The Islamic State in Somalia is assessed to be cash poor, according to a recent report from the Hiraal Institute.
The group raises money through donations (some of which may be voluntary), as well as taxation and extortion. The group focuses on larger businesses within its area of operations, avoiding taxing smaller businesses.
While the group may not raise significant amounts of funds, it also has a low ‘burn rate’ due to low expenses. The group primarily spends money on weapons (most of which are old or outdated), and salaries (which are also very low). Historically, the group is reported to have received financial support from Yemen (in 2015 and 2016).
This report is in contrast to a report from August 2018 that suggested that the group is raising $72,000 per month, likely well above its subsistence level. These two reports demonstrate how little is known about terrorist financing by the Islamic State in Somalia, and how variable the estimates can be.
Analysis: The Islamic State in Somalia is likely to be able to raise funds quickly due to its existing taxation base. In Somalia, raising funds is largely about territorial control. Without control of a lucrative economic area or significant donors (such as other terrorist groups or state patrons), terrorist and insurgent groups generally maintain a subsistence level of financing.