Somalia to issue new currency to restore its central bank’s powers

The Central Bank of Somalia’s top priority is to reestablish the nation’s currency, which will enable it to take full control of monetary policy, its governor said. 

Somalia hasn’t printed new banknotes since descending into a civil war after the government collapsed in 1991. Most of the bills that were in circulation disappeared or became too worn out to use. 

They were replaced by US dollars or counterfeit notes, often printed or shipped in by warlords and businessmen in breakaway regions. In 2017, the International Monetary Fund estimated that 98% of the local currency circulating in the economy was fake. 

“The Somalia economy is dollarized for the last 30 plus years,” Abdirahman Mohamed Abdullahi, the central bank’s governor, said in an interview in Mogadishu, the capital. “Until such a time we reintroduce the Somali shilling. it would not be easy to have a monetary policy in the country,” 

While he wouldn’t commit to a timeframe for the reissuance of the currency, his deputy Ali Yasin Wardheere in January said the bank is targeting next year.  

The re-introduction of the shilling, which will circulate alongside the dollar, “is essential to facilitate the development of a monetary policy that is vital for the growth of the economy,” Abdullahi said. 

The central bank began working on plans to issue high-value currency notes in 2017 with the help of the IMF, and the World Bank subsequently became involved.  

Abdullahi expects the economy, which has faced multiple shocks in the past two years from Covid-19, a severe drought and Russia’s war in Ukraine, to expand 3.1% in 2023, and slightly more next year.

Source - Bloomberg 
-Agencies