A new report suggests that Al Shabaab has plenty of money to fund its ongoing insurgency and terrorist activity. A report from 2018 estimates that the group has made at least $17.5 million this year alone.
The group primarily makes money from taxation of illicit charcoal, estimated to generate $7.5 million in taxes for the group.
The group also taxes other economic activity within its area of control including tolls on vehicles. One lucrative checkpoint is believed to earn Al Shabaab $10 million per year.
The export of illicit charcoal is transiting through Iran where it is re-packaged as “Product of Iran”. No further details were provided on the financial end of the transaction, but the charcoal may be sold in Iran or through Iranian businessmen. They likely take a cut of the profits, but send the majority of the funds back to Somalia through hawala or money services businesses.
Analysis: Terrorist organizations that tax economic activity within their area of control are often able to generate more revenue in taxation from illicit or illegal activities (such as smuggling), but also generate significant proceeds simply from taxing the day-to-day activities of individuals. Stopping a group’s ability to fundraise in this manner is almost entirely about reducing their territorial control.