Islamic State in Somalia Suffers Major Financial Setback After Puntland Operations

MOGADISHU, Somalia — Islamic State's branch in Somalia has suffered a major decline in its financial capacity after military operations by Puntland and US support disrupted key networks used by the group to collect and transfer funds, according to a new report by the Africa Center for Strategic Studies.

The report said Islamic State in Somalia had previously generated hundreds of thousands of dollars each month, with much of its income coming from extortion and illegal taxes imposed on businesses, as well as revenues linked to financial services.

US authorities have estimated that the group raised about $2.5 million in 2021 and nearly $2 million during the first six months of 2022. The figures illustrate the scale of the financial networks that the group developed before recent counterterrorism operations disrupted parts of its funding system.

A key component of that network was Al-Karrar, an Islamic State-linked financial hub that played an important role in managing funds and facilitating support for the group's affiliates in other parts of Africa and beyond.

A 2026 US assessment said Al-Karrar remained important for transferring money between Islamic State's Somalia branch and other elements of the group's global network.

One of the most significant blows to the group's financial structure came in 2025 with the arrest of Abdiweli Mohamed Yusuf, whom the United States had previously identified as the head of Islamic State-Somalia's financial operations.

US authorities said Yusuf was responsible for managing part of the group's revenue and facilitating the movement of money, fighters and supplies.

Puntland's military campaign against Islamic State, which began in late 2024, has also disrupted networks involved in extortion and illegal taxation. The Africa Center for Strategic Studies said the operations had significantly weakened the group's ability to generate revenue and sustain its activities inside Somalia.

The report nevertheless warned that the financial pressure has not eliminated Islamic State's ability to operate.

The group retains limited sources of income that could allow it to maintain smaller-scale operations and preserve some links with its wider international network, according to the assessment.

The financial decline could constrain the group's ability to recruit fighters, purchase weapons and supplies, pay operatives and maintain logistical networks. But analysts say disruption of revenue streams does not necessarily translate into the complete collapse of an armed group, particularly when it retains access to local sources of funding and external networks.

Puntland forces, backed by US airstrikes and other forms of international support, have conducted sustained operations against Islamic State positions in the mountainous areas of Bari region. The campaign has targeted the group's fighters, leadership and infrastructure.

The developments have placed growing pressure on Islamic State's Somalia branch, which has sought to maintain a presence in northern Somalia while serving as an important financial and logistical node for the group's broader network.

The Africa Center said continued pressure on the group's financial infrastructure could further restrict its operational capacity, but stressed that the remaining funding channels mean the threat has not disappeared.

The findings underline the importance of targeting financial networks alongside military operations, as Islamic State's ability to collect and move money remains a key factor in determining its capacity to survive and adapt.

GAROWE ONLINE