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Dubai - Al-Shabaab emerged as a regional threat funded by millions of dollars from activities ranging from extortion to taxing charcoal exports, but its attack on a Kenyan shopping mall is expected to provoke a counter-terrorism response aimed at crippling the Somali Islamist group's finances.
The money is important to al-Shabaab, a group whose aims include the wider imposition of Islamic law but whose ability to attract fighters in one of the poorest countries of the world is based largely on its ability to pay them.
A report by United Nations monitors in July estimated al-Shabaab earned more than $25-million a year from illicit exports of charcoal to Gulf Arab states and from taxing the trucking of charcoal to the Somali ports of Kismayu and Barawe.
Other funds come from informal taxes on small businesses in areas of Somalia that al-Shabaab controls, and from donations from Somalis overseas, although these transfers are thought to be declining due to a general disenchantment with the increasingly violent group in the diaspora, diplomats say.
A security source in the capital, Mogadishu, said al-Shabaab was expert at extorting money from small businesses and at setting up front companies whose income was funnelled to the group. Both sorts of company also acted as informers.
“It's the small little shops where you repair your vehicle, or charge your mobile phone,” the source said. “It's a myriad of little businesses, who also help them in their surveillance.”
“There's no need for heavy-handed daily enforcement because everyone knows the penalties for non-compliance are drastic,” he said, referring to the amputation of limbs or execution.
Suspected additional sources of income include militant Islamists overseas and, according to UN sanctions monitors, the nearby state of Eritrea.
The monitors said Eritrea was destabilising Somalia by paying political agents and financing a warlord linked to al Shabaab.
The Eritrean government, accused by its critics of seeking to use Somali territory to undermine Ethiopia, its old enemy, has long denied meddling in Somalia, saying it has no links to al-Shabaab's fight against the Somali government.
Al Shabaab has been waging an insurgency since 2007 and formally became part of al-Qaeda in 2012. It remains Somalia's most powerful non-government armed group despite being pushed out of Mogadishu by an African Union force in 2011.
Al-Shabaab's economic strength is vital to its operations because it can pay its thousands of fighters a monthly salary normally varying between $100 to $300 a month.
That, more than its declared aim of imposing a strict version of sharia or Islamic law, is the main incentive to join up, Somali researchers say.
Ironically, al-Shabaab's income may have benefited from an upturn in the Somali economy that followed the partial restoration of order in Mogadishu over the past two years and a growth in investment amid hopes of an end to years of war.
In the wake of the four-day attack by al-Shabaab militants on a Nairobi shopping mall in which at least 72 people were killed, Western counter-terrorism agencies are expected to subject the group's sources of financial support to renewed scrutiny, Somali experts say.
The success of such efforts will depend to a large extent on the choices made by Somalis, in particular the powerful Somali business community in East Africa.
According to Ken Menkhaus, a leading US scholar of al-Shabaab, the most formidable weapon against al-Shabaab may be the Somalia expatriate business community in Kenya, which has emerged as a force in property and trade in the past 20 years.
Since the collapse of the Somali state in 1991, more than one million Somalis have fled to or through Kenya, and many now have extensive business and real estate investments there.
Fearing a crackdown on Somali firms by a Kenyan government keen to be seen to be doing something, Somali businessmen in Nairobi might now feel compelled to take their own steps against the group, he wrote on the website www.thinkprogress.org.
“Messing with Somali business interests has never advanced the interests of any political actor in Somalia, foreign or local,” he said.
It was up to Somalis to “mobilise against al-Shabaab and take the movement out once and for all by drying up its financial sources, exposing its operatives, and denying the movement any safe space from which to operate”.
The alternative, he said, was action by foreign governments, but that would almost certainly impact “innocent Somalis and legitimate Somali businesses in Kenya and around the world, and that is not in anyone's interest except al-Shabaab's”.
Stig Jarle Hansen, a Norwegian expert on the group, told Reuters that what was best known about al-Shabaab finances was its system of local taxation in the areas it held, especially the taxation of transport. But verifying this information was difficult and was hampered by hearsay, he said.
In Somalia, a traditional kinship society, research was complicated by the fact that while someone might nominally be in al-Shabaab, in reality people were more loyal to their clan elders, he said. - Reuters