Issue No. 810

Al-Shabaab at the Nexus of Terrorism and Crime

The nexus between terrorism and criminal activity has always been hazy. Criminal groups have long deployed violence for a litany of reasons, while at times wielding 'terrorist' tactics to intimidate and coerce. In the late 1980s, for instance, the Colombian Medellin Cartel, headed by the notorious narcotrafficker Pablo Escobar, famously bombed an Avianca passenger jet, killing 107 passengers and crew, as well as a government building in Bogota, in which 57 people were killed and more than 2,200 injured. And the nexus has cut both ways, with militant groups also increasingly integrating with illicit networks and using criminal enterprises to expand both their territorial presence and diversify their funding operations. 

In the past 30 years, taking advantage of the Horn of Africa's porous borders, endemic insecurity, and state fragility, insurgent groups have become increasingly 'hybridised' with their criminal counterparts. Activities such as cybercrime or human trafficking-- once considered solely the remit of criminal syndicates-- have been increasingly employed by terrorist and insurgent groups. Within the Horn region, Al-Shabaab is undoubtedly the most influential 'hybrid' of the insurgent groups operating today and, in many ways, functions similarly to criminal organisations. Indeed, the group's practice of 'taxtortion' within Somalia and its cross-border operations in Ethiopia and Kenya render Al-Shabaab, by definition, not just a terrorist organisation but also a transnational organised criminal syndicate.

The Somali jihadist movement has grown so powerful that it can now arguably be described as a 'proto-state'-- a political entity capable of exercising most state-like functions and power, such as taxation and juridical institutions, but without formal boundaries or recognised de jure sovereignty. Al-Shabaab's revenues are conservatively estimated at approximately USD 200 million annually, a figure almost on par with Jubaland, Puntland, and Somalia's federal government, despite not having direct access to port revenues. Indeed, the relative lack of corruption within Al-Shabaab compared to Somalia's nominally more secular administrations means that it spends its income much more effectively on consolidating its grip across central-southern Somalia.

In geographic terms, the extremist group is generally estimated to control roughly 30% of the country, including much of the Juba and Shabelle Valleys, most of Gedo, and the southern Bay region – some of the most densely populated and fertile parts of the country. Given this significant territorial footprint, it is perhaps illustrative to consider Al-Shabaab's economic significance not just in terms of revenues but also as a proportion of Somalia's Gross Domestic Product (GDP). In 2023, the World Bank's estimate of Somalia's total GDP placed it at just under USD 11 billion. If Al-Shabaab administers approximately 30% of the country, the territory and population under jihadist control represent at least USD 3.3 billion in GDP – if not more. 

The opaque intersection of criminality, government and terrorism is especially evident in Puntland, which lies at a crossroads between international arms trafficking, human smuggling, sanctions busting, and violent extremist networks. Across the Gulf of Aden, the lines between criminal gangs and extremist groups have become increasingly blurred through highly profitable triangular commerce in various types of contraband, including 'dark' ships that ferry Iranian fuel to northern Somalia and dhows plying informal trade routes between Yemen, Somalia and Djibouti. Perhaps the individual most emblematic of these shadowy connections is Issa Yullux, a former pirate-turned-arms dealer, who has been designated for ties to global terrorism by the United States government for his links to Islamic State-Somalia (ISS) and now commands Puntland troops in anti-ISS operations. 

In recent months, particular attention has been paid to the growing relationships between the Houthis, Al-Shabaab, and ISS, including the transfer of arms and expertise for more sophisticated weapons systems – notably armed drones. Much like Al-Shabaab, the Houthis also wield state-like control over territory and critical infrastructure (including the capital of Yemen, Sana'a) and Hodeidah Port, which serves as a conduit for Iranian weapons. Their growing collaboration reflects how these 'proto-states' are able to exploit governance gaps and mirror sovereign states' interactions across illicit networks. 

However, the scale of Al-Shabaab's financial networks also necessitates laundering money through formal private enterprises and licit activities, such as real estate and construction in Mogadishu and Nairobi. Al-Shabaab enablers and facilitators funnel the movement's finances through Somali banks and financial services companies, as well as a network of Islamic charities headquartered in Mogadishu and registered with the Somali federal government.

But what happens when a 'proto-state' with transnational criminal networks transitions into an actual government? Sovereign recognition of an insurgent group can further offer new licit opportunities to provision itself as a newly recognised national authority. If Al-Shabaab were to seize power in Somalia, it might no longer have to use Iranian smuggled fuel or Yemeni trafficked arms; instead, it would seek access to global markets. But simply being in government does not rule out criminality. For instance, the now deposed Bashar al-Assad's Syrian regime was the region's largest Captagon producer, a highly addictive amphetamine that has penetrated across the Gulf and, increasingly, the Horn as well. Nor would it necessarily entail Al-Shabaab renouncing its claims to parts of Kenya and Ethiopia or suspending cross-border attacks against its neighbours.

Somalia's federal government's framing of Al-Shabaab as a terrorist group on its last legs fundamentally misrepresents the scale and sophistication of the jihadists-- and the level of effort required to combat them. Its transnational, hybrid nature and adeptness at monetising gaps in state failures in both the illicit and licit spheres require a highly coordinated relationship between military, intelligence, and law enforcement agencies both within and between countries. Failure to rise to the challenge now could likely mean the emergence of something entirely unfamiliar in the African context-- no longer just a terrorist group or transnational crime syndicate, but a post-jihadist government that exhibits elements of both.

The Somali Wire Team