Somali businesses find themselves caught between a rock and a hard place as they face taxation from multiple groups. The government, al-Shabab and Isis are all collecting taxes from business people with no option to choose whom to pay. Pay up or close shop.
Al-Shabab is already well established in the business of taxation. It runs a tax system that rivals that of the government, with tax income from telecoms and other major companies, a charcoal tax, retail tax and road tolls, netting millions of dollars to run its operations.
The group is rumoured to receive funding from al-Qaeda, but this is not the case. Al-Qaeda is on the run and its funds have reduced or otherwise faded away. Al-Shabab in response has resorted to widen its tax base in Somalia. Businesses have become familiar with it, and even get receipts to show they paid in case another al-Shabab collector or supervisor shows up.
Now, al-Shabab has another rival in the form of Isis, the Islamic State group. In October, 2015, a few hundred fighters abandoned al-Shabab and pledged allegiance to Isis, whose fighters are mainly based in the mountainous area of Galgala in north-eastern Somalia. The group is led by Sheikh Abdikadir Mumin, who once lived in London, and was a former al-Shabab spiritual leader.
Since then, al-Shabab has been hunting down members of Isis, killing and jailing them out of fear that they may one day diminish its own power and influence. Last month, al-Shabab killed one of its foreign fighters after he was suspected of having links with Isis.
Isis militants in Somalia are weak and they do not have any geographical control. Their greatest success happened in December 2016 when they temporarily took control of Qandala, a small fishing town on the coast of the Red Sea. They have also carried out a few attacks on Somali and African Union forces in Mogadishu and the Puntland region.
Unlike al-Shabab, Isis fighters in Somalia do not have the medium to communicate with the Somali public, and mainly rely on the Isis mainstream in Syria and Iraq. They are out of touch with the public and have little interaction with them.
To compete with al-Shabab and fund its activities, Isis is now taxing small businesses and big corporations and they are killing anyone who refuses to pay. In Mogadishu, staff of major companies are being targeted and killed.
In the last month, more than 10 people working for Hormuud, Somalia’s biggest telecom company, were killed by suspected Isis members. Reports say the staff were targeted after their employer refused to part with cash for Isis. There were also reports of businessmen being killed in Bosaso, a commercial coastal town in the northeast of the country. Banks and money transfer companies have also been targeted.
Isis is now expanding its reach, sending operatives to Mogadishu and other major towns. In November, Somalia’s intelligence agency, the National Intelligence and Security Agency (NISA) said it had arrested an Isis operative who was in charge of the group’s finances, in Mogadishu. In a statement, NISA said the capture of this high-profile Isis figure will derail the financial flows of the militant group.
“Some businesses will definitely close because they cannot pay taxes to so many groups,” said Abdilatif Adan, a Horn of Africa analyst based in Mogadishu.
“Because of this, people who had planned to open businesses, especially those from the Diaspora, will try to rethink their investment. It will be costly and will discourage entrepreneurship.”
Yahya Mohamed, a communications and political analyst, says small businesses will die or fail to even grow.
“Small businesses owners are there to survive. They are not building empires. If they divide the little profit they get with three tax collectors, they will either shut down or forget about expanding,” he said.
Somalia is recovering from three decades of civil unrest and the government says the country is open for business. Despite security threats, Somalis in the diaspora are returning home to invest. But with this latest development, the cost of starting a business will go up and the prices of basic goods will rise and life will become more difficult for ordinary Somalis already struggling to make ends meet.
Source: 7D News