Taxes, fees deemed lifeline for Somalia’s Al-Shabab

Since its establishment in 2006, Harakat al-Shabaab al-Mujahideen, more commonly known as al-Shabaab, has been developing and seeking new funding sources to ensure the continuation of its terrorist operations and avoid any financial crises.

Extremist groups, including Al-Shabab, have develop various sources of funding, including the imposition of taxes on local residents and businessmen, illegally trading smuggled goods and narcotics, and finally ransom money in exchange for hostages.

As for taxes, Al-Shabab is currently waging an economic war over businessmen and companies in Somalia as they demanded them to pay taxes for the movement to compensate for its continuous losses.

Reports further affirmed that business froze in Jowhar, the administrative capital of Middle Shabelle region of Somalia, as merchants of the city stopped buying goods from Mogadishu, as al-Shabaab, which is active in the state, imposes taxes on goods being transported from Mogadishu to Jowhar.

In addition to taxes, the movement also imposes various fees over transit points as a source of income, and despite that the number of these checkpoints reduced significantly, Al Shabaab’s most lucrative checkpoint is about 160 km (100 miles) north-west of the capital Mogidishu on the road to Baidoa, the monitors said, citing an al Shabaab defector who reported that the location earns the group approximately $30,000 per day — $10 million a year.

Earlier this year the monitors obtained ledgers belonging to al Shabaab that were recovered after one of the group’s senior accountants was killed in an attack by the Somali National Army and African Union peacekeepers.

They wrote that the ledgers detail al Shabaab’s revenue and expenses in one region, Hiran, in central Somalia, from October 2014 to March 2018 and “display a sophisticated accounting system” in which the militants transfer funds using the mobile money system, according to Reuters.

Charcoal trade has also been a main source of income for the terrorist group. The U.N. Security Council forbade charcoal exports from Somalia in 2012 in a bid to cut off al Shabaab’s funding, but the group largely ignored the ban.

Al-Shabab has built up an extensive racketeering operation, with illicit trade of charcoal bringing in an estimated $10 million a year despite the UN ban.

Since April, the UN has been buying 52 tons of charcoal a week for the kitchens of peacekeeping forces in Mogadishu, and one Somalia expert says it is “highly unlikely” that the deal is “not at least indirectly benefiting” the terrorists.

The report says that since March the main destination for shipments - using fake country of origin certificates from Comoros, Ivory Coast and Ghana - has been ports in Iran, where the charcoal is packaged into white bags labelled “Product of Iran”.

Al-Shabab has also managed to initiate wars on the Somalian society while in the same time robbing and taking over the foreign aid that is being sent by Arab and European countries.