Al-Shabaab: Al-Qaida’s Financial Lifeline in Somalia

Al-Shabaab: Al-Qaida’s Financial Lifeline in Somalia

A new counterterrorism assessment has shed light on the alarming role of al-Shabaab as the financial backbone of al-Qaida’s global operations. According to the report by the Combating Terrorism Center (CTC) at West Point, al-Shabaab generates as much as $200 million annually, making it the most profitable affiliate in al-Qaida’s worldwide network.

How Al-Shabaab Funds Its Campaign

The group’s wealth comes from a wide range of coercive practices, including forced taxation, extortion, illicit trade, smuggling, and money laundering. Its parallel taxation system is so entrenched that many Somali businesses describe it as more efficient and reliable than the federal or regional governments. Traders, farmers, herders, and transporters are forced to pay fees disguised as zakat (Islamic alms), while importers and exporters are taxed at every stage of commerce.

This sophisticated financial network sustains an army of up to 18,000 fighters, allowing al-Shabaab to fund its military campaigns in central and southern Somalia despite ongoing Somali and U.S. counteroffensives.

Military Gains Despite Pressure

Flush with cash, al-Shabaab has intensified attacks and reclaimed territories, including the strategic town of Adan Yabaal in Middle Shabelle, northeast of Mogadishu. Once a government stronghold, the town now serves as a key logistical hub, connecting the capital with central regions and enabling the flow of fighters, weapons, and supplies.

These gains highlight persistent weaknesses in Somalia’s military operations, including stretched supply lines and challenges in maintaining control over liberated areas. Even with the support of clan militias and African Union forces, the Somali National Army has struggled to consolidate its advances.

International Countermeasures

The United States has responded with 71 airstrikes in Somalia in 2025 alone, targeting leadership compounds and training camps. In addition, the U.S.-Gulf Terrorist Financing Targeting Center (TFTC) sanctioned 15 Somali financiers in April, freezing assets linked to al-Shabaab’s networks.

Domestically, the Central Bank of Somalia and the Financial Reporting Center have ramped up regulations on informal money transfer systems (hawalas) and frozen hundreds of accounts tied to suspected al-Shabaab financiers. Prosecutions for terror financing have also been initiated through the Attorney General’s Office and Benadir Regional Court.

A Global and Local Threat

The CTC report concludes that while al-Qaida’s central command has weakened since 9/11, its African affiliates—especially al-Shabaab—are now at the core of its global strategy. By embedding itself deeply into Somalia’s economy and exploiting both state fragility and international trade routes, al-Shabaab has turned financing into a weapon of war.

For ordinary Somalis, this financial coercion means being trapped between a weak state and a militant group that functions like a shadow government. Traders across Baidoa, Beledweyne, and along key transport corridors report paying multiple layers of fees to survive, with al-Shabaab’s levies often backed by threats and violence.

Looking Ahead

The battle against al-Shabaab is not only fought on the battlefield but also in banks, businesses, and markets across Somalia. Cutting off the group’s financial lifeline is as critical as neutralizing its fighters. As the report emphasizes, al-Shabaab’s ability to collect and spend at scale has made money the backbone of its war machine—and a central pillar of al-Qaida’s resilience.