Pirates of the Gulf of Guinea: A Cost Analysis for Coastal States

Pirate groups concentrated in the Niger Delta earn perhaps $5 million of direct income per year through theft and hostage-taking. The majority of this income---nearly $4 million per year---is stolen and extorted from non-African entities seeking the release of non-African hostages.

These low direct costs to African nations have created the perception among some that Gulf of Guinea piracy and armed robbery are greater problems for international shipping companies and foreign seafarers than they are for African nations. According to this view, these crimes happen in Africa, but they do not typically happen to Africa. Gulf of Guinea waters are crime scenes, but Gulf of Guinea nations are not the primary victims. The implication is that those paying ransoms and suffering direct financial losses have the most at stake.

This report shows that this perspective is misguided. Gulf of Guinea nations are facing significant direct, indirect, and opportunity costs related to the presence of piracy and armed robbery. These costs occur on a scale that is thousands of times greater than what is paid to pirates in ransoms each year.