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Observatory of Illicit Economies in Eastern and Southern Africa
Summary highlights
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Iranian weapons supplied to the Houthis may end up in Somalia.
Over the course of almost two weeks, the GI-TOC communicated with an arms dealer based in Sana’a, the capital of Yemen. The dealer provided the GI-TOC with detailed information, including photographs of assault rifles similar to both weapons found in Somalia and those seized by US and partner forces from alleged Iranian arms deliveries to Houthi insurgents in Yemen. Our analysis revealed evidence of illicit-arms smuggling networks, which see Iranian arms intended for Yemen ending up in Somalia – and potentially beyond.
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Kenya’s recent ban on the export of donkey skins to China faces court challenges.
The expanding production of ejiao, a Chinese traditional medicine manufactured from donkey skins, has put a strain on donkey populations worldwide. In March 2020, Kenya became the latest African country to ban the export of donkey products, following pressure from farmers’ lobbies and animal-rights groups. In the wake of the March ban, three Kenyan slaughterhouses took the government to court, where the cases are ongoing.
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Counterfeit and substandard hand sanitizers have flooded markets in eastern and southern Africa during the coronavirus pandemic.
When the coronavirus pandemic struck eastern and southern Africa in March 2020, hand sanitizers quickly began disappearing from store shelves. Locally manufactured sanitizers began appearing to meet skyrocketing demand. However, such products have often failed to meet health standards, particularly the minimum 60% alcohol content recommended by the World Health Organization. In South Africa’s Eastern Cape province, the supply of substandard sanitizer has been linked to at least one serious outbreak of COVID-19 at a secondary school.
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Stricter measures targeting remittance companies risk driving financial flows to Somalia underground.
The UK financial regulatory environment is pushing banks to close the accounts of international remittance providers, with companies serving Somalia particularly affected. Banks have already increasingly opted to cease providing services to remittance companies, as the cash-based nature of their transactions render them vulnerable to abuse from those engaging in money laundering or terrorism financing. The timing of the UK regulatory crackdown is particularly unfortunate for Somalia, which is facing the aggregate threat of the coronavirus pandemic, devastating floods and a locust invasion. The crackdown also threatens to drive financial flows to the country further underground. 5. Kidnappings continue to shake the business community in Mozambique. In recent years, kidnappings in Mozambique have regularly targeted prominent members of the business community, particularly those of Asian descent. Eight such kidnappings have been reported since the start of 2020. Perpetrators appear to operate with impunity. This, together with arrests of police and military officers in connection with some of the attacks, as well as government inaction, has led some to conclude that Mozambique’s criminal-justice system has been compromised by criminal networks.
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Kidnappings continue to shake the business community in Mozambique.
In recent years, kidnappings in Mozambique have regularly targeted prominent members of the business community, particularly those of Asian descent. Eight such kidnappings have been reported since the start of 2020. Perpetrators appear to operate with impunity. This, together with arrests of police and military officers in connection with some of the attacks, as well as government inaction, has led some to conclude that Mozambique’s criminal-justice system has been compromised by criminal networks.
About this issue
The latest phase of the civil conflict that erupted in Yemen in 2015 has led to a proxy war between Iran and the United States and its allies in the region. Iran’s supplies of weapons and ammunition to the Houthi insurgency have been well documented in a series of maritime seizures of dhows dating back to 2015. By tracing assault rifles of likely Iranian origin that have ended up in Somalia, our headline story explores whether the conflict in Yemen may be spilling over into East Africa. The Global Initiative Against Transnational Organized Crime (GI-TOC) will further explore these dynamics in a forthcoming research study on the Yemen-Somalia arms trade.
East Asia plays a key role in the trafficking of high-profile wildlife products, such as ivory and rhinoceros horn. Less known is the trade in donkey skins. The hides are processed in East Asia for use in the traditional Chinese medicine, ejiao. Plummeting donkey populations have led many African states to ban the export of these products, with Kenya being the latest to do so. Yet the theft and cross-border smuggling of donkeys in East Africa is still rife, and there seems to be a significant risk of an emerging organized illicit trade that would circumvent the bans now covering much of Africa. A regional approach to combatting donkey smuggling may be necessary to safeguard the animals and the vital role they play in subsistence lifestyles across East Africa and beyond.
The coronavirus pandemic continues to affect patterns of crime and corruption across Africa. In the last Risk Bulletin, the GI-TOC detailed likely corruption in the Somali Federal Government in relation to the diversion of COVID-19 medical donations. A comparable case emerged in the Democratic Republic of Congo in July, with media reports of a ‘mafia network’ in the Ministry of Health embezzling funds intended for coronavirus relief. In the current issue, however, we explore an example of a more decentralized criminal activity, namely the manufacture and distribution of substandard hand sanitizer across southern and East Africa. While it seems to be the product of small-scale criminal opportunism, the proliferation of substandard and counterfeit sanitizers may have a detrimental impact on public trust in the state’s ability to respond to the pandemic. The most salient example of this impact was seen in South Africa in June, where an outbreak of COVID-19 in a secondary school was linked to substandard sanitizer, as well as possible procurement fraud.
In this issue, the GI-TOC also explores how the UK financial regulatory environment is threatening the remittance sector, with potentially significant humanitarian implications to Somalia. The increasing reluctance of banks to provide services to remittance companies also threatens the integrity of Somalia’s nascent formal banking sctor, and risks driving fiancial flows further underground. Finally, we look at the ongoing trend of kidnappings of businesspeople in Mozambique, including the worrying involvement of police and military officers. Despite past promises to address the problem, the Mozambican government is yet to enact any meaningful reforms, and it is possible that the appeal of kidnapping for ransoms may attract other organized criminal actors in the country.