Al Shabaab’s domestic fundraising from taxation activities has been estimated at more than $10 million per year by a United Nations Monitoring Group report.
This amount is believed to be more than adequate to sustain the group’s insurgency. The group operates as a quasi-government in the areas it influences (although no longer directly controls), and employs a centralized taxation system.
The group uses the telecommunications and financial sectors in Somalia to facilitate its activities. Al Shabaab uses a network of checkpoints to raise money, and those funds are collected through violence and intimidation. The group also uses a relatively sophisticated accounting and financial management structure. Al Shabaab has four distinct revenue streams from taxation: registration and taxation of vehicles, taxation of transported goods, taxation of farms and agricultural produce, and taxation of livestock sales.
The group also practices fiscal restraint, seeking to “reduce monthly and yearly budgets when possible.”
These estimates are in line with previous estimates of Al Shabaab’s fundraising from taxation and extortion.
Analysis: As with any terrorist group that extorts money from the population under its control or influence, management of this activity is key. Avoiding double taxation of individuals or businesses is important to maintaining at least grudging acceptance of the activity, as is limiting the use of violence and intimidation. This example outlines how little actual control is required in a given territory in order to still raise funds.