How al Shabaab Finances Terror
In light of al Shabaab’s recent Garissa University attack, the Kenyan government has begun responding not only with airstrikes, but also by attacking the group’s finances. Kenyan officials have closed 86 entities and accounts that may be associated with al Shabaab. Of the 86 closed, 13 are major money transfer companies.
Despite proving that they can carry out impressive attacks with limited funds and few resources, the group does need some funding. So how exactly is al Shabaab funded?
In the past, Al Shabaab had control of several port cities on the coast of Somalia, including the city of Kismayo. The control over these cities allowed al Shabaab to make millions of dollars in profits from charcoal exports.
In 2012, however, Kenyan forces removed al Shabaab from Kismayo, forcing the terrorist organization to find other means of funding their operations. Without having the profit from charcoal to rely on, al Shabaab turned to both local and foreign sources of profit.
Locally, al Shabaab turned to taxing local businesses protection fees and creating elaborate taxing schemes to create funds. A simple way that al Shabaab helps raise funds is through the poaching and selling of ivory. Trading commodities, such as sugar, is an easy way that al Shabaab can raise funds without being traced. Importing sugar is a lucrative business for al Shabaab because it provides an opportunity to smuggle in weapons as well as profiting without a paper trail. A 2012 U.N report stated that 10,000 bags of illegal sugar were sold every day at lower prices.
Foreign sources of funding come mainly from two locations. The first is from other terrorist organizations that also operate with the goal of global jihad. The ideological similarities fostered an alliance between al Shabaab and al Qaeda. The groups had been working together for sometime already when al Shabaab released a video pledging allegiance to al Qaeda in 2012. This loyalty to al Qaeda meant that al Shabaab would receive financial support from the group.
The second form of foreign funding comes from international individuals wishing to donate and support al Shabaab. Since, unsurprisingly, there isn’t an “al Shabaab’s plight for global jihad” gofundme or kickstarter, donations are usually made through the Hawala system. Hawala is a type of money transfer that allows individuals to make transactions without risking detection by large banks and is theoretically untraceable. A Hawala uses several middlemen to facilitate transactions. In fact, the Kenyan Ministry of finance has estimated that over $70 million dollars is transferred through this system. However, due to the limitations in making those estimations, its unclear just how much has been donated this way.
There have been cases of United States citizens donating to terrorist organizations using this system. In July of 2014, two American women were arrested for financing al Shabaab.
Al Shabaab has contiuously demonstrated an ability to raise enough funds to launch attacks, without needing to control a large amount of territory.
