Somalia is home to one of the most peculiar monetary circumstance in the world today. The central bank of Somalia lies in a crippling state of disrepair as it is slowly descending into ruins. This is due to the product of the constant war that has plagued the nation for the past 16 years.
The country’s main economic enterprise deals with livestock but due to the constant state if unrest since it’s independence and coupled with long droughts, their livestock and consequent livelihoods could not be sustained
Somalia was a former British colony and had gained brief independence on July 1st, 1960. The nation’s peace did not last long however as the country was then plagued by communist guerrillas, civil war and Islamist insurgents since then.
In the year 1991, the Somali state collapsed and as a result of that the country’s domestic currency, the Somali Shilling, also subsequently crashed.
This meant that the impaired economy had to figure out a way to recover from their circumstances and to replace their ageing bank notes without a body of authority to look to
Their plight was further complicated because they were not officially recognized by the international stage which made it particularly difficult for foreign agencies to aid them.
Out of desperation and no body of authority to look to, they took it upon themselves to revive their central bank on their own. This was done in order to provide essential service to the population of Somalia and that is the act of printing and regulating the currency of the country. The main area where they decided to set up headquarters is not in the ruinous state of the former central bank but rather in the Bakaara market which is the largest Somalian market.
Somalia’s Hargeisa money market
The Somali shilling is regulated largely by a system of guesswork and rumor.
Money changers from all over the country would proceed to call the market every morning to inquire the current rate of their currency against the US Dollar
Because Somalia’s currency regulation was taken up by individuals who were not officially considered a body of authority but more of a guide to which people look to, gang factions in the country have tried to make a profit by selling counterfeit notes
Although these counterfeit notes can be easily told apart from real notes, they are still accepted in the market
This may seem extremely strange to the rest of the world because in other countries, a counterfeit note is just a worthless piece of paper with no monetary value whatsoever
Abdikarim Fodere, a money exchanger from the market says “it is all a matter of supply and demand and the price they put on the dollar depends on its availability in the market and nothing else”
Therefore if a a counterfeiter finds a currency printer who is willing to print decent knockoffs of the Somali shilling overseas for a cheaper price and bring them into the country, it would over-saturate the amount of bank notes circling the market and therefore decrease it’s value.
This would in turn make it non profitable for counterfeiters to produce the fake bank notes as the supply for it is far more than the demand
Because of this over circulation of bank notes and the sheer amount of it there is in the market, Somalia has gone into a state of extreme inflation
Many people have dubbed this market to be comparable to Wall Street as both places serve as the financial districts of their respective countries
If you find this article interesting, please share it with your friends. Thank you.
