January 31, 2012
Somali piracy has adversely impacted the general socio-economic conditions in the region, in particular the mercantile activities of the Berbera port, commerce and shipping officials say.
Deputy Chairman of the Somaliland Chamber of Commerce Mohamed Shukri Jama identified two ways business has been impacted at the port.
"First, freight rates have increased considerably. For instance, Berbera's port rates are twice as high as in Djibouti," he told Sabahi. "Second, large, reliable ships are unwilling or reluctant to transport goods to the Berbera port; and if one is found, the asking rate is much higher than before."
"Those two factors pose challenges for consumer goods received at the Berbera port to be competitively priced in the marketplace," Jama said. "Right now, there are two Somaliland shippers who have had their cement cargo stranded in Pakistan for the last five months because they have not been able to find a ship to transport [the cargo] to Berbera."
Yusuf Ismail Ali, head of the Tawfiq Shipping Agency and an agent for ships docking at Berbera port, said another problem is that cargo ships originating from Dubai, Kuwait and Oman could be at risk for piracy, particularly now that pirates have expanded deep into international waters.
He said the increase in freight rates have reduced the number of large ships willing to transport to Berbera, particularly those from Brazil, India and Bangladesh transporting sugar and rice.
"Because of the increase in insurance, cargo ships have raised freight rates, so a 14-tonne shipment that used to be transported by a single ship is now transported by 14 small boats, which further raised transportation rates," Ali told Sabahi.
The Deputy Chairman of Somaliland's Chamber of Commerce explained how the cost of piracy trickles down to the consumer.
"Merchants will add the cost of overhead expenses to the goods, and then add a profit margin," Jama said. "So, increasing shipment costs have a huge impact on market prices, especially at those rates."
Higher costs at Berbera port, the biggest port in northern Somalia, have been felt throughout the rest of Somaliland's economy.
"Taxes levied at the port are a big revenue source for the government and affect the annual spending budget. Whenever taxable imported goods increase, government revenues also increase. Conversely, whenever taxable imported goods decrease, government revenues decrease," Jama said.
Businesses are also feeling the pain of decreasing consumer demand and slow-moving inventory due to higher prices of goods, Jama said, adding that the economic impact of piracy is multifaceted and a "big problem".
Fatima Hussein, who runs a grocery shop in Hargeisa, said she and her customers feel the impact of rising prices.
"Customers complain whenever the price of goods increase, and some leave and don't come back because they can no longer afford and find it difficult to purchase goods," she said.
She said certain goods that used to sell within three months now sit on the shelves for nine months or more.
Somaliland has been focusing on deterrence efforts to curb piracy activities by prosecuting and sentencing piracy cases locally. Sahil District Court Chief Justice Osman Ibrahim Dahir told Sabahi that since 2008, authorities have prosecuted 80 piracy cases.
A recent report from the International Maritime Bureau found that overall piracy incidents in Somalia's waters rose from 219 in 2010 to 237 in 2011, however the number of successful hijackings fell from 49 to 28, due in large part to the continued efforts of international security forces.
No other port in the region has been as adversely impacted by piracy as has Berbera port, said Berbera port deputy supervisor Omar Abokor Jama.
"We have a strong marine force that patrols our coastline, guarding against criminal piracy activities seeking to commandeer ships," he told Sabahi. "Not a single ship destined to the Berbera port has been hijacked yet, with the exception of MV Juba XX, transporting an oil shipment for Red Sea Petroleum. It was hijacked off our coastline, and when it was taken to Bossaso, we negotiated for its release through traditional Somali practices, because Somalis cannot take hostages from one another due to a much-revered Somali custom."
The port supervisor said Somaliland's marine forces do not escort ships, but use a radar system with a 90-mile radius to monitor the coastline.
The Chamber of Commerce official said the international community should notice what Berbera is doing to safeguard its coastline and differentiate Somaliland from other ports in Somalia. He said ships should be encouraged to transport goods to the Berbera port.
"If ships were hijacked and docked off our coast, if we provided safe-havens and hide-outs for pirates, then we should be treated the same as Somalia, otherwise we should not be treated the same," Jama said.
Somaliland is preparing anti-piracy legislation that addresses sentencing pirates regardless of nationality, including if they are engaged in financing piracy.
"The UN Office on Drugs and Crime (UNODC) supports this law and has assisted the [Somaliland] Ministry of Justice in drafting with the document," UNODC representative in Somaliland Mohamoud Abokor told Sabahi.
Abokor said that anti-piracy legislation, which is pending parliamentary approval, stipulates that pirates be held in secure prisons designed for inmates serving long sentences.
He said rehabilitation programmes, counselling, vocational training and basic formal education programmes are provided in the hopes that at the end of their sentences, pirates will become contributing members of society.
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