Somalia: Al-Shabaab's unequal but consistent tax-brackets

MOGADISHU, Somalia - Al-Shabaab militants run consistent but unequal tax brackets in Somalia, it has been established, with the group mostly targeting the route from Kismayo to Dhobley near the border with Kenya, while the Mogadishu to Kismayo route seemingly being the least productive to the group.

The prevailing narrative is that commercial drivers in Somalia prefer to use al-Shabaab transit routes rather than those controlled by government forces because al-Shabaab’s taxation is consistent, and predictable and is applied only once over the course of a single journey.

And the above narrative seems to be consistent with the research done by the Global Initiative Network dubbed "Terror and Taxes; Inside Al-Shabaab's revenue-collection machines which paints a picture of consistent but unequal tax brackets imposed by the Somalia-based militants on various businesses.

The Kismayo-Dhobley route which connects Somalia and Kenya is the main zone for Al-Shabaab's punitive taxation. Commercial traffic transiting between Kismayo and Dhobley is typically taxed at the Labikuus, Janay Abdullah or Berhani checkpoints, all of which are located just to the west and northwest of Kismayo.

In virtually every case, drivers had to pay identical transit taxes of US$90 and goods taxes of US$180, irrespective of the cargo their vehicles were carrying.

Rates were equally consistent for medium-duty [UD] and heavy-duty [candamedle] trucks.

In every case, UD trucks had to pay transit tax rates of US$180 and goods rates of US$300. For heavy-duty trucks, the rates were US$450 and US$975, respectively. Furthermore, there appear to have been no instances in which a driver was charged multiple times over the course of a single journey.

The research shows one notable example of apparent favouritism, however. One light-duty truck driver appeared to have been given a significant discount on his tax rate in each of the 12 receipts issued to him. Instead of the standard US$90/US$180 rates for transit and goods, he only had to pay US$52.50 and US$120, respectively.

Moreover, these lower rates were applied by at least three different al-Shabaab tax collectors, indicating that they were a matter of policy. According to a colleague of the driver, the driver had a brother serving in al-Shabaab’s military wing, which might explain his preferential treatment in taxation.

Al-Shabaab maintains sufficient influence in the hinterland of southern Somalia to operate a sophisticated network of revenue-generating checkpoints. Additionally, the group wields direct administrative control over a large swathe of territory centred around the fertile Juba River valley.

This al-Shabaab heartland encompasses several urban centres lying along the meandering Juba River, including Jamaame, Bu’ale, Saakow and, most notably, the group’s de facto capital of Jilib. As is the case with the Kenyan borderlands, many basic goods destined for the al-Shabaab
heartland arrives through Kismayo port.

According to the report, incoming commercial traffic from Kismayo destined for the al-Shabaab heartland consisted primarily of basic foodstuffs
[including sugar] as well as building materials. Al-Shabaab officials taxed these ‘imports’ at a significantly lower rate than trade within areas not under the group’s direct control.

Transit [gadiid] taxes on trucks destined for al-Shabaab-held population centres were on average about 85% of those levied on trucks transiting between non-al-Shabaab areas. For goods [badeeco] taxes, the disparity was even greater: goods headed for al-Shabaab
areas were on average taxed at less than half the rate [47%] of those passing through territory outside the group’s direct control.

Similarly, ‘exports’ from the al-Shabaab heartland – consisting mostly of agricultural produce, as well as some livestock – were also taxed at a preferential rate. These shipments also tended to be on a considerably smaller scale. While most of the incoming commercial goods came by truck, and nearly all the outgoing agricultural produce from the al-Shabaab heartland was transported by minibus.

This small scale-trade was taxed at nominal rates. In a typical example, a minibus [homey] transporting six 50-kilogram sacks of lemons from Jilib to Kismayo had to pay an agricultural produce

The available data for internal trade within al-Shabaab areas was limited. Our data set contained only three receipts issued to vehicles transiting between towns in the Juba valley. All were minibuses that were charged transit fees of US$8 or less. While it is likely that al-Shabaab also taxes its internal commercial traffic at highly favourable rates.

In a fiscal sense, then, al-Shabaab treats the territory under and outside its direct control as distinct customs zones, imposing far higher taxes on goods passing outside its territory – particularly if those goods are ultimately destined to leave the country.

The al-Shabaab heartland straddles the Middle and Lower Juba regions; as a result, any land trade between the greater Mogadishu urban
area and Kismayo must pass through territory under direct al-Shabaab control.

However, vehicles transiting from the greater Mogadishu area to Kismayo were taxed at a significantly lower rate than those travelling from Kismayo to the Kenyan border, despite the distance by road [approximately 500 kilometres] being twice as great.

The rate, however, was higher than for vehicles destined for the al-Shabaab heartland. Al-Shabaab taxed both medium-duty and heavy-duty trucks [dynos and candamedles] consistently at a rate of US$300 for transit and US$650 for goods.

Once again, there was no evidence in the data that al-Shabaab officials had demanded payment more than once over the course of a single journey.

Most receipts for vehicles departing from Ibrahim Cali Meyrre featured ‘T.R.T.’ scrawled at the top of documents, likely indicating that the receipts had been issued by tax officials at Toratoorow, a major al-Shabaab hub and the headquarters of the group’s judicial court system in the Lower Shabelle region.

The government of Somalia and allies have activated a crackdown against Al-Shabaab in various parts of the country, particularly near Mogadishu and this explains the minimum presence of the militants in the surrounding areas with the troops also liberating several towns in Al-Shabaab heartlands.

GAROWE ONLINE