After decades of battling through a civil unrest, Somalia has expressed its intention to resume printing currency this year . The resumption in printing will mark the first time the government is printing money since 1991. The Governor of Somalia’s central bank, Bashir Issa Ali, revealed over the weekend saying that all technical preparations were complete, and his government was confident it can assemble a financial aid package within three months to fund the printing program.
When asked if Somalia will print and distribute banknotes during 2017, Ali answered: “Absolutely. Absolutely. Absolutely! We have prepared all the issues and all the basic groundwork, and put in place the technical requirements.” He went on to say that the new currency would include “good, reliable security features.
Outgoing Somali President Hassan Sheikh Mohamud met a major demand of the international community in 2016 when he signed into law a legislation that outlaws money laundering and financial terrorism. The Somali government needs $60 million to be able to begin printing banknotes. Mr Ali said the country hopes to raise the money at an international donors’ conference for Somalia to hold in London in May this year. He also added that international institutions, such as the World Bank and the International Monetary Fund, as well as the U.S. Treasury, have been helping Somalia reform its financial sector and train central bank staff.
“We expect the international community to assist us with that issue” Ali said.
Hardship and a scarcity of trustworthy currency has created opportunities for some innovative strategies in the private sector, Mr Ali revealed, and Somalia has made some progress in establishing private banks and mobile money systems.
“Most of it is done through dollars and electronic money, which is a great thing for saving costs and effort and very convenient, also. Remittance companies that relay payments from Somalis working abroad operate in many parts of the country, but a large part of the nation does not have access to electronic funds or dollars, so there is an urgent need for a reliable national currency” the bank chief noted.
Somalia does not yet have its own currency, therefore there is no monetary policy in place, but once the banknotes begin circulating, it may just be the dawn of a new era for the war-plagued East African nation. Once Somalia-printed banknotes are in circulation, the Central Bank Governor said, his staff will be able to regulate and control operations by private banks and remittance services. The bank now has trained staff members to work on the financial and exchange systems, and training efforts are continuing.
“Monetary policy always must come together in close collaboration with the fiscal policy of the government -taxation and revenue, the public budget and these kind of things. We don’t apply any monetary policy at the moment. By February 12, more than 10 staffers are departing for training about counterfeiting and financial controls. They include staff from the bank, police and the national security agency”, Mr Ali stated.
Economists have recently predicted a slowdown for Somalia’s domestic economy, which largely relies on livestock exports as the drought in the country has killed thousands of farm animals.
“When you don’t have enough crops, it will contribute to food shortages. When you have drought problems, you will not be able to export livestock. That will affect our foreign market and our exports, so Somalia’s foreign-exchange earnings will decline. When you get less foreign exchange, you will not be able to import what is required, and when you import less, there will be less tax revenue for the government”, Mr Ali said.
Meanwhile, the peaceful election of a new Somali president appears to have helped the nation’s economy. The Somali shilling rose in value compared with the U.S. dollar over a two-day period; $1 brought 22,000 shillings before the election in Mogadishu, and by last Saturday it was trading at 16,000 shillings.
“It’s a matter of expectations. There is a new government, new environment and new atmosphere, and that will have an effect on people’s opinions about security, the economy and the stability of the government” the country’s financial boss commented.