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The illegal trade of charcoal in southern Somalia is booming and generating significant revenue for al-Shabaab, analysts and observers say.

Al-Shabaab relies heavily on revenues from charcoal exports to finance its terrorist operations, said Sheikh Ahmed Madobe, leader of the Ras Kamboni movement, which is taking part in the allied forces' military campaign against al-Shabaab in the Juba regions.

"The illegal export of charcoal is currently considered al-Shabaab's main source of revenue," Madobe told Sabahi. "Al-Shabaab is the only faction that allows corrupt businessmen to export charcoal from ports under its control."

Madobe said there are no official figures on how much money al-Shabaab receives from charcoal exports, but said revenues could reach several millions of dollars annually.

A letter by the UN Monitoring Group on Somalia and Eritrea leaked in June said charcoal is "al-Shabaab's single most important source of revenue".

Al-Shabaab controls three main ports in Kismayo, Barawe and Marka through which charcoal is exported.

Al-Shabaab fighters have begun to flee as Somali and allied forces advance on Marka, and Somali and Kenyan military leaders say they intend to take Kismayo this month.

Al-Shabaab has been driven out of many strongholds in Somalia over the past few months, including Beledweyne, Baidoa, Hudur, Afgoye and Balad. As a result, al-Shabaab "lost a large portion of its funding sources that were available through collecting high taxes from markets, commercial entities and farmers", said Mohamed Hassan, a political analyst who monitors al-Shabaab.

"Al-Shabaab has been focusing recently on the charcoal trade to finance its combat activities after its other revenues gradually dwindled since the escalation of the allied forces' military campaign," Hassan told Sabahi.

"When al-Shabaab was faced with financial problems, it started to focus on exporting charcoal," he said. "More than 95% of charcoal [from Somalia] is exported via ports under al-Shabaab's control."

Efforts to stop Somalia charcoal exports

In February, the UN Security Council passed a resolution banning the import of Somali charcoal, saying its trade threatens the peace, security and stability of Somalia.

In April, the Somali Transitional Federal Government issued and implemented a law banning the export of charcoal, forbidding it from passing through Mogadishu's port.

Despite the UN resolution, charcoal from Somalia still flows into the markets of Gulf countries, according to the June letter from the UN Monitoring Group on Somalia and Eritrea.

"The main importers of Somali charcoal -- notably the United Arab Emirates and Saudi Arabia -- have been slow to implement the ban, and as of June 2012, large volumes of charcoal continued to leave the al-Shabaab controlled ports of Barawe and Marka for markets in Gulf Co-operation Council countries," the letter said. "But military offensives by AMISOM, Ethiopia and Kenya have deprived al-Shabaab of control of lucrative taxation centres, including markets and border posts, eroding its revenue base."

Lawmaker Mohamed Omar Gedi said it will be difficult to impose the export ban until al-Shabaab is driven out of the ports it uses to export the charcoal. Gulf countries must also impose a trade embargo on Somali charcoal imports, he said.

"If these countries agree to end charcoal imports from Somalia, the exporters will not be able to find a market, leading to a decline in al-Shabaab's revenues," Gedi said.

Environmental damage from charcoal threatens agriculture

According to environmental activists, this illegal industry adversely affects the environment and can exacerbate drought and famine conditions.

"Deforestation, a result of the manufacturing of charcoal, causes immense environmental damage that has contributed towards deepening the humanitarian crisis in Somalia," said Farhan Ali, deputy director of the Somali Environment Protection Alliance Network, a non-governmental organisation (NGO) based in Mogadishu.

"Heavy deforestation in certain areas of Somalia has led to desertification and decreased arable land and pastures," Ali told Sabahi. "This has forced some local residents, especially shepherds, to leave their native land when it becomes unsuitable for grazing after all trees have been wiped out."

Experts believe the deforestation caused by charcoal production contributed to the drought and subsequent famine last year in Somalia.

"Charcoal production in Somalia not only destroys the environment and contributes to food insecurity, but it also funds the elements and organisations behind conflicts," the UN Development Programme said in May. "The charcoal production accelerates the process of desertification, decreasing the amount of land useable for agriculture or even grazing, pushing locals out of areas as they become uninhabitable after charcoal producers clear all of the trees."

Ali said al-Shabaab has thwarted any attempts by local residents and environmental protection agencies to replant trees.

"If local residents or environmental protection NGOs try to implement projects to replant trees in the uprooted areas for the sake of protecting the environment, the militants start thinking they are working for foreign organisations and therefore reject such efforts," he said.