In recent years, much has been made of the alleged connection between the terrorist group al Shabab and the illegal ivory trade in Africa. A report from the Elephant Action League in 2013, for example, suggested a strong connection between al Shabab and the poaching and trafficking of ivory, going on to estimate that the trade contributed up to 40 percent of the funds needed to pay fighters’ salaries.

Recent research, however, has concluded that the connection between al Shabab and ivory is far less significant than many policymakers and law-enforcement agencies thought. For example, a recent Royal United Services Institute paper argues that poaching is more likely to be “opportunistic, ad hoc, and small-scale.” Instead, reports from both the UN Somalia Monitoring Group and Kenya-based Journalists for Justice have suggested, it is the group’s trade in another white gold—contraband sugar—allegedly facilitated by the Kenyan military (KDF) that sustains al Shabab.

In 2011, the United Nations estimated that the group made anywhere from $400,000 to $800,000 per year from the illicit import of sugar. Observers now believe the total to be substantially higher; al Shabab benefits from taxing the increasing amount of sugar that is smuggled via Somalia into Kenya, where it is repackaged and sold in Nairobi’s wholesale markets. The recent report from Journalists for Justice estimates that 150,000 tons of illicit sugar enters Kenya via Somalia each year, a trade worth in total between $200 million and $400 million to all those involved.

Like any insurgent group, al Shabab’s survival is linked to its finances. The group maintains an evolving and adaptive funding model, which includes taxes on populations and businesses in territories it controls, as well as on any trade that passes through. The funding al Shabab raised from the charcoal trade is one example: Somali charcoal is of a high quality, which makes it a prized commodity in the Middle East and a lucrative export for the group. According to the United Nations, by levying taxes on charcoal traders and tolls on transport, al Shabab has previously earned over $25 million per year.

But after the group lost control of the ports of Kismayo and Barawe to KDF-led African Union troops, the trade in charcoal became less tenable. And so al Shabab has supplemented its income via the taxation of the increased flow of contraband sugar and other basic foodstuffs imported to Somalia for onward sale in Kenya. High tariffs in Kenya make illicit trade more lucrative for those who are able to import products duty-free through Somali ports, with Kenya as their final destination. Al Shabab’s control of checkpoints on the roads that lead to domestic ports allows the group to levy its own tolls; on the roads out of Kismayo, for example, each truck must pay $1,000. As many as 230 Kenyan-bound trucks leave that port per week.

Deputy leader of the hardline Al-Shabaab Islamist group Sheikh Mokhtar Robow Abu Monsor (L) and spokesman of Al Shabab group Sheikh Ali Mohamud Rage (Ali Dhere) walk in Somalia's capital Mogadishu, January 4, 2010.
Deputy leader of the hardline Al-Shabaab Islamist group Sheikh Mokhtar Robow Abu Monsor (L) and spokesman of Al Shabab group Sheikh Ali Mohamud Rage (Ali Dhere) walk in Somalia's capital Mogadishu, January 4, 2010.
Ismail Taxta / Reuters
According to the United Nations, the extent of this illicit trade came to light following the Garissa University College attacks earlier this year in which nearly 150 people were killed by al Shabab, leading Kenyan authorities to launch a crackdown on alleged “mid-level smugglers.” Yet the situation is murky as research by Journalist for Justice claims al Shabab is helped by the apparent rent-seeking operations of Kenyan military forces (strongly denied by the Kenyan Government) that control key border crossings from Somalia into Kenya.

Terrorism is a powerful mobiliser of focus and resources yet, focus and resources are finite and, if misdirected allow the true root cause of illicit finance to flourish unchecked, shielding “the real criminal drivers of the trade [leaving intact] the true sources of terror financing.”  Overlooking the importance of the trade in smuggled sugar and conflating the financing of al Shabab with ivory is a case in point. Al Shabab’s reliance on the taxation of trade is the group’s Achilles heel. Disrupting this trade should thus be the key focus of those forces seeking to degrade the group’s operations.

Disrupting the means by which terrorist groups finance themselves is one of the most effective methods of reducing (albeit not eliminating) the threat posed by such groups—accurately identifying such sources is therefore a critical first step.

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  • TOM KEATINGE is a former investment banker at J.P. Morgan and Director of the Centre for Financial Crime & Security Studies at the Royal United Services Institute. 
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