Piracy driving economic boom in Somalia By KEVIN J. KELLEY for TheEastAfrican
The proceeds of piracy have generated broad economic benefits in parts of Somalia, giving local residents and political leaders incentives to allow high-seas hijacking to continue, suggests a new study by a London-based think tank

“A deep-rooted culture of sharing” leads Somali pirate chiefs to spread ransom payments broadly within their respective clans while discouraging conspicuous personal consumption, says the analysis written by Dr Anja Shortland for the Chatham House research institute.

“It’s not like three people split a million bucks,” pirate leader Abshir Boyah is quoted in the report as saying.

“It’s more like 300.”
Based on a statistical model developed for the study, Dr Shortland estimates that one-third of ransom receipts are converted into Somali shillings

About $21 million of the $70 million paid in ransoms in 2009 is believed to have been invested in local economies, particularly in the regional hubs of Garowe and Bosasso, the study calculates. By comparison, Puntland’s official budget for 2009 totalled $17.6 million.
Cattle prices have risen in tandem with the proceeds of piracy in recent years, Dr Shortland notes as an indication of some ransom money being invested in legitimate economic activities. In addition, “piracy is not driving food price inflation but on the contrary has offset the loss of purchasing power of local wages after the 2007/08 food price shocks,” the report asserts. Read more