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NAIROBI (Reuters) – The Al-Qaeda-linked Al Shabaab insurgency in Somalia is collecting nearly as much taxes as the government through a sophisticated system of levies on activities from importing goods to irrigating crops, according to a report by a group of experts.
The Mogadishu-based Hiraal Institute said Al Shabaab tax collectors were raising an estimated $ 15 million per month. His report was based on more than 70 interviews with businessmen, government officials, Al Shabaab defectors and active members of the insurgents’ tax collection cell.
He examined receipts and income reports for religious taxes and fees charged for activities such as crossing checkpoints, running businesses, irrigating or selling land, or exporting or importing goods.
A senior Somali military commander told Hiraal that he had to pay the insurgency $ 3,600 in taxes to finish building his house. The first contractor he had hired resigned after Al Shabaab threatened him because the commander had not paid taxes; the second contractor stopped working for the same reason. Even the trucks carrying his construction materials would not move, the commander said, until he made his payment.
Hussein Sheikh Ali, Somalia’s former national security adviser and founder of Hiraal, said Al Shabaab’s tax collection had become more efficient since the think tank released a first report on the militants’ finances two years ago.
“These people are really in the business of making money,” he told Reuters. That doesn’t mean they are corrupt, he said.
“They are strategic, they are serious and they will look for ways to weaken their adversaries: the Somali authorities.”
Hiraal’s report comes before a UN report that is expected to say that al Shabaab is generating a significant cash surplus and moving millions of dollars through the formal banking system.
“This is an area that the panel prioritizes and will continue to investigate,” Natascha Hryckow, head of the UN sanctions panel on Somalia, told Reuters.
Much of al Shabaab’s revenue comes from ports, said Mohamed Mubarak, director of Hiraal, especially Mogadishu, where militants tax shipping containers the same way the government does.
Another great source of income is zakat, an annual religious tax of 2.5% of an individual’s wealth, Ali said.
Al Shabaab is extremely adaptable, Ali said, and is following the government in adopting new taxes in areas such as health or education.
“They are learning,” Ali told Reuters. “If (Finance) Minister Beileh gets a new tax bracket for a company, Shabab will say aha, we will tax this one too.”
The insurgency often calls and questions business entities such as the Chamber of Commerce or government agencies responsible for certain tax brackets, he said.
The Chamber of Commerce did not return calls seeking comment. Somalia’s Finance Ministry also did not immediately respond to requests for comment. The federal government raised $ 230 million in household income last year.
A senior Somali counterterrorism official told Reuters that the insurgency was probably raising millions a month, but that it was difficult to get the full picture.
Additional reporting by Abdi Sheikh; Edited by Peter Graff
