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Wednesday October 1, 2025
Mogadishu (HOL) — Al-Shabaab has emerged as al-Qaida’s financial lifeline, generating as much as $200 million annually from forced taxation, extortion, and illicit trade to fund its growing military campaign across central and southern Somalia, according to a new counterterrorism assessment.
A report released by the Combating Terrorism Center (CTC) at West Point, titled
The Global State of al-Qa`ida 24 Years After 9/11, identifies al-Shabaab as the most profitable affiliate in al-Qaida’s network. The group’s revenues, the report says, are sustaining an army of up to 18,000 fighters and enabling it to reclaim key towns, including Adan Yabaal, a strategic crossroads northeast of Mogadishu, despite intensified airstrikes by Somali and U.S. forces.
The CTC report estimates that al-Shabaab now earns between $100 million and $200 million each year, derived from a network of extortion, road taxes, smuggling, trade-based money laundering, and remittance skimming. Much of the money is collected through a parallel taxation system.
Residents and traders say militants routinely demand payments under the guise of zakat, or Islamic alms. Transporters, farmers, herders, and importers must pay fees to move goods or operate businesses in areas under the group’s control.
The report describes al-Shabaab’s taxation system as “sophisticated and institutionalized,” noting that its financial discipline and reach have enabled the group to function in many ways like a state, sustaining operations despite military pressure.
The report finds that al-Shabaab’s taxation network has become deeply embedded in Somalia’s economy, often collecting revenue more efficiently than federal or regional authorities. It notes that many businesses continue to pay the group’s levies out of fear or necessity, illustrating how the insurgency’s financial system rivals that of the state in both reach and reliability.
Flush with cash, al-Shabaab has intensified attacks and regained territory in Middle Shabelle and Galmudug, reversing gains made by government forces during the early stages of President Hassan Sheikh Mohamud’s 2022 offensive.
The group’s recapture of Adan Yabaal, roughly 245 kilometers northeast of Mogadishu, has re-established a logistical corridor connecting the capital to Jowhar and central regions. The town, once a government stronghold, now serves as a staging hub for fighters, weapons, and supplies.
The loss, the report says, exposes persistent weaknesses in Somalia’s military operations, including overstretched supply lines and difficulty sustaining control over recaptured areas. It adds that despite support from clan militias and African Union forces, the military has struggled to consolidate gains made during recent offensives.
The United States has carried out 71 airstrikes in Somalia this year, targeting al-Shabaab leadership compounds and training camps, according to U.S. Africa Command (AFRICOM). In April, the U.S.-Gulf Terrorist Financing Targeting Center (TFTC) sanctioned 15 Somali financiers, freezing assets tied to the group’s hawala and trade networks.
Still, the CTC warns that reduced Western counterterrorism focus, as global priorities shift toward great-power competition, has given al-Qaida affiliates in Africa greater operational space.
The group’s financial coercion has left ordinary Somalis trapped between state fragility and militant control. Traders in Beledweyne, Baidoa, and along the Mogadishu–Belet Weyne corridor say they pay multiple layers of fees to survive.
The report notes that in many areas, transporters and traders face overlapping demands from government forces, clan militias, and al-Shabaab. It says the group enforces its levies through threats and intimidation, leaving many Somalis feeling they have little choice but to comply.
Al-Shabaab’s taxation of livestock, exports, and charcoal, combined with cuts from remittances, provides a steady influx of hard currency that sustains its war chest even when battlefield losses mount.
Over the past year, the Central Bank of Somalia has tightened regulations on informal money transfer networks and required hawalas to register under the country’s updated Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) framework.
The Financial Reporting Center, Somalia’s independent financial intelligence unit, has been conducting joint operations with law enforcement to track suspicious transactions and freeze accounts linked to the group’s facilitators. Since 2025, authorities have frozen hundreds of accounts belonging to suspected tax collectors and intermediaries operating between Mogadishu, Kismayo, and Baidoa.
The Attorney General’s Office and Benadir Regional Court have also initiated prosecutions for terror financing.
The CTC report concludes that while al-Qaida’s central leadership has weakened, its African affiliates, particularly al-Shabaab, now anchor the network’s global operations. In Somalia, the militants’ ability to collect and spend at scale has turned financing into a central pillar of their war effort.