Case Study: Al-Shabaab's "Charcoal for Sugar" Trade Cycle

Illicit charcoal export trade is closely linked to the importation of sugar to Al-Shabaab-controlled areas. Many vessels discharge sugar before loading charcoal cargoes. The UN Security Council Monitoring Group on Somalia and Eritrea conservatively estimates the total volume of sugar imports in southern Somalia to be between 20,000 and 40,000 metric tons per year. The sugar is smuggled overland to neighbouring countries, particularly Kenya. According to the Monitoring Group, well-organized criminal networks with links to Al-Shabaab take advantage of the porosity of the border with Kenya to smuggle sugar, as well as arms and people. The Kenyan authorities have also discovered light weapons and ammunition concealed in some sugar consignments. Several of the individuals involved are well-established businessmen and real estate investors. Allegedly, an opportunistic and mutually beneficial kind of "pax commercial" has been established between those criminal networks and Al-Shabaab. Import taxes on this trade represent estimated revenues of between $400,000 and $800,000 per year for Al-Shabaab, although this estimate is claimed to be conservative. In its 2016 report, the Monitoring Group observed an estimate claiming that the volume of illicit sugar trade may be as much as 230 trucks per week. This could equal as much as $12 million-$18 million in revenue per year for Al-Shabaab. Al-Shabaab generates revenue from taxing the illicit sugar trade at checkpoints, ports and border crossings (UNSC, 2016)

The connection between Al-Shabaab and sugar smuggling came to the fore in Kenya in 2014. Following Al-Shabaab's attack at Garissa University College, the Government of Kenya issued a confidential list of 30 individuals who the government claimed were 'engaged in sugar smuggling' and whose accounts had accordingly been frozen. The Kenyan security forces in turn launched a crackdown on the sugar trade in the Dadaab refugee camps, and a 'sugar unit' was created within the Kenya National Intelligence Service for that purpose. In mid-April 2015, the sugar unit arrested six mid-level smugglers in the Dadaab camps.

The profits of the sugar trade can be used to launder voluntary contributions to Al-Shabaab through fraudulent invoicing, overvaluing of import proceeds and undervaluing of exports.