths who remain unemployed and without skills.  At the same time, a few politicians and business tycoons enrich themselves from the oil wealth. This leads to discontented youths taking up of arms. Indeed many industry watchers believe that Nigerian piracy is seen as "political protests over perceived injustices by the oil industry".    

Poor resourcing of the navy and air force in West African countries mean they lack the personnel and resources to deal with piracy on their high seas.  Proliferation of small arms due to conflicts provides arms to fuel pirate attacks.

WHO ARE BEHIND PIRACY?
Experts agree that most of the pirates are from Nigeria or Nigeria-based. According to Seth Miah of Tema-based Amitlaw Professional Development Centre, "most [of the pirates] are military elites from the days of fighting in the Niger Delta. They have suddenly discovered new territories off the coast of Togo, Benin, Ivory Coast and Ghana, territories which are evidently not prepared for the pirates and still at see on how to combat the menace".

 Onuoha explains that contrary to popular thinking that piracy on the continent emanated from Somalia, it actually began from 2003 in Nigeria's Delta region. It began when groups took up arms to fight and defend their communities from perceived exploitation. It was prevalent until the government literally bought them off with an amnesty in 2009. The dominant group among them the Movement for the Emancipation of the Niger Delta (MEND) led the signing of the amnesty. However a faction of MEND rejected the amnesty. It is believed this break-away faction is responsible for this upsurge in piracy attacks. 

WHAT IS THEIR MODUS OPERANDI?
The mode of operation of GG pirates is different from what pertains in Somalia. In Somalian waters they hijack ships and kidnap sailors for ransom payment. In GG waters the main strategy is to attack oil tankers with refined oils whiles they are anchored at port or about to do so. The pirates then commandeer the hijacked vessel to a waiting ship, siphon off the oil and then release vessel. The stolen illegal oil is then sold on the black market as legal oil, thus finding its way back into the oil industry.

So whereas in East African piracy is for ransom payment, in West Africa is mainly for oil cargo.

The strategy of 'smash and grab' in GG means oil tankers are seized for an average of 10 days compared to 6 months in Somalian waters (during which time negotiations over ransom amount takes place), according to Onuoha.

In October 2012, pirates attacked a Greek oil tanker Orfeas with oil of 32,000 tons and anchored at the Abidjan port. The pirates controlled it via the coastlines of Ghana, Togo and Benin before arriving in Nigerian waters. Orfeas was released after 3 days when about 3,000 tons of gasoil was reportedly stolen from the tanker.  

Another group hijacked the Panamanian-flagged Itri in January 2012 in Ivorian waters, and was able to siphon off the ship's entire oil cargo with a valuation of about US$5 million.

The pirates are successful because they are well organised and resourced.  Confessions from captured pirates revealed that they are backed by a network of powerful Nigerian port officials and oil industry executives. These officials pass on intelligence information to pirates as to which vessel is docking where, the type of fuel cargo on board so that the pirates go after that specific target. After the oil cargo is stolen, its onward storage and distribution are equally coordinated by these corrupt officials in the background.

COST/IMPACT OF PIRACY
The global piracy enterprise is a very huge business. In monetary terms it is very rewarding for the pirates but a big loss to the global economy. According to US-based One Earth Future Foundation, in 2011 pirates made an income of US$160million through ransom and cargo theft while it cost $7billion to the global economy. GG countries lose a combined $2 billion annually to stolen cargo, insurance premium and on security, as quoted by Journalist Scott Baldauf.

Because GG produces 70% of Africa's oil, increasing pirate attacks on oil vessels can affect global oil prices, increasing the price for ordinary citizens.

SOLUTIONS
Despite the growing number of pirate attacks in West Africa's Gulf of Guinea region, the 2012 IMB report indicated that "the area has not received the attention that was brought to Somalia".

The real solution to maritime piracy in the GG is to address the problems on land of poverty, youth unemployment and absent social infrastructure in oil producing regions. The lack of jobs and opportunities for young men from these communities, serves as an incentive for them to be recruited into pirate gangs.

West Africa needs to learn from the Somalia experience where piracy has reduced due to a US-led international anti- initiative. The daily patrol by coordinated international security vessels in Somalian waters has helped in the drop. Presently the US Navy's AFRICOM mission has been engaging in the training of navies of some GG nations and this need to be strengthened.

Ships using routes in GG can also ward of pirates by employing armed security guards on board those ships and also erecting barbed wire on ships to prevent pirates from climbing on-board.

States like Ghana and Togo have acquired naval patrol ships and other surveillance equipment to counter piracy and other illegal marine activities, but a recent development in Togolese waters calls for urgent joint multinational efforts.

The human and economic impact of piracy in West Africa is huge so countries need to work together to combat it. 

DO WE NEED A NATONAL AIRLINE?

The president John Mahama and the Transport Minister Dzifa Attivor have both said this year that Government will establish a new national airline under a Public-Private-Partnership (PPP) scheme. Madam Attivor explained that the decision is meant to tap into Ghana’s booming aviation industry.

Indeed, the economy has been growing over the last few year’s. It grew at a record 14% in 2011 and 8% last year. The growth is mainly due to the oil and gas industry, a growth in the mining sector and a growing middle-class population becoming increasingly reliant on air-travel.  

 

The figures in the aviation sector support this. In the year 2000 there were 15 airlines in Ghana, but currently there are about 40 in number. There were 1.8 million passengers using our airport in 2011, but the figure has been projected to shoot up to 6 million in 2015. The sector experiences an annual growth rate of 10%, and with Government hoping to make Ghana the aviation hub of West Africa, the sector can only look up.
 
Ghana was one of the first African countries to establish a national airline in 1958, but it went into liquidation in 2005 under a mountain of debts. A new Ghana International Airlines (GIA) was set up in 2005 (70% Government-owned and 30% private-owned). This also collapsed, in 2010, with debts and other problems.

While on a visit to the USA two years ago, the country’s late president John Atta-Mills told Ghanaians resident in New York that a national airline was not a priority of his Government. So the renewed interest by the John Mahama administration to establish a new carrier for the country has set me thinking. I thus wanted to find out how feasible it is, the merits and demerits and how other African countries with national airlines are faring.

Some African countries with well-known national carriers include Ethiopia (Ethiopia Airlines), Kenya (Kenya Airways), South Africa (South African Airlines), Morrocco (Royal Air Maroc) and Egypt (Egypt Air). Last year, The Gambia established a national airline called ‘Gambia Bird’ while Nigeria, Zambia and Uganda are all contemplating having their own airlines.

Having a national carrier has many advantages. Firstly it helps in boosting a country’s tourism and trade potential. Once a country establishes a state-owned carrier, the country usually becomes the hub for the airline. The country’s route becomes well-served and this draws in tourists because research evidence shows that there is a direct relationship between air links and tourism.

 It also benefits trade and commerce. Writing on a blog, aviation writer David Lawrence wrote that in a June 2012 article entitled “Room for Improvement” in the British Terminal World magazine, Simon Buck revealed that “you are 9 times likely to trade with a country with direct air links”. With intra-African trade (trade among African nations) so low, having regional routes well-served by airlines could help boost trade.

A national airline is also a source of pride and prestige for the country. The national colours and flag of a country adorning the fleet of the airline from country to country is a source of branding for the country and its image.

Many countries are experiencing a commodities boom and, with poor road and rail transport networks, state carriers ensure connectivity. Some countries are landlocked and private airlines may be reluctant to fly to them due to low volumes, and as a result national airlines come in handy to fill this gap.

Indeed, within Africa, Ethiopia’s and Kenya’s airlines are very profitable businesses -- generating tax revenue, employment and economic growth for their nations. The success of these 2 carriers in particular is what many other states like Ghana are seeking to emulate. But there serious issues with having a national airline, as Ghana’s two previous failed attempts show.

Setting up and operating a state-owned airline is very capital intensive. Cost of new or charter planes, fuel and aviation costs, staffing costs, maintenance costs and so on make operating airlines very expensive ventures. In Nigeria in 2011 the total budget for the aviation industry was put at about N28billion Naira (US$182million), according to Monday Ukoha writing in the Aviation and Allied Business online publication. This is a lot of money that could be spent on other critical sectors of the economy like education and health.

Many national airlines suffer from political interference in their running. Typically, political appointees are sent to serve on boards and to manage the airlines. The aviation sector requires expertise and experience to run it, but because political appointees are not chosen on merit, it affects their management and with time the carriers run into debts, collapse or are taken over. 
 

Instead of being run on a professional basis, they are run at the whims of politicians who enjoy free travel and other perks at the expense of profitability. Apart from the Ghana Airways and GIA examples above, it is interesting to note that many African airlines have folded up recently or are in parlous states.

According to the Economist magazine, Air Zimbabwe suspended operations last year due to fears of been impounded because it owes many creditors abroad.  Zambian Airways went bankrupt in 2009 and Air Malawi is limping in the air because it cannot find a strategic partner to help it survive. Once a profitable and proud national airline, South African Airways is having serious operational difficulties. It appointed its fourth Chief Executive within 7 months and was bailed out with a huge amount of taxpayer funds not long ago.

With the state of affairs above, is it prudent for Ghana to go ahead and establish a national airline -- albeit on a PPP basis? I do not think so. In making a case for a new national carrier for Ghana, Minister Dzifa Attivor said: “Government will partner the private sector to set up a national airline. We must avoid all those challenges like political interference and all the other issues”.  I understand PPP to mean Government will still have some shares when the airline comes on-stream, probably with a minority shareholding. But a minority shareholding will entail the state still contributing money financially, and also appointing one or two officials to serve on the board or management. The same problems of the past will surely crop up.

I think Government should completely remove itself from the setting-up and operation of a national airline. Government should create the needed business environment for private investors to invest their own money into establishing and running a national airline. The state can create the needed environment by ensuring airports are modern and have state-of-the art facilities, regular supply of aviation fuel, cheaper airport taxes, flexible regulation, upgrading regional airports, and ability for airports to operate 24 hours and so on. Since successive Governments have touted that the “private sector is the engine of growth”, Government should facilitate it instead of been in competition with the private sector.

A lot of private investors shy away from investing in critical sectors, including aviation, because they fear their private investment will not get them managerial autonomy. For example, if a Government is a minority shareholder, it will find ways to interfere or give directions to the private partners. Or if the airline runs into difficulties, the state will be forced to bail-out the airline with taxpayer’s money. This fear makes some investors reluctant to join PPP arrangements. 

For example, in South Africa private airline operator Comair complained bitterly Government’s US$540million subsidy that was given to prop-up South African Airways created an uneven playing field and scared away potential investors.
Empirical research shows that when a Low-Cost-Carrier (LCC) enters the aviation market, prices fall by an average of 20% in the first 4 years, resulting in an increase of passenger through-put by about 50% in the same period. Thus, a Government stands to gain more by creating an environment that fosters competition among private aviation operators.

Additionally, the nature of the aviation industry involves huge capital outlay that many African countries should study well before embarking on. Although Kenya airways is profitable, a look at the ownership structure shows that it is 30% owned by KLM and 70% by the general public and other institutional investors. The name and flag of the country is used to brand the airline. That is an approach Ghana could imitate, such that the state has no shares but receives royalties from the airline for the use of the name and the country’s flag.

The airline industry is the worst-performing of any industry worldwide. In the last 10 years alone in the USA, the industry has cumulatively lost US$50billion and numerous carriers have either gone bankrupt or merged, according to the July 2012 edition of the International Finance Corporation (IFC) quarterly publication, the Handshake. In the same publication, the former Director-General of Airports Council International and an aviation expert, Robert Aaronson, said that “given the abysmal record of state-owned airlines the world over, consensus has finally emerged that Governments have no business being in this business”.

The record for national airlines around the world and Africa in particular is not impressive, so I am of the opinion that Ghana will be better served if private operators are invited to set up a national airline. Government should only be a willing facilitator.