Report: Al‑Shabaab nets $200 million annually, financing Somalia’s insurgency

Al‑Shabaab’s War Chest: How a Militant Tax System Fuels a Comeback in Somalia

A militant economy hiding in plain sight

The hardest thing to see in Somalia’s long war is often the most obvious: the receipts. A new assessment by the Combating Terrorism Center at West Point says al‑Shabaab, al‑Qaida’s Somali affiliate, is now the network’s financial powerhouse—pulling in an estimated $100 million to $200 million a year. That money isn’t just paying for bullets. It’s rebuilding a parallel state.

The report, The Global State of al-Qa`ida 24 Years After 9/11, portrays a group that has monetized control of territory and trade with a rigor that many governments struggle to match. The result is a war sustained less by spectacular heists than by the methodical, daily extraction of cash from truckers, herders, shopkeepers, and importers. With those funds, the group has kept as many as 18,000 fighters in the field and clawed back ground—including the strategic town of Adan Yabaal northeast of Mogadishu—despite increased Somali and U.S. military pressure.

Taxes at the barrel of a gun

Somalis have a phrase for it—two taxes for the same road. Travel the Mogadishu–Beledweyne corridor and you’ll meet a bureaucracy in camouflage. Checkpoints levy fees; phone calls demand “zakat,” Islamic alms repurposed as a coercive revenue stream. In markets from Baidoa to Beledweyne, traders whisper about payment schedules the way others discuss school timetables or prayer times. Pay here to move your flour, there to sell your goats, and yet again when you send earnings back to relatives through remittance networks.

What makes al‑Shabaab’s model so potent, the CTC notes, is not just intimidation. It is organization. Ledgers are kept. Receipts are sometimes issued. The militants’ system is, in the report’s words, “sophisticated and institutionalized.” In places where formal governance is thin or contested, their collectors show up more predictably than state tax officers. For businesses that operate on tight margins and tighter timelines, predictability—however brutal—can look like a kind of order.

This is not taxation in the classic sense of a social contract. It is extraction under threat. But the line between extortion and administration blurs when an insurgent group enforces contracts, resolves commercial disputes, and fixes roads it needs for its own logistics. Every toll taken at a checkpoint buys not just ammunition; it buys influence, intelligence, and the grudging compliance of communities that simply want to survive.

Cash buys time and territory

Flush with revenue, al‑Shabaab has intensified its campaign in Middle Shabelle and Galmudug, reversing some of the early gains made by government forces after President Hassan Sheikh Mohamud launched a new offensive in 2022. The group’s recapture of Adan Yabaal—about 245 kilometers from the capital—reopened a corridor that links Mogadishu to central regions, a logistical artery for fighters, supplies, and illicit trade.

Somali commanders point to a familiar set of challenges: overstretched supply lines, the difficulty of holding ground once it’s retaken, and a patchwork of allied clan militias with divergent priorities. The African Union mission helps, but presence is not permanence. The West Point report frames this as a math problem: a well-funded insurgency can afford to lose battles if it keeps its income. It can retreat, regroup, and simply wait for state forces to move on. Then the tax collectors return.

Meanwhile, the United States has stepped up from the air. U.S. Africa Command says it has conducted 71 airstrikes in Somalia this year, targeting leadership compounds and training camps. In April, the U.S.-Gulf Terrorist Financing Targeting Center sanctioned 15 Somali financiers linked to hawala networks and trade-based laundering. Those measures sting. They raise the cost of doing business for the militants and signal that money men are as exposed as field commanders. But al‑Shabaab’s revenue streams are diversified, resilient, and embedded in basic commerce. Stop one spigot, another trickles.

Somalia tightens financial choke points—slowly

Somali authorities are trying to close the gaps. The Central Bank has pushed hawalas—the informal money remitters that move lifelines from the diaspora—to register under updated anti-money laundering and counter-terrorism financing rules. The Financial Reporting Center, the country’s financial intelligence unit, has partnered with law enforcement to trace suspicious flows, freezing hundreds of accounts since 2025 across Mogadishu, Kismayo, and Baidoa. Prosecutors have begun bringing cases in Benadir courts for terror financing.

These steps matter, especially in a country where most payments happen on mobile phones and in cash. Diaspora remittances are a lifeline worth roughly $1.3 to $2 billion annually, according to World Bank estimates—money that feeds families, seeds businesses, and stabilizes communities. The dilemma is delicate and global: how do you preserve those lifelines while stopping militants from skimming off the top? Overregulation risks pushing transactions further underground. Underregulation leaves loopholes you could drive a truck convoy through.

Somalia has also struggled to police high-value commodities. The United Nations banned Somali charcoal exports more than a decade ago, yet illegal shipments continue to surface, generating hard currency that’s easier to move than stacks of shillings. Livestock, sugar, and imported goods are also taxed along trade routes. In this shadow economy, a ledger is as lethal as a rifle.

When counterterrorism slips down the list

The CTC warns that as Western governments shift attention toward great‑power competition, al‑Qaida affiliates in Africa have more room to maneuver. The trend is bigger than Somalia. In the Sahel, jihadist groups levy “taxes” on farmers, transporters, and gold miners. In Nigeria, ISWAP assesses and audits fishing communities on Lake Chad. The Taliban perfected a similar approach long before Kabul fell: build predictable channels of coercive revenue, then turn that cash into battlefield endurance. The lesson is basic and bleak—where states can’t offer reliable services and security, insurgents will try to sell their own version.

So the question for Somalia and its partners is not only how to kill commanders or clear towns. It’s how to compete with a rival fiscal authority that citizens encounter every day. Who shows up first when your truck is stuck in the mud? Who settles a land dispute? Who lets your goods pass on time?

What would change the math?

• Hold ground with services, not just soldiers. Clearing an area must be followed by deployable local policing, quick dispute resolution, and predictable fees—so traders don’t feel compelled to pay militants for “order.”
• Digitize to protect. Expanding regulated digital payment rails can reduce cash leakage and make it harder for militants to skim remittances—if privacy and access are safeguarded.
• Suffocate the high‑margin trades. Charcoal smuggling and illicit cross‑border commerce still provide hard currency. Stricter port inspections and cooperation with Gulf states that are end markets can raise costs for middlemen.
• Target the accountants, not just the emirs. Sanctions and prosecutions that focus on logisticians, tax collectors, and brokers signal that the back office is a battlefield too.
• Shield the honest trader. Safe corridors, predictable government fees, and rapid redress when officials overreach can pull commerce back into the formal economy.

The war with receipts

In Somalia, al‑Shabaab has learned to conquer not just land but transactions. It doesn’t need to seize the central bank if it can skim the economy’s daily heartbeat. That is why the fight against the group is as much about governance as gunfire. The militants have weaponized predictability; the state must offer something better than fear.

The numbers in the West Point report are stark—up to $200 million a year is a lot of payroll. But the lived reality behind those figures is starker: a driver who pays three bribes to reach a market; a family whose remittance is shaved before it buys bread; a shopkeeper who keeps two sets of receipts, one for the government and one for the men with guns. Until those stories change, the ledger will keep writing the war.

For Somalia’s partners—regional neighbors, the diaspora, and Western capitals drawn to other crises—the imperative is to stay engaged in the unglamorous work of building a tax system that outcompetes a terror group’s. In the end, who taxes best often governs most.

By Ali Musa
Axadle Times international–Monitoring.