The Somalia Investor – Issue#11

Somalia is about to re-introduce its local currency the Somali Shilling. The country has not had an official Somali currency since the collapse of Government in 1991. The risk-benefit pendulum of the currency re-introduction could easily swing either way depending on its handling. The whole process, though, has to be carefully managed, lest it runs into some headwinds.

The first headwind gravitates around restoring faith in the currency given the current highly dollarized market. For the past 25 years or so, Somalia has been dollarized-hence the fixation with the US Dollar is quite elevated. Undoing this fixation requires concerted effort. Additionally, Somalia operates a fragile federal system with each federation almost assuming some level of autonomy.

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