One intriguing and unconventional investment opportunity that many people still don’t know about is investing in piracy in Somalia.
A pirate organization came together in Haradhere, a small coastal town in Somalia, in 2009. The pirates hunt the waters of the Indian Ocean and the Gulf of Aden, which links Europe to Asia through the Red Sea. To gather funding, the “companies” also created their own pirate stock exchange. That way, the public can invest in their endeavors.
This activity has challenged traditional investment paradigms and raised many questions from legal, ethical, and humanitarian aspects. The following article will explore the Pirate Stock Exchange, examine the economic drivers, and highlight the socio-political context contributing to its emergence.
Understanding Piracy in Somalia
While the Somalian government was busy dealing with Islamist extremism, the population of Harardhere, a small fishing town decided to join pirate gangs to ensure better income and avoid a life of poverty.
This common trend led to the birth of the first Pirate Stock Exchange. Pirates united in different “companies.” At first, there were just fifteen, but the number is said to be growing. According to reports, the Harardhere Pirate Stock Exchange has over 70 distinct maritime operations listed.
So, how does it work? The basic principle of the exchange is that investors earn a share of the profits every time a pirate mission is successful. Some shocking quotes reported by Reuters came from a young divorced woman who donated part of her settlement, saying, “I am waiting for my share after contributing a rocket-propelled grenade for the operation.” She also added – “I am really happy and lucky. I have made $75,000 in only 38 days since I joined the company.”
The practice is said to be mainstream already. Some websites even claim that government officials allegedly get a cut of the ransoms to pay for desperately needed public infrastructure. Furthermore, the government finds it hard to ensure the needed resources to address piracy due to fighting rebels. As a result, this has left many young men lured to the life of piracy.
How the Somalia Piracy Stock Exchange Works
The individuals organizing the pirate operations plan with potential investors to assess trade routes for profitable pirate opportunities. When there is a potentially-promising mission, they contact the Pirate Stock Exchange. Anyone can participate in the mission by contributing food, weapons, kerosene, or cash. Reuters cited one of the leaders of this operation: “The shares are open to all, and everybody can take part, whether personally at sea or on land, by providing cash, weapons, or useful materials … we’ve made piracy a community activity.”
With the resources and information available, the pirates attack container ships in the trade routes they have assessed. Their target is usually human hostages. Everyone involved is set free once the ransom is secured, usually without harm.
According to a report by Statista, piracy attacks in the waters of Somalia increased significantly in 2011, with 160 recorded instances. Between 2010 and 2015, the number surged to 358 cases. However, between 2016 and 2022, the number of attacks dramatically decreased to only eight incidents. This drop has been attributed to consolidated efforts to mitigate sea crimes.
To Wrap Up
The Somalia Piracy Stock Exchange is an unorthodox investment resulting from economic desperation. It allows locals to escape poverty in a region where opportunities are scarce by funding illegal and criminal activities.
