Islamic State’s Somalia Branch Faces Deepening Financial Strain After Puntland State Offensive
MOGADISHU, Somalia — A sustained Puntland State military campaign, supported by the United States, has sharply weakened Islamic State’s financial networks in Somalia, disrupting the group’s ability to collect, move and manage money, according to a new report from the Africa Center for Strategic Studies.
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Before the latest operations, Islamic State in Somalia was bringing in hundreds of thousands of dollars each month. The group relied heavily on extortion, illegal taxes imposed on businesses and income associated with financial services, the report said.
US authorities estimated that the group generated approximately $2.5 million in 2021 and close to $2 million in the first six months of 2022. Those figures highlight the reach of the funding system Islamic State had built before counterterrorism operations began disrupting key parts of it.
At the center of that system was Al-Karrar, an Islamic State-linked financial hub that helped oversee funds and provide financial support to the group’s affiliates across Africa and elsewhere.
A 2026 US assessment described Al-Karrar as continuing to play a significant role in moving money between Islamic State’s Somalia branch and other parts of the organization’s global network.
The group suffered one of its most consequential financial setbacks in 2025, when Abdiweli Mohamed Yusuf was arrested. The United States had previously identified Yusuf as the head of Islamic State-Somalia’s financial operations.
According to US authorities, Yusuf managed a portion of the group’s revenue and helped arrange the transfer of money, fighters and supplies.
Puntland State’s offensive against Islamic State, launched in late 2024, has separately disrupted networks used for extortion and illegal taxation. The Africa Center for Strategic Studies said the campaign had substantially reduced the group’s ability to raise funds and sustain operations inside Somalia.
Even so, the report cautioned that financial losses have not deprived Islamic State of all operational capability.
The organization still has limited income streams that could support smaller-scale attacks and preserve some connections to its broader international network, according to the assessment.
Reduced revenue could make it more difficult for Islamic State to recruit fighters, acquire weapons and supplies, pay operatives and maintain logistics. However, analysts caution that cutting funding does not automatically bring about an armed group’s collapse, especially when it retains local sources of income and access to external networks.
With US airstrikes and other international assistance, Puntland State forces have continued operations against Islamic State positions in the mountainous areas of the Bari region. Their campaign has focused on the group’s fighters, leadership and infrastructure.
The pressure has intensified on Islamic State’s Somalia branch, which has worked to retain a foothold in northern Somalia while functioning as a major financial and logistical link for the organization’s wider network.
The Africa Center said sustained attacks on the group’s financial infrastructure could further limit its ability to operate, while emphasizing that surviving funding channels mean the threat remains.
The findings underscore why financial networks have become a central target alongside conventional military operations. Islamic State’s ability to raise and transfer money will remain critical to its capacity to endure, reorganize and adapt.
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