Axis of evil: The illegal charcoal trade from Kenya to the Gulf States

Charcoal is the lifeline of Al Shabaab and earns it a lion share of the revenue it uses to finance its operations. Despite a United Nations Security Council ban on charcoal trade in Somalia, which was introduced to cripple the terror group, numerous studies have shown a blatant disregard for the ban and in some instances attempts to even formalise it with the help of government officials.  

A major role of the terror group in the charcoal business is collecting taxes from lorries transporting the commodity to the port of Kismayo, the largest in the country located in Southern Somalia, and ensuring any international buyer also pays tax at the port. Local charcoal producers are forced to pay a 2.5 per cent ‘production tax’ upon and are then issued with production certificate.

As the charcoal is transported to the port on trucks, the owners are equally supposed to pay 2.5% tax of the estimated value. In case a truck is stopped at a checkpoint, manned by Al Shabaab, the owner is supposed to pay a checkpoint fee. Those who disregard these tax directives are either imprisoned or their consignment seized.

The charcoal upon arrival at the port of Kismayo is loaded into huge vessels and destined mostly to the Gulf States. The Port Al Hamriya in Dubai remains the key destination for this illegal charcoal.

The owners of the large vessels part with a tax of 2.5% of the estimated value of their cargo with the smaller boats paying $0.5 for every sack. The yearly wholesale value of this charcoal to United Arabs Emirates for example is estimated at $180 million and $228 million for retail the UN says.

The trading cycle also involves sugar. International shipping companies deliver sugar at the port of Kismayo which they exchange with charcoal. This sugar is then smuggled as contraband in the Eastern Africa region where the demand is high especially in neighbouring Kenya.

It is a business that earns the terror group more than $100 million each year and is used to buy weapons, carry out recruitment and radicalisation campaigns and pay its jihadists.

“Al Shabaab has quite an extensive network of raising revenue to sustain its operations including donations from sympathisers from the Middle East and Eritrea coupled with a growing Somali in diaspora who exploit the less stringent money remittance service Hawala. But the greatest sources of revenue remain charcoal and sugar which explains why the terror group has guarded it jealously. What makes this business flourish is how they have managed to capture the entire market chain from production to export and exploit every stage to earn,” said Reuben Otondo, a security policy analyst in Nairobi.

A report by the UN Monitoring Group on Somalia and Eritrea noted that Al Shabaab affiliated businesses enjoy tax breaks and preferential treatment even as the militant group exploit porous borders and weak regulation to fan this racket.

“Shipping companies deliver sugar to Kismaayo and collect charcoal for the return journeys. Bank accounts in the Gulf States where the profits of this trade are deposited can be used to launder voluntary contributions to Al-Shabaab through fraudulent invoicing, overvaluing of import proceeds and undervaluing of exports,” This trade cycle is dominated by networks of prominent Somali businessmen operating mainly between Somalia and the Gulf Cooperation Council (GCC) countries, notably Dubai in the United Arab Emirates,” read a section of the report.

And in a dramatic twist of events, the Kenya Defence Forces, KDF, operating under the ambit of the African Union Mission in Somalia, Amisom, has been mentioned in numerous reports as being at the centre of the illegal sugar and charcoal trade where they share the spoils with the terror group. KDF has been in Somalia to pacify increasing attacks on the Kenyan soil by the militant group that has so far claimed more than 600 Kenyan lives.

Stationed at the various ports, the Kenyan soldiers are said to receive $2 for every bag of charcoal illegally shipped from the port of Kismayo earning up to $24 million a year.

Journalists for Peace in their report dubbed Black and White: Kenya’s racket in Somali: “As such, the charcoal trade is not some kind of illicit hobby for KDF officers stationed in Kismayo to earn some pocket money. Together with the import of sugar, it is in fact, the main reason they are there.”

The United Nations supports this assertion in a 2017 Security Council report that states: “Amisom, whose KDF contingents remain deployed at the ports of Kismayu and Buur Gaabo, has neither assisted the Somali authorities in implementing the charcoal ban nor facilitated Monitoring Group access to charcoal exporting ports.”