MOGADISHU, Somalia (Caasimada Online) – The Somali government has asserted that the Al-Shabab militant group is facing a financial crisis due to declining revenue collection.
The government claims that its efforts to shut down suspected bank accounts and mobile money accounts, as well as targeting militant taxation officials, have reduced the group’s revenue by half.
This development marks a turning point in the ongoing battle against Al-Shabab, as it signifies the potential weakening of the extremist group.
Al-Shabab’s revenue sources and financial system
According to the US Treasury, Al-Shabab relies on money obtained through extortion of local businesses and individuals, fees collected on goods, and facilitating illicit trades.
The Africa Center of Strategic Studies reveals that the group has even established a formal banking system, prompting the Somali government to enact the Anti-Money Laundering and Countering the Financing of Terrorism Act in 2016.
This legislation requires financial institutions to report transactions exceeding $10,000. Despite this law, many money transfer firms avoid reporting such transactions for fear of retaliation from Al-Shabab.
Challenges in disrupting Al-Shabab’s financial networks
Despite receiving technical support from the UN Office on Drugs and Crime, the Somali government has faced difficulties in curbing the group’s exploitation of the financial system.
Al-Shabab has demonstrated effectiveness and efficiency in revenue collection for years, often surpassing the federal government.
Factors such as a lack of proper identification for the population, coordination, regulatory enforcement, corruption, and political will have allowed the militants to continue extorting money from locals.
Recommendations for combating Al-Shabab’s finances
To effectively block the group’s revenue collection, the Africa Center of Strategic Studies suggests that Somalia should prioritize the professionalization of infiltrated government agencies, including those responsible for financial, intelligence, and judicial functions.
This requires more than just financial sector development; it also necessitates improved criminal investigatory work, enhanced law enforcement, and a cultural shift within the Federal Government of Somalia and the five Federal Member States toward transparency, accountability, and citizen service delivery.
Government crackdown and ongoing operations
President Hassan Sheikh Mohamud announced earlier this year the closure of over 250 bank accounts and 70 mobile money transfer firms linked to Al-Shabab activities.
The military has also initiated the second phase of operations against the group in various parts of the country.
International partners, including the United States, have pledged to invest in Al-Shabab defectors to motivate the national army to pursue the ultimate goal of crushing the extremist group.
