East Africa: Countering Terrorism Financing in East Africa

What the report says

A new analysis from the Africa Center for Strategic Studies, published by AllAfrica on 6 August 2026, argues that countering terrorism in East Africa will require more effective action against the funding networks of al Shabaab and the Islamic State in Somalia (IS-S). The report says both groups rely on increasingly sophisticated, cross-border financial systems that make them harder to disrupt through national measures alone.

The piece says al Shabaab has become a hybrid criminal-terror network, with revenue drawn from extortion, informal taxation, smuggling, money laundering, and investments that reach beyond areas it controls in Somalia. It also notes that the group’s links with actors in Yemen, including the Houthis, may widen its reach across the Gulf of Aden and threaten maritime routes in the Red Sea. The analysis describes these connections as part of a broader pattern in which militant and illicit trade networks overlap across East Africa and the Arabian Peninsula.

For Somalia, the article credits the federal government with some progress on anti-money laundering and counterterrorism financing reforms, including account freezes and prosecutions. However, it says enforcement gaps, limited regional coordination, and weak operational capacity continue to hamper disruption efforts. The report similarly notes that IS-S has used extortion, illicit trade, and digital channels such as cryptocurrency, though its capabilities have been reduced by Operation Hilaac, a joint campaign launched in December 2024 with local and international backing.

Overall, the analysis presents terrorism financing as a regional security issue that extends beyond Somalia’s borders. It argues that stronger financial intelligence, cross-border cooperation, and asset recovery tools will be central to limiting the groups’ ability to recruit, arm, and operate.