In a three-part analysis briefing series, EXXAfrica explores specific threats to the aviation sector in Africa. In part one, we examine how the risks of war and terrorism may manifest via an explosive device attack, assault on an airport, or shoulder to air missile attack.
With 54 countries and a continental coastline of 30,500 km that spans the Mediterranean sea in the north, the Suez Canal and the Red Sea in the northeast, the Indian Ocean in the east, and the Atlantic Ocean in the west, Africa’s borders are both numerous and vulnerable. EXX Africa delves into the primary threat actors taking advantage of these vulnerabilities to further their own objectives across the continent. The report will be submitted the United Nations General Assembly this month and is pre-released to our clients ahead of the publication.
EXX Africa takes a closer look at the idiosyncrasies of some of the prominent internet shutdowns on the continent over the last year, exploring the causes and consequences of this repressive technological tactic.
The use of internet shutdowns by African governments to suppress popular dissent is becoming increasingly common. So far in 2019, there have already been reports of internet shutdowns in at least 12 countries. The states most affected usually have few internet providers, which makes it easier to implement a ban. Although such shutdowns may be contrary to local law, they are often detrimentally effective before they can be challenged in court. Furthermore, there is a lack of a binding international legal framework to hinder governments from acting with impunity.
These partial or near-total internet blackouts are most often implemented in anticipation, or in the wake, of anti-government protests, particularly around elections. However, governments also use targeted blocking of certain websites to restrict access to specific information during critical periods, such as national examinations. We explore some recent case studies from the past 12 months in this latest briefing. We also examine the impact such shutdowns have on commercial operations and the wider economy in African countries.
This briefing follows on from EXX Africa’s special report published at the beginning of the year and updates the key forecasts established in that report (See SPECIAL REPORT: THE COST OF INTERNET SHUTDOWNS IN AFRICA).
Sudan: Prolonged shutdowns to control unrest
Internet blackouts have become a staple during the past 12 months in Sudan, particularly from December to April as protesters took to the streets to oust former president Omar Al Bashir from power. During this period, the government intermittently blocked access to Facebook, Twitter, Instagram, and Whatsapp. However, it was the near-total shutdown instituted in June until July, following particularly violent unrest in the capital, which garnered the most attention (See SUDAN: HARD-LINE DARFURI MILITIA SEIZE CONTROL OF THE CAPITAL).
On 3 June, the Sudanese Transition Military Council ordered a partial internet shutdown amidst reported paramilitary attacks on pro-democracy demonstrators in Khartoum, during which an estimated 100 people were killed. To begin with, the ban targeted mobile networks before escalating to encompass fixed-line connections on 6 June. From 6 June to 9 July, a near-complete blackout was implemented, cutting the population off from the outside world. According to NetBlocks, a web freedom group, the internet disruptions under the rule of the Council were “more severe” than those imposed under Al Bashir at the time.
The Council’s actions contributed to significant condemnation from local and international watchdogs, in turn spurring social media campaigns. For example, throughout June, international social media campaigns, #BlueForSudan and #IAmTheSudanRevolution, were launched in an attempt to gain attention for the massacres and censorship being perpetrated in Sudan.
Locally, a lawyer, Abdel-Adheem Hassan, challenged the shutdown in court. On 23 June, Hassan was successful in ordering his telecoms operator, Zain Sudan, to restore connectivity. Yet, while his win was widely publicised and celebrated in the belief that the internet would be restored countrywide the next day, the operator only restored connection to his personal line.
According to Human Rights Watch, the near-total blackout in Sudan resulted in “wide-ranging harm”. Notably, it prevented activists and residents from reporting critical information regarding paramilitary forces, who were responsible for the attacks in Khartoum and previously for violent campaigns in Darfur, Southern Kordofan and the Blue Nile. Medical professionals further added that it made it difficult to organise ways to provide care.
The internet was only fully restored on 9 July after a further court challenge and a formal denouncement of the shutdown by the UN.
Chad: The longest night
Although Chad has a very low internet penetration rate – with only 6.5 percent of the population reported as having access to the internet as of 2017 – the country was recently subjected to the longest-running internet blackout on the continent. In March 2018, President Idriss Déby announced a partial internet block that affected major sites including WhatsApp, Twitter, Instagram, YouTube, and Facebook, as he prepared to amend the constitution to remain in office until 2033. Sixteen months later, the ban was lifted on 13 July 2019 (See CHAD: CREATING A DE FACTO MONARCHY AMID MULTIPLE CHALLENGES TO POLITICAL STABILITY).
According to the government, the ban was implemented for security concerns over terrorism threats. While this justification was challenged in local courts, all appeals were ultimately unsuccessful. The government only lifted the ban following a sustained international campaign, led by Internet without Borders, which included diplomatic pressure, protest action, as well as the sponsorship of VPN access for Chadians.
Long-term social media blackouts are common in Chad. Previously, in 2017, the government cut connections for ten months following controversial elections. These long periods of internet blackouts have severe economic consequences for the already impoverished country. According to the ‘Cost of Shutdown Tool’ by NetBlocks, the 2017 blackout cost the government an estimated USD 163 million. It is estimated that the most recent blackout cost upwards of USD 253 million.
Moreover, during the blackout, the country’s largest ISP, Millicom, a Swedish telecommunications company, was subject to substantial adverse media in Sweden regarding the company’s alleged failure to honour its UN commitments to protect free expression. In the early days of the blackout, the company claimed that the outage was due to technical problems before later admitting that the government had ordered the blackout. In June 2019, Millicom completed the sale of its operations in Chad to Maroc Telecom, a Moroccan telecommunication company. Although part of wider strategic disinvestment from Africa, Millicom’s withdrawal was likely impacted by the reputational damage it faced following the Chad blackout.
Mauritania: Internet shutdowns and propaganda campaigns
Mauritania held its presidential elections on 22 June. When violent protests broke out on 23 and 24 June in the capital Nouakchott, challenging the initial election results, the government moved to disrupt the internet before instituting a near-complete ban on both mobile data and fixed-line connections by 25 June. All of Mauritania’s consumer ISPs – Mauritel, Chinguitel, and Mattel – were impacted by the government’s decision.
By suppressing social and news media, the government was able to provide its own account of the protests through a false propaganda campaign. On 26 June, the state television broadcaster paraded a group of foreign nationals who alleged to take full responsibility for the protests. Only after the internet services were fully restored on 3 July did a more accurate picture of the post-election situation emerge.
Contrary to state propaganda, a number of Mauritanian political activists were reported to have been arrested for participating in the protests. Moreover, it was revealed that during the blackout, the state had detained two prominent journalists without charges. Lastly, once connectivity had resumed, delayed reports of civil unrest in the immediate aftermath of the elections from outlying rural areas began to emerge (See MAURITANIA: NATURAL GAS AND MINING BONANZA WILL MITIGATE INVESTMENT RISKS).
Ethiopia and Somalia: Shutdowns for exams
Internet shutdowns are not always instituted for political reasons. In Ethiopia and Somalia, they have also been implemented during national exams to prevent cheating. While internet access is occasionally restored in the evenings during these periods, the impact of such shutdowns is significant. According to Netblocks, a one-day shutdown of the internet costs Ethiopia at least USD 4.5 million and has a long-term impact on investor confidence in the host country.
The latter is particularly true in the case of Ethiopia as newly elected Prime Minister Abiy Ahmed has sought to privatise the national telecommunications provider, Ethio Telecom. Nevertheless, while such government interference is likely to concern potential investors, the anticipated establishment of an independent regulator is expected to provide appropriate checks and balances (See
Countries to watch
Protests in Zimbabwe have also been met with internet shutdowns in recent months. In January 2019, for example, the government imposed a “total internet shutdown” amid violent protests against a dramatic fuel price increase. Access to the internet and social media apps like Facebook, Twitter and WhatsApp were intermittently blocked as the country’s largest telecom company, Econet, sent customers text messages relaying the government’s orders and calling the situation “beyond our reasonable control”. As the situation has continued to decline over the past few months, with reports of load shedding of up to 16 hours a day, food shortages, and the outlawing of anti-government protests, further unrest and associated internet clampdowns are expected.
Tunisia is scheduled to hold the first round of its presidential elections on 15 September 2019. The country has enjoyed relatively free access to the internet since widespread blackouts during the Arab Spring in 2011. After transitioning into a democracy, a key test for the budding democracy will be whether or not these elections are free and fair. Any internet shutdowns during the election season, which the government would likely justify by appealing to the threat of terrorism, will instead be an indication of the state’s democratic integrity.
Burundi is expected to hold presidential and parliamentary elections in May and June 2020. In 2015, as President Pierre Nkurunziza, sought to seek a third term ahead of the country’s elections, messaging services including Facebook, Whatsapp,Twitter, and Tango were shutdown. Actions by the government since then have further pointed to little tolerance for media freedom. In March 2019, for example, the government renewed its suspension of Voice of America and withdrew the BBC’s operating license. As such, it is highly likely that next year’s elections will be accompanied by an internet shutdown and near-total blackout.
Tanzania is expected to hold multiple elections in 2020, including presidential and parliamentary votes. With current President John Magufuli having cracked down on online media over the last year (See EXX Africa Special Report: The Cost of Internet Shutdowns in Africa) it is likely that he may move to control messaging ahead of and during the elections by implementing partial bans on the internet and removal of anti-government sites. Indeed, during an August 2017 meeting with leaders from China, the Tanzanian Deputy Communications Minister praised his counterpart for blocking social media platforms and replacing them with “homegrown sites that are safe, constructive and popular”.
Each case of those in power using internet blackouts to control information, and therefore people, has its particularities. However, one constant in all of these cases is the economic impact of the blackouts at both a macro- and micro-economic level. Decreased productivity, lack of email communication, disruption to online sales, decreased online advertising; these are a few examples of the consequences of internet shutdowns for commercial entities. At a national level, a recent Global Network Initiative report indicates that the loss of internet connectivity has a pronounced effect on a country’s daily GDP. The report estimates that an average high-connectivity country stands to lose at least 1.9 percent of its daily GDP for each day of a total internet shutdown. For an average medium-level connectivity country, the loss is estimated at one percent of daily GDP, and for an average low-connectivity country, the loss is estimated at 0.4 percent of daily GDP.
Activist groups like NetBlocks and Global Network Initiative are creating awareness of both the prevalence of internet shutdowns around the world and their associated economic impact. This awareness is vital for the media, NGOs, and international organisations to try to combat the increased use of shutdowns across the African continent. Indeed, internet access and the guarding against the abuse of it by those in power are fast becoming a key frontier for the protection of international human rights. However, the fight against the abuse of freedom of expression is expected to be prolonged in Africa, as more and more leaders are turning to this form of control to suppress dissent and manipulate access to information. In the interim, businesses and the wider economy are expected to bear the brunt of these decisions.
SEE COUNTRY OUTLOOK: ALL COUNTRIES
The central African regional CEMAC bloc is unlikely to fully deliver on its fiscal consolidation and debt sustainability agenda, as its respective national governments prioritise political patronage and regime survival over fiscal and monetary prudence. Failure to successfully implement IMF-mandated reforms is likely to trigger a devaluation of the CEMAC currency, which would in turn sharply increase non-payment risks across key sectors.
On 20 May, the Congolese senate voted to approve the restructuring of USD 2.5 billion of loans from China’s Import-Export Bank, which includes eight credit agreements between Congo Republic and China. The restructuring is a key condition for the unlocking of a three-year lending programme with the International Monetary Fund (IMF). In June, the Fund’s Executive Board is due to approve, or not, a three-year Extended Credit Facility (ECF). EXX Africa made further observations on Congo’s risk outlook in a recent briefing in May (See REPUBLIC OF CONGO: IMF BAILOUT OFFERS ONLY SHORT-TERM RELIEF AS POLITICAL CHALLENGES REMAIN).
If approved, Congo Republic will become the fifth country in the central African regional bloc, the Communauté économique et monétaire de l’Afrique centrale (CEMAC), to join the IMF programme, leaving out only Equatorial Guinea. A slump in global oil prices between 2014 and 2016 saw the foreign reserves at the Bank of Central African States (BEAC) drop by 68 percent from USD15.5 billion in 2014 to USD 4.8 billion in December 2016. Reserves dropped further to USD 4.5 billion in April 2017, which amounted to less than two months of import cover. The slump also led to a combined loss of almost one percent of GDP in the CEMAC region. This fiscal and monetary crisis led to the holding of an extraordinary meeting in Cameroon, where all constituent countries agreed to undertake painful reform.
The successful completion of an IMF programme by all CEMAC countries will be critical to ensure economic recovery, as well as to stave off a devaluation of its currency by France. On the back of dwindling foreign reserves at BEAC, the French Treasury in June 2017 called for a 50 percent devaluation of the CEMAC currency, which has a fixed parity with the euro. The last time France devalued the currency by 50 percent without warning was in 1994 following a dramatic collapse in global oil prices.
The role of the IMF in CEMAC
Negotiations between the Congolese government and the IMF have been ongoing since January 2017. The main sticking point in the negotiations has been the runaway public debts of Congo owed to China and other investors, especially oil exporters. As a precondition set by the IMF, Congo should secure debt restructuring from both China and the oil exporters. Following its May vote, the Congolese parliament has finally ratified the agreement with Export-Import Bank of China that will see 33 percent of Congo’s entire debt paid in the first three years, while the remaining 67 percent paid over 15 years.
Moreover, the IMF is also demanding enhanced transparency in the oil sector, calling for state oil firm Société nationale des pétroles du Congo (SNPC) to submit to parliament a report of all pre-export financing contracts. This has to be done before the meeting of the IMF’s Executive Board later in June. Although the debt restructuring agreement with China has the potential of facilitating the approval of the ECF, there is risk of a further delay to the process in the event the government fails to declare all pre-export finance contracts and demonstrate new resolve to renegotiate these contracts.
At present, CEMAC constituents Central African Republic (CAR) and Chad have secured a three-year ECF with the IMF amounting to USD 132 million and USD 312 million respectively, while Cameroon and Gabon secured USD 666 million and USD 642 million dollars, respectively. The amount approved is a reflection of the size of the economy of each country, with CAR having the weakest economy, while Cameroon holds the largest economy in the CEMAC region. This means that the amount to be approved for Congo Republic will be between USD 500 and 600 million.
However, for most of these countries, the amount of the IMF loan is not of great importance. What is more important for some of the CEMAC countries is the fact that securing an IMF programme would legitimise contract renegotiations with commercial investors and facilitate the release of financial support from other partners in the name of debt relief or restructuring.
Social strife undermines economic diversification
Protracted social strife in Cameroon, CAR, and Chad, as well as intermittent political violence in Gabon and Congo Republic is compounding the challenges to promote economic diversification in these countries. On 6 February 2019, a peace agreement was signed in CAR between the government and 14 armed groups, raising hope for a revitalisation of country’s sluggish economy. However, armed attacks along the Bangui–Garoua Boulai corridor has led to the disruption of key exports, including gold, cotton, timber, and coffee. In Chad, the ongoing insurgency by Boko Haram together with the loss of oil revenue have left the country with three consecutive years of recession, with poverty expected to hit almost 40 percent by the end of the year. Its foreign reserves are critically depleted, amounting to just under one month’s worth of import cover, according to the latest available figures in 2018. EXX Africa is due to publish analysis briefings on Chad and CAR in the coming two weeks.
Meanwhile, Cameroon is struggling to contain the worsening security situations in the Far North from Boko Haram attacks and the North West and South West by the Anglophone separatist movement. EXX Africa has published monthly briefings on these security situations in Cameroon and their impact on the country’s economic outlook. The buoyant economic statistics for Cameroon underestimate the impact of the conflicts in the real economy (See CAMEROON: BUOYANT ECONOMY DESPITE SECURITY THREATS). Due to the rising attacks in these areas, businesses have come to a halt. Following the kidnapping of Tunisian workers in 2018, the Tunisian firm SOROUBAT-CM, abandoned the 60 km Kumba- Ekondo Titi road rehabilitation project, an important route for agricultural exports.
The North and South West regions of Cameroon, where the Anglophone separatist movement launched an armed struggle in October 2016, is a key provider for agricultural produce aimed at the export market. The fighting is disrupting the agro-business sector, with banana exports dropping, while palm oil factories, in particular the PAMOL plantations in Ndian Division, have almost ceased operations in the Anglophone regions. The Cameroon Development Corporation (CDC), which is an important debtor to local banks, is also in crisis with its plantations and mills not in operation due to the insecurity. This is likely to impact negatively the bottom line of local banks.
In times of economic hardship, CEMAC governments are more likely to pile pressures on foreign investors to extract more money. This is done mainly through arbitrary demands for backdated tax, demands for new investment, reduction of equity participations, and other unilateral demands to sponsor local projects or some government programmes.
In 2018, the government of Gabon seized the assets of the national power and water supplier, SEEG, a 51 percent subsidiary of French utility firm Veolia, before annulling its contract. This was partly due to Veolia’s refusal to bring down its equity share. Veolia took the matter to the International Centre for the Settlement of Investment Disputes (ICSID), an offshoot of the World Bank for international conciliation. The government’s action against Veolia, a French company was meant to send a strong message to other investors and concession holders to support its agenda or face serious consequences on contract stability.
Similarly, Congolese oil companies Total E&P, Eni, Perenco, Congorep, and Wing Wah E&P have received a letter in April 2019 from the authorities requesting a joint contribution towards the payment of EUR 1.7 million directly to the Organization of the Petroleum Exporting Countries (OPEC) to cover Congo’s 2018-2019 statutory contributions. Furthermore, the Congolese authorities have threatened to cancel Eni’s offtake agreement of 171,000 barrels per month, stating that the company’s contract with the government to finance infrastructural project in exchange for oil export has come to an end. Perenco and Congorep were also asked to end the practice of deducting the maritime tax from the profit of their oil sales, which was a well-established practice in the past. The Congolese government’s claim of having no knowledge about the practice was to justify future sanctions including claims for backdated tax payments.
In Cameroon, businesses are also facing a number of challenges including increasingly high operating cost, the ongoing security crisis in vast swathes of the country, and difficulty in accessing foreign currencies to pay for imports, according to the employers’ union (GICAM). The government has imposed price controls on essential commodities, such as frozen fish and rice, which together require over half a billion dollars annually for importation. Moreover, the IMF is concerned with the ailing health of some the country’s local banks as some struggling companies like PAMOL and CDC, are fast losing revenue and are struggling to honour some of their financial obligations.
In Equatorial Guinea, in September 2018, the government threatened oil companies with a licence extension refusal if they failed to invest collectively at least USD 2 billion in new oil wells. As part of its strategy, the government has launched an audit exercise to determine firms that are not complying with the National Content Regulation of 2014. The first company to fall foul of the audit has been US-based oil services company Subsea 7. The government has now ordered all energy firms in the country to cancel their contracts with the company. In its banking sector, local sources in the ministry of finance have claimed that the government has requested new loans from local banks, which is against the advice of IMF not to accumulate new arrears with local banks in a bid to protect the banking sector.
Finally, in Chad, the government with the assistance of IMF is working to improve the ailing health of the country’s two largest public banks in a bid to mitigate the risk of banking collapse. The only bright spot so far for the CEMAC banking sector is in CAR, where the government has managed to pay back commercial arrears, thereby decreasing the share of the sector’s non-performing loans. EXX Africa will continue to monitor these developments in the CEMAC region in coming months on the political, security, and economic front.
SEE COUNTRY OUTLOOK: ALL COUNTRIES
Transport logistics are a vital and promising sector for business in Africa. However, traversing land, sea, and air routes across the continent comes with a plethora of political and security risks. EXX Africa explores the key concerns in this regard, their manifestation, impact, and outlook.
Doing business in Africa is beset with a number of political and security risks. Recent research by Aon reveals that 70 percent of countries in sub Saharan African are currently at risk from strikes, riots, and other types of civil unrest while 25 percent are at risk from sabotage and terrorism. Although government assets are most frequently targeted during such events, these risks ultimately affect the viability and profitability of private entities and investments as well.
The latest Emerging Markets Logistics Index, which ranks 50 emerging economies across the world, places these concerns in the transport logistics sector. Agility Logistics produces this index. Rankings are pulled from data from institutions such as the IMF, the OECD, the World Bank, the UN, and the WEF, among others, and is supported by a survey of trade and logistics industry professionals. Findings from the 2018 Index reveal that many of the top supply chain risks in sub Saharan Africa relate to political and economic concerns, with industry professionals citing corruption (23 percent), government instability (18.3 percent), terrorism (9 percent), and piracy (4.1 percent) as major risks. In North Africa, terrorism (43.8 percent) and government instability (19.9 percent) together represent almost two thirds of the primary concerns.
A similar long-term study by Willis Towers Watson echoes these findings. Its 2016 Transportation Risk Index, compiled from data and insights derived from 350 interviews with executives in the sector, noted that the number one long-term (up to ten years) megatrend for logistics across the continent concerned geopolitical instability and regulatory uncertainty.
Such political and security risks tend to affect transport logistics across the continent in three ways: border closures or delays, the targeting of state assets, or the targeting of private assets. We explore each of these manifestations, identifying their major trends, impact and outlook below.
Border closures and delays
Government and geopolitical instability frequently result in the planned or unexpected closure of land, sea and air routes, affecting the movement of goods and services. Such closures most often arise as a result of a change in government – whether by democratic or undemocratic means – or as a result of bilateral tensions between neighbours.
Election periods pose one of the primary threats in this regard. Even votes deemed free and fair, and organised by democratically elected governments can cause disruption. During the General Elections in Nigeria in February 2019, for example, the government announced the closure of all borders and implemented various restrictions on vehicular movements for the voting weekend. A similar elections-related border closure took place in December 2018 when the Democratic Republic of Congo (DRC) closed its borders with its nine neighbours as it held its long-awaited polls.
Unexpected changes of power, such as via an insurrection, coup, revolution or rebellion, further results in risks to the logistics sector and induces high levels of uncertainty. During the successful removal of President Omar Al-Bashir in Sudan in April 2011, following weeks of anti-government protests, the transitional military council closed the country’s airspace for 24 hours as well as all border crossings until further notice.
Unsuccessful attempts at regime change can also result in panic, as witnessed in January 2019 when Gabon suddenly closed its border with Cameroon following an attempted coup against President Ali Bongo. All cross-border trade ground to a halt forcing local businesses to divert their goods to Equatorial Guinea.
Poor bilateral relations can further limit the flow of goods and services. While there are some known long-standing tensions between neighbours that have resulted in border closures, such as between Morocco and Algeria (ongoing for 25 years) and Ethiopia and Eritrea (borders have closed again despite a peace deal in July 2018), emergent socio-political developments can cause abrupt stoppages to cross-border commerce as well. In February 2019, Rwanda unilaterally decided to close its busiest border with Uganda over mutual allegations of threats to national security. The decision not only affected bilateral trade but impacted trade to Burundi, the DRC and Zambia as well. One month later, borders were again closed in Southern Africa, this time between South Africa and Mozambique following xenophobic attacks in Kwa-Zulu Natal province. During this incident, a crowd of around 200-300 Mozambicans barricaded the N4 and began targeting trucks with South African license plates.
Targeting of state assets
Beyond broader political threats and the closure of borders, the logistics sector is often impacted by security-related incidents in which non-state actors target key state infrastructure assets. Such incidents may emerge during acts of militancy, labour unrest or sabotage.
The strategic importance of a country’s infrastructure – particularly its ports – often renders these assets prime targets for militant attacks and activity. This has been demonstrated repeatedly in conflict zones over the past 12 months, with attacks reported against sea and air ports in Somaliland (Bosaso Port), Somalia (Mogadishu International Airport), Libya (Ras Lanuf and Es Sider Ports, and Mitiga International Airport), Niger (Diffa Airport), and Mali (Sevare Airport). Militants may even attempt to seize such assets for political leverage. In March 2019 in the Central African Republic, a local rebel group stationed at the border post with Cameroon blocked cargo to impede commercial traffic in an attempt to force the government to include them in the newly formed government.
The economic importance of logistical infrastructure further incentivises established worker unions to target such assets during labour disputes and negotiations. In this instance however, disruptive events are not limited to conflict zones but can be found across all countries, including the major economies. In a 2019 survey on supply chain risk management in South Africa, all 20 participants identified socio economic factors, such as labour unrest, as a key source of vulnerability. South Africa has also been impacted by frequent incidents of sabotage within the logistics sector, with arson and derailment attacks having recently been carried out against both its passenger and cargo rail services.
Targeting of private entities
Political and security risks may also affect private commercial entities and their assets directly as well. One of the primary security threats in this regard is posed by piracy. While this threat is location and sector specific, its impact is significant – particularly considering that 90 percent of African imports and exports are moved by sea. According to the 2018 Oceans Beyond Piracy report, in East Africa alone, the annual cost of maritime piracy was estimated at USD 1.4 billion in 2017 (down from USD 7 billion in 2010) while in West Africa it was estimated at USD 818 million (up from USD 719.6 million in 2015).
Most concerning, according to the latest statistics released by the International Maritime Bureau, the threat from piracy is increasing in West Africa. Since 2014, there have been approximately 250 actual and attempted attacks in the Gulf of Guinea, with a 70 percent increase in incidents being reported between 2017 and 2018 alone. This surge is expected to result in associated rises in the cost of maritime business, particularly with regard to insurance. In 2017, the total costs of additional premiums incurred by ships transiting the Gulf was calculated at USD 18.5 million. Moreover, it was estimated that 35 percent of all ships now take out Kidnap & Ransom insurance, totalling USD 20.7 million.
Companies operating in the transport logistics sector are also frequently targeted by corrupt individuals. The sector remains particularly vulnerable to corruption given its close engagement with customs officials who are often underpaid and look to increase their wages through opportunistic facilitation payments. Extensive red tape and delays further amplifies this risk: according to the African Development Bank, the average customs transaction across the continent could involve 30-40 different parties. In addition to increasing commercial operating costs and affecting intraregional and international trade, such corruption at ports of entry and exit frequently facilities a range of illicit activities as well, such as the smuggling of people and goods, and tax evasion.
Despite these challenges, there remain sound opportunities for transport logistics in Africa. Egypt, Morocco, Algeria, Tunisia, Libya, South Africa, Nigeria, Ethiopia, Ghana, Tanzania, Uganda, Kenya, Mozambique, and Angola all featured within the Emerging Markets Top 50 Logistics Index last year.
Looking more closely at the data, Egypt and Ethiopia were identified as having made significant strides in the logistics sector. The improvement in business conditions in Egypt, including the reduction in business costs associated with crime, violence and terrorism, has been identified as one of the primary reasons for it jumping six places in the index last year – the most of any country. Similarly, Ethiopia’s goal to become a low-cost manufacturing and textiles hub along with the opening of Africa’s largest cargo terminal in Addis Ababa has attracted much attention. However, ongoing security concerns, especially the threats posed from ethnic conflicts and terrorism along border areas with Somalia and Kenya, were identified as setbacks.
In another promising development, South Africa, Nigeria, Egypt, and Kenya were identified within the pool of countries that have the most potential to grow as logistics markets within the next five years. However, sub Saharan Africa’s two largest economies – South Africa and Nigeria – each fell down the index, with Nigeria falling seven spots. Both countries were nevertheless identified as turning a corner, particularly with regard to corruption and political instability and uncertainty in 2019.
As demonstrated above, supply chain risks vary wildly from country to country across Africa. From isolated events that cause single points of impact (such as a militant attack), to ongoing events that generate a localised yet sustained impact (such as strikes), to all-encompassing events (such as a coup), companies in the transport logistics sector are advised to stay abreast of political and security dynamics to navigate and forecast their threat environment. In addition, transport logistics should consider using political risk insurance to insulate their operations against disruption.
SEE COUNTRY OUTLOOK: ALL COUNTRIES
A recovering oil sector and IMF credit support are shielding Cameroon’s economy from the impact of a deteriorating political climate and mounting security concerns. Western countries remain relatively muted in their response to alleged abuses by the government and security forces, even though, as EXX Africa previously warned, the country is slipping into a protracted state of civil war.
Vast swathes of Cameroon’s northern and western regions are turning into a permanent conflict theatre, as there is no indication of the anglophone insurgency abating. Meanwhile, a concurrent Islamist insurgency is becoming more deeply entrenched. As counter-insurgency tactics fail, Cameroon risks stumbling into a drawn-out civil war, especially once the president’s eventual departure triggers fresh political instability.
The Gulf of Guinea has become the world’s largest piracy hotspot since the decline of Somali piracy in the early 2010s, with incidents increasing markedly in the last two years, continuing into early 2019. With the media reporting of new attacks in recent weeks, including kidnappings for ransom, we examine the piracy threat and its trends in the Gulf of Guinea.
Reports in the last few weeks have highlighted the persistent threat of piracy, armed robbery at sea and kidnap-for-ransom in the Gulf of Guinea. Within just the first quarter of 2019, 22 incidents were recorded across the Gulf while the region accounted for all worldwide crew kidnappings with 21 crewmembers kidnapped in five separate incidents. Although the prevalence of piracy may be higher – it is believed that about half of all attacks go unreported – incidents this year have already been recorded in Nigeria, Benin, Cameroon, Ghana, Ivory Coast, Liberia and Togo.
The threat of piracy has been steadily increasing in this region over the past half-decade. Since 2014, there have been approximately 250 actual and attempted attacks in the Gulf of Guinea, according to the International Maritime Bureau’s Piracy Reporting Centre. However, between 2017 and 2018 alone, the number of attacks increased by more than 70 percent. Nigeria has been and remains the epicentre of this threat. In 2018, 48 incidents were reported in Nigerian waters and between October and December alone, 41 kidnappings were recorded off its coast. Thus far this year, 14 incidents have occurred in the country’s waters – making up over 60 percent of the total reported incidents in the region to date. While this is a slight improvement year-on-year compared to official data collected in 2018, the waters within the Gulf of Guinea, and specifically those off Nigeria, remain some of the most dangerous for vessels and crew. We explore the evolving nature of this threat and the outlook for the year ahead.
A persistent and evolving threat
The below map shows piracy and armed robbery incidents that have been reported to the International Maritime Bureau in 2019 to date. The markers show attempted attacks, boardings, incidents in which vessels were fired upon, hijackings, and suspicious vessels. If exact coordinates are not provided, estimated positions are shown based on information provided.
Emerging alongside the rise of commercial oil exploitation in the region, piracy in the Gulf of Guinea has posed a persistent threat since the 1970’s. As global maritime trade expanded from this period onwards, ports became busier and vessels were forced to wait to berth, rendering them vulnerable to opportunist attackers. Small gangs in hollowed-out tree trunks masquerading as fishing vessels carried out these first attacks. Over time, however, these makeshift canoes were fitted with outboard motors to extend their speed and range, before gradually becoming more sophisticated to include the use of advanced technologies and weapons, including speedboats, radio frequency jammers, satellite navigation and a combination of small arms and light weapons.
By the 1990s, attacks shifted from Lagos Anchorage towards the Niger Delta where incidents became more politicised as a result of contestation over the exploitation of oil and the distribution of its rents among the local population. Crimes, such as oil bunkering and kidnapping for ransom, were attributed to groups such as the Movement for the Survival of the Ogoni People (MOSOP) and the Movement for the Emancipation of the Niger Delta (MEND), who would use criminal activities to raise revenues and further political ends by bringing attention to their cause. While an amnesty programme launched in 2009 contributed to an initial decline in incidents, an increase in reprisals were reported from 2016 onwards. Today, it is evident that political insurgents have been co-opted by highly organised, sophisticated criminal groups, with clear involvement by senior politicians and members of the security force. These groups also operate outside of Nigeria, in the waters of neighbouring countries, and the threat of piracy now extends from Senegal all the way along the coast to Angola.
From steel pipes to RPGs
As small maritime-focused gangs (such as the Seadogs, the Corsairs and the Vikings), organised criminal groups and political insurgents (such as the Niger Delta Avengers, Red Scorpions, and the Niger Delta Greenland) have melded, it has been difficult to pinpoint the number of groups operating in the region and their respective sizes. In 2012, it was estimated that there were around 1,250 ‘trained’ pirates, but this figure is in itself questionable given that groups employ young men and local fisherman via ‘unions’ on a job-by-job basis depending on the skills needed. There has been little verifiable evidence subsequently to demonstrate the exact number of pirates operating across the vast number of criminal gangs and militant groups, which are generally accepted to be amorphous.
Piracy in this part of the world is dynamic and comprises theft – varying from petty to sophisticated, where crimes are planned in advance and executed with greater skill -, oil bunkering, petro-piracy – often by means of ship-to-ship transfers or attacks on offshore platforms -, hijackings, and kidnap for ransom. Attacks also target an increasingly wide variety of ships, including: bulk carriers, container vessels, general cargo vessels, tankers, oil industry support vessels, and fishing vessels.
In the majority of cases, piracy takes the form of petty theft in port or from a vessel at anchor by perpetrators armed with knives or improvised weapons, such as pieces of steel piping. However, in more sophisticated incidents, attackers have boarded vessels well outside territorial waters, up to 100nm offshore, and are armed with assault rifles, machine-guns and rocket-propelled grenades (RPGs), demonstrating the intent to use lethal violence as a tactic when carrying out an attack.
Attacks off Nigeria have become increasingly violent, with pirates making use of multiple attack boats and engaging in shootouts with naval escorts. Kidnappings have also steadily increased over the past two years in which crewmembers are abducted form ships well offshore before being brought back into Nigeria where they are held for ransom. On 29 October 2018, for example, Nigerian pirates in a speedboat hijacked a tanker 100nm off Point Noire, Republic of Congo, kidnapping eight of the 18 crewmembers.
Modus operandi differs by incident. In more opportunistic attacks, small gangs will target vessels identified to have a poor security profile, attacking under the cover of night to avoid detection. With armed robbery at sea, attackers often pose as fishermen to blend in with the many small craft, before identifying a target and launching a stealth attempt at night, where use of force is threatened if perpetrators encounter crew. In kidnappings for ransom, ‘high-value’ targets are identified beforehand. In the most sophisticated attacks, motherships may be used and intelligence gained from corrupt officials to support a hijacking and ship-to-ship transfers.
The involvement of government officials from various departments has not only provided perpetrators with valuable intelligence but, through bribes, has ensured that naval forces turn a blind eye at crucial moments. Moreover, rumours of high-level politicians directly receiving oil rents and oil companies assisting local groups in bunkering oil as a ‘cost of business’, demonstrate how licit and illicit economies in Nigeria have blended.
Shipping companies have taken a number of ‘hardening’ measures to mitigate their vulnerability to attack. These include carrying armed guards deployed by security forces, such as in Nigeria, employing best practice management strategies for evasive measures, and awaiting berth outside high-risk waters such that vessels can move swiftly to port when required. However, private military security companies are not permitted in Nigerian waters, ruling out a method that proved most successful in combatting Somali piracy. Nigeria instead allows shipping companies to hire security escort vessels carrying naval officers. This strategy is nevertheless reported to be prohibitively expensive and largely ineffective as a deterrent.
State-based and regional efforts have drawn limited success with some countries garnering better results than others. Togo, for example, has been the most enthusiastic in the region, and has managed to decrease incidents in its waters by increasing patrolling activities and being the most likely of states in the region to respond to distress calls. Nigeria, however, has a mixed record, with security forces being plagued by corruption, and the majority of its defence budget having been deployed to fight the many conflicts onshore. Nigeria also seldom responds to distress calls, having led to a trend in the late 2000s and early 2010s in which masters simply did not report attacks to local authorities.
At a regional level, the establishment of joint reporting centres and cooperation zones have been met with a positive response. However, these efforts, while extensive and proactive on paper, have been hampered by funding and capacity constraints as well as the Anglophone/Francophone divide in the region, alongside fears of amplifying Nigerian hegemony by allowing Abuja to take a leading role. As such, however useful these strategies may be, they are often not fully implemented, forcing the region to rely on support from external actors, including the EU and the US, who regularly conduct joint exercises and counter-piracy training drills.
In the Gulf of Guinea, the nature, frequency, impact and geographical dispersion of piracy fluctuates as a result of a number of factors, including: the oil price, the exchange rate, whether fuel subsidies are in effect, the efficacy of state-based counter-piracy measures, the evasive behaviour of vessels and local politics. However, while the patterns of piracy are always shifting, the risk is never fully absent.
The threat of attacks of all kinds – ranging from petty theft to kidnap for ransom – will therefore continue in the medium to long term for a number of reasons. Poverty levels remain high, meaning that young men looking for income opportunities are numerous, policing and law enforcement remains weak, and governments are frequently distracted by other security and political issues, such as Islamist extremism onshore and local elections.
Shipping companies operating in this region should exercise caution, and continue to follow the measures detailed in Best Management Practices 4 alongside the guidelines issued by the International Chamber of Shipping and its partners. Further, vessels can minimise their risk by, where possible, planning to limit the time spent at anchor or adrift, or doing so much further offshore. Vessel hardening can also prove effective in improving the vessel’s security integrity and preventing boarding. This can include the deployment of barbed wire fencing along the vessel perimeter, the utilisation of a ‘safe room’ for crew to retreat to, and the development of standard radio and emergency procedures in the event of an attack. All necessary insurances should also be in place to mitigate loss for those with commercial interests in shipping, or whose goods are bound from or destined to the region.
The Islamist insurgency in northeastern Nigeria has continued on a track that is all too familiar. In many ways, the conflict appears to be repeating trends seen in previous years, particularly from 2013 to 2015, when the insurgency flared up dramatically. Should the conflict continue on its current trajectory, the threat may again extend beyond Borno State and Nigeria’s borders.
Local and international reports are increasingly highlighting the grave socio-economic impact of militancy in Northwest and Southwest Cameroon, as well as harsh counter-insurgency tactics applied by security forces. Mounting criticism of the Cameroonian government is frustrating the country’s diplomatic relations and economic outlook.
- BENIN: TRADE DISPUTE AND POLITICAL TENSIONS DESTABILISE COUNTRY’S EXEMPLARY MODEL
- MOZAMBIQUE: ELECTION MANIPULATION IS UNLIKELY TO TRIGGER RETURN TO CIVIL WAR
- NIGERIA: TRADE RESTRICTIONS DRIVE UP NIGERIAN INFLATION AND BOOST FUEL SMUGGLING
- KENYA: PRESIDENT STEPS UP PRESSURE TO LIFT THE LENDING RATE CAP TO APPEASE THE IMF
- BOTSWANA: POLITICAL TRANSITION WILL DRIVE MUCH-NEEDED ECONOMIC REFORMS