Puntland State Government has so far taken the following steps to try salvage the collapsing currency.
- Mobile Wallet providers will bar transfer of sub $1 between users.
- Fixing of the USD exchange rate $1 to 35,000 shillings. Currently the market rate is fluctuating between 60,000 and 70,000 shillings.
Puntland’s President throws the towel in his effort to keep the counterfeited Somalia Shillings currency in circulation. Mr. Deni says there are enough shillings stuck in vaults that was worth millions, but as it stands now is worth nothing.
Prices of basic commodities, including food, have rocketed in Somalia’s self-declared autonomous region of Puntland because of crippling inflation linked to an influx of currency.
There has been no legal printing of Somali currency since the collapse of the Siad Barre regime in the early 1990s. Instead, all the local currency in circulation is either printed in the country or imported by individual businessmen. There is no central bank to officiate over monetary policy.
The business has, however, gone out of control, thereby fuelling inflation, according to Puntland authorities - hence the imperative to control it.
“The government has issued a decree banning the printing and importation of any Somali shilling notes,” said Abdirahman Bankah, the Puntland Minister of Information.
While the government had previously allowed limited printing, importation and circulation of Somali currency, traders had resorted to printing “fake currency”. As a result, a flood of the fake currency invaded the market.
“That was hurting the livelihoods of the ordinary people and so the government has decided to put a stop to it,” Bankah added. “The currency notes in circulation are enough.”
Local businessmen in Bossaso, the region’s commercial capital, said the price of a 50kg bag of sugar had risen to 570,000 Somali shillings (US$21) against $15 a year ago, while a 50kg bag of rice was 720,000 shillings ($26) from $14 in March 2007.
The price of 50kg of wheat flour had nearly tripled from the equivalent of $12 a year ago to $33 or 900,000 shillings. “That is equal to the [monthly] salary of a policeman,” a businessman, Liban Yusuf, said.
According to businessmen, the Somali shilling reached an all-time low against the dollar this week. On 20 March, the Somali shilling was exchanged in markets across Puntland at 27,000 to US$1. "This time in 2007, the rate was 15,000."
Photo: Manoocher Deghati/IRIN
The inflation has hurt the livelihoods of ordinary people
“There is incredible inflation and it is affecting everybody, particularly those who get paid in Somali shilling,” Yusuf told IRIN.
“The printing and importation of the fake currency is a major contributing factor to this runaway inflation,” he added. “Many traders have started to quote prices in dollars because we cannot rely on the Somali shilling.”
However, a businessman involved in printing currency in Puntland, who requested anonymity, told IRIN the Puntland administration was being dishonest about the currency and inflation problem.
“They are allowing some people to import, while denying others,” he said, accusing some senior government officials of involvement.
The Puntland security minister, Abdullahi Said Samatar, told IRIN that it was wrong in the first place for the authorities to allow ordinary people to print currency. He denied knowledge of officials who were involved in printing money.
“With this decision [to ban printing more currency] we are righting what went wrong,” he said. "The decision follo
As always behind the curve and reactive policy making, no idea why they are still beating a dead horse. Always neither here nor there. Clueless or timid?
The link to the twitter feed is not working.
Their main problem is ‘lost of trust’ of the counterfeit currency. The only way they can get back trust is if the government purchases back enough Shillings from the market to create a virtual circulation which it can then slowly let the market take over.
But Deni is asking the business community to foot the risk and accept on face-value - which is a huge ask.
No amount of forcing businesses and traders to accept the shilling will reverse this death spiral. How about they ban the dollar instead? Forces EVERYONE to use the shilling. including politicians.
that would be suicidal. Not too sure if they can even enforce one. They couldn’t enforce the $10 limit on Mobile money. Folks in Galkacyo switched to Mogadishu’s Hormood SIM-card which allowed them to use without restrictions.
True, it is now beyond the point of salvaging it. Which is what Deni was trying to say anyway.
Why doesn’t central govt (Mog) introduce new Somali Shilling with all the latest security safeguards. Or are they not in the business of stabilising Somalia?
It used to be in the headlines and something Somalia’s Finance Minister talked about the first year or two of Farmaajo’s Presidency. But it has since been relegated to the backburner. Probably, they realised what is involved is beyond their capability.
It is one thing that the World Bank will definitely be involved in and financing it. But it will require setting country back on the UN’s planned path i.e. London Somalia Conference agenda. It will be at least couple of years from now.
September 21, 2021
Money changers in Garowe are struggling to make ends meet as local business community refused to use Somali shillings/File Photo/Ergo
Farhan Ayanle, 32,has been struggling to make ends meet after his money changing business collapsed in March, alongside Garowe’s 70 or so money changers in the central Somali town.
Following claims of huge sums of counterfeit currency circulating in the market, the local business community in Garowe refused to use Somali shillings and shifted to mobile money transfers in US dollars.
“I provided for my family and paid the bills with the small profit I made changing money. I worked as a moneychanger for three years and it was the only job I knew well. But now, I have been out of work for six months,” said Farhan, who used to take Somali shillings and exchange them for dollars.
“We dumped our worthless Somali shillings in the streets of Garowe,” he added.
Farhan, a father of three, had to move his wife and two youngest children to Hamur, a small village in eastern Nugal region, because he could not afford the $65 rent for their two-roomed house in town. His child in class six at a primary school in Garowe is living with a relative, who is paying the school fees.
Farhan said the losses he incurred when the shilling was declared worthless crippled him financially, as he had no savings and no one in town would lend him money to start up another business. He called on the authorities to come up with a solution to the crisis affecting many families.
“We want the government to bring Somali shillings back into use. Ten thousand Somali shillings used to feed an entire family for a day, but now it is worthless. Everyone is feeling the pain of this crisis!” he exclaimed.
Daud Ali Hersi, 27, another money changer in Garowe, said his family used to eat three meals a day but are not struggling to cook just one meal. He was making five to ten dollars a day in the money market, and his family was able to buy food to last them a month from a local store. Now they are depending on help from neighbours and relatives.
“I am a father and I have dependents. I can’t sit back at home, I still go to the market at eight in the morning to see if I can get help from friends, but I return empty handed in the evening,” Daud said. “I have two young children and it is so sad that I can’t afford to buy them milk.”
The director of Somali shilling development at Puntland’s ministry of trade and industry, Abdulkadir Said Dahir, told Radio Ergo that their hands are tied, as issues relating to the Somali shilling printing are handled by the federal government. He blamed the central government for neglecting the crisis role and failing to safeguard the national currency.
“Constitutionally, the federal government is responsible for the printing of the Somali shilling and its regulation against other currencies. For us, we have no solution for this problem,” he said.
Source: Radio Ergo
Their government just passes the buck while the people have been suffering for a decade. No mention of this by those weekly WFP reports, but at least they tell us the supply Khat is good.
That loser writing and copy pasteing that WFP report think that Somaliland will lose something…