Somalia intends to print new official bank notes that will circulate alongside dollars in the Horn of Africa nation by early next year as the government seeks to replace counterfeit currency and promote commerce in an economy ravaged by civil war.
The International Monetary Fund is helping Somalia print and circulate the currency, Bashir Issa Ali, governor of Somalia’s central bank, said Friday in an interview in the Kenyan capital, Nairobi. Somali shillings currently in circulation aren’t printed by the federal government in Mogadishu and most are fake, Ali said. The new banknotes would be produced by “reputable companies,” he said.
“The economy is overwhelmingly dollarized,” Ali said. “Poor communities and those in rural areas have no access to dollars. They will benefit most from the shilling circulation.”
Somalia’s economy was destroyed by conflict that erupted after the ousting of dictator Mohamed Siad Barre in 1991 and the emergence of the al-Shabaab Islamist insurgency. President Hassan Sheikh Mohamoud’s government is stabilizing the country and confidence among investors is increasing as the security situation improves, Ali said.
While the central bank has no reserves, Ali said the country receives about $1.5 billion a year in remittances from Somalis abroad. Neighboring Kenya, east Africa’s largest economy, received $1.55 billion in remittances from citizens living and working abroad last year, according to data from the Central Bank of Kenya.
The new banknotes will be a step toward formulating monetary policy, Ali said. Effective economic management and planning is difficult without an official currency, he said.
“Printing money is very important for Somalia’s national payment systems and for our national pride,” he said.