Zakat is its most important resource.. How did the Somali Al-Shabaab movement build its financial network?

Al-Shabaab imposes taxes on vehicles and goods that pass through checkpoints spread throughout the country (French)

Since its inception in 2006, the Al-Shabaab Mujahideen Movement in Somalia has been able to build a financial network that intertwines economics, security, and the use of modern technologies, forming stable sources that provide the movement with tens of millions of dollars.

The movement's financial network not only ensured its ability to continue, but also transformed it into the richest and most important branch of Al-Qaeda in the world, according to Stephen Townsend, the former commander of US forces in Africa (AFRICOM).

The US Treasury Department estimates that the movement generates more than $100 million annually, a remarkable figure considering that the Somali government’s local revenues in 2022 amounted to $250 million, which sheds light on the size and effectiveness of the group’s fundraising mechanisms.

Taxes and zakat

Taxes represent one of the main resources that feed the group’s finances, and according to a UN report issued in 2021, these taxes include 4 main areas: agriculture, vehicles, goods, and livestock.

Al-Shabab has two main departments to collect taxes from citizens, the Zakat Office is dedicated to collecting non-cash taxes such as livestock and agricultural products, while the Finance Office collects all cash taxes.

A study published by the Mogadishu-based Hiral Center shows that zakat is collected from people appointed by the movement with the help of tribal sheikhs.

Ramadan is the traditional season for collecting them.

Collectors issue receipts to patrons;

Those who lost their receipts are forced to pay taxes again next year, to ensure that herders who were far from lands controlled by the movement during the previous year do not evade paying zakat.

As for the Finance Office, it collects all cash taxes, including cash zakat, which is set at 2.5% of the cash value of the business according to an evaluation conducted by the movement’s accountants, who maintain a list of business owners and an estimate of their value, as they are required at the end of the year to pay the annual zakat to the Finance Office in cash. .

In areas not under the movement’s control, taxes are collected in various ways, such as summoning business owners by the movement’s financial affairs officials to come to their areas to pay, or stopping trucks transporting their goods at the group’s checkpoints outside the cities and forcing merchants to pay.

In addition to the above, the movement relies on a wide network of informants to provide it with information about merchants whose goods do not pass through roads controlled by the group, as they are forced to pay under the threat of being targeted, in the event of refusal, by the group’s security office, which applies penalties against them extending from closing the business. Business to murder.

Despite the difficulty of arriving at accurate figures for the value of taxes collected by the group, calculations conducted by the Hiral Center for Security Affairs confirm that it is no less than $3.5 million from the capital, Mogadishu alone.

A review of Al-Shabaab fighters (Al Jazeera - Archive)

Checkpoints

One of the main sources of income for Al-Shabaab comes from imposing taxes on vehicles and goods that pass through checkpoints spread throughout various parts of Somalia, including some areas under the various government control. A United Nations team estimates the number of these points operated by the movement at 100.

This checkpoint network consists of permanent, semi-permanent and mobile posts, giving Al-Shabaab the ability to adapt collection methods according to the field situation on the ground.

It is difficult to avoid paying taxes through these points due to the extensive network of informants who collect information for the movement and report it to drivers who try to take an alternative route, where non-negotiable fines are issued against them.

The value of the tax per truck ranges between 500-1,000 dollars each time it uses this road, and a UN report estimates that the revenues of the Kasuma Bridge point alone, which is one of the most profitable points, ranges between 15,000 and 30,000 dollars per day.

Collection from ports

Sea ports are one of the areas of fertile financial collection for traffic, which uses its agents within port departments to obtain shipping data and provide information about companies and what they import and export, enabling them to impose taxes not only on imports and exports, but also extends to goods transiting through the vital road to and from ports and companies. .

In a case mentioned in a UN report issued in 2022, a company imported 8,000 tons of food through the port of Mogadishu in early 2021, and 10 days after the shipment arrived, the movement contacted the company by phone and demanded that it pay a tax of more than 30,000 dollars.

In a figure indicative of the size of these taxes, the same report estimated what the movement collected in July 2021 from the port of Kismayo in southern Somalia alone at 34,200 US dollars.

Mobile phone in the service of movement

The use of telephone transfers is one of the most prominent means that the group uses to move money. According to a report issued by the World Bank, more than 70% of the population uses mobile money services, and more than two-thirds of all payments in Somalia are made via mobile money platforms, where 155 million transactions are made monthly through this method, amounting to $2.7 billion.

The movement takes advantage of the ease of the mobile transfer process and the inability of the Central Bank to impose complete control over this huge amount of transfer operations due to its weak resources. All that is required is obtaining a SIM card to carry out the transfer operations directly.

In addition to bank accounts belonging to some members of the group, cash dealing is the most common, as tax funds of various types are collected in cash and are circulated by withdrawal and deposit in the same way.

Central Bank of Somalia in Mogadishu (Al Jazeera)

Enterprise penetration

The movement has resorted to infiltrating government institutions, including those responsible for taxes and the Somali Chambers of Commerce and Industry, which gives it the opportunity to obtain sufficient and detailed information to blackmail traders, businessmen and local communities.

According to a former member of the movement who told Voice of America, this penetration occurs through several means:

Including including one of its followers in the relevant institution, or recruiting a worker within these targeted circles by giving him a monthly salary.

The hack may reach the heart of the agencies charged with protecting security, as officials in vital institutions such as Mogadishu Airport and the National Intelligence Service have been convicted on charges of cooperating with the group.

This hack not only provides information, but also creates an atmosphere of terror that prompts citizens to comply with the group’s requests, as they feel the government’s inability to protect them when they refuse to pay. They are also afraid to report members of the movement because of the group’s network of agents and informants and the high level of infiltration, and this is what makes it active. In extorting companies and individuals in some areas without the need to control them militarily.

Drying up financial sources

Many relevant reports indicate that the movement is involved in various commercial activities such as gold, real estate, charcoal smuggling, weapons, and others. A decision issued by the US Treasury Department in March 2024 to target entities and people supporting the movement reveals a wide network of money laundering operations in East Africa, Cyprus, and elsewhere.

This decision falls within Washington's efforts to dry up the sources of financial movement, as the US Treasury Department announced a reward of $10 million for reporting information that leads to disrupting these activities.

This international dimension in combating the movement’s economic activity is matched by a parallel local dimension, as the Somali federal government has taken many measures in this regard, such as issuing the Anti-Money Laundering and Terrorist Financing Law in 2016, which requires financial institutions to report financial transactions that exceed $10,000.

In an attempt to confront the movement's use of mobile money transfers, the Somali government developed legal regulations for money transfer via mobile phone, and starting in February 2021, a license was issued to a number of mobile money service providers in an effort to create some kind of regulation and oversight over them.

The economic front represented a pivotal part of the Somali government’s comprehensive war on Al-Shabaab declared in 2022, as the Ministries of Finance, Ports, Land Transport, Trade and Industry warned businessmen, institutions and citizens against dealing with the movement at risk of withdrawing licenses from companies proven to be involved in this activity. .

In addition to the above, security forces carry out attacks and raids on tax collection points and financial officials affiliated with the movement.

Obstacles to the authorities

However, many obstacles face the Somali authorities in their efforts to undermine the movement’s economic activity, as employees in various financial institutions fear the movement’s retaliation if their activities are reported, and the spread of nepotism and clannishness in state departments threatens the effectiveness of government procedures, as corruption begins with the local elites who hold power. The reins of power.

In May 2022, the Somali Financial Reporting Center issued a government document assessing the national risks associated with identifying, assessing and understanding money laundering and terrorist financing risks in Somalia, and developing coordinated actions to ensure effective risk mitigation.

This assessment indicates that Somalia cannot expedite investigations into money laundering and terrorist financing due to the fragmented nature of interaction between agencies, the lack of investigative capacity within the Financial Reporting Center and other agencies, and the fact that the military court that tries terrorist financiers is sometimes accused of failing to meet international standards for fair trial. .

Source: Al Jazeera