The building that was once the home of the Central Bank of Somalia remains in a largely ruinous state in the middle of Mogadishu having been unused for the past 16 years of war in the country.
|1,000 dollars in 1,000 shilling notes |
means a lot of paper
The collapse of the Somali state in 1991 and the subsequent and the crash of the domestic currency, the shilling, meant the crippled economy was starved of liquidity to facilitate an economic recovery and of any means to replace ageing banknotes.
Without a viable central bank or any other financial authority able to provide such an essential service many people decided to take it upon themselves to do so.
Consequently it is in the Bakaara market, Somalia's biggest, where the value of the Somali shilling is now regulated, largely by a network of guesswork and rumour.
Every morning money exchangers from all over the country call the market to enquire the rate of the Somali shilling against dollars.
In short they have taken on the role of the central bank.
Mohammed Dhoore is among the people who have come to exchange dollars at the market. A huge pile of notes is his return for a thousand dollars.
"These traders are unscrupulous," Dhoore says. "During the end of the month when there are dollars in the market they reduce the price of the dollar and then a week later they increase it. They are just selfish."
However the traders deny this.
Abdikarim Fodere, a money exchanger, 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.
The biggest problem with the Somali shilling, however, is that it comes in only one denomination - the one thousand shilling note.
As a result customers may end up buying more than they had budgeted for.
The usual price for a cup of tea is 500 shillings.
But due to lack of a smaller denomination than 1000 shillings, consumers are either forced to drink another cup of tea or part with the whole amount regardless.
During the prolonged absence of any effective state authority, forged banknotes distributed by rival factions competed to fill the void and all became accepted currency.
The consequent unregulated private supply of money seeking to capture foreign exchange has raised prices, eroded the market value of Somali banknotes and reduced it to pure commodity money.
Today Somali shillings can be easily printed from Indonesia and inserted into the markets at will.
The government and businessmen have been the biggest culprits in the money printing spree.
There are also reports that some of the money in the markets is printed by underground cartels in the country.
"Our money has been reduced to a commodity like rice and sugar which anyone can just print and bring into the market," Abdikarim Fodere says. "The fake money has eaten into our economy."
|Abdiraham Yusuf is paid in the notes |
which are of no use to him or his family of eight
The profiteering from fake Somali currency has indeed created more destitution in the country.
It has affected the poorest of Somalia's poor especially those whose wages are paid in the practically useless currency.
Abdirahman Yusuf has been a porter for eleven years and says "the prices have kept rocketing all this years but my wages still remain the same".
"What I earn can hardly feed my family of eight. No one pays attention to people like me here."
But despite this multitude of problems the Somali currency, oddly, survives and retains its service value.
It is also used beyond the borders of Somalia, in Somali-inhabited areas of Kenya and Ethiopia.
The money is also exchanged against currencies of neighbouring countries and major world currencies.
Source: Al Jazeera