Based on the conversations and debates on the currency crisis in Puntland economy, I suspect that people limit their understanding on inflation. The case here is more complex than this.
What does it mean when traders refuse to accept a currency? Where is the role of National Central Bank of Somalia? Why the FGS have been failing that long to handle its obligations to citizens of the country and the national economy with regards to monetary policies and supply of Somali Shillings and secure and reliable exchange mechanism? How long does a country keep going on without the supply of new and legitimate banknotes?
The neglect and irresponsibility of many decades are now catching up, and hence a dangerous monetary crisis is exploding before our eyes.
What is needed now are calm and cool educated nerves to study the problem and submit advice to:
- All levels of the government
- International partners.
- Supply of legal Somali Banknotes
Among immediate tasks, there must be some positive intervention (Do no further harm measures) to build confidence in Somali Shilling by making guarantees and availabillty of exchange rates.
There must be some limits to and issuance of regulations on existing electronic money firms, which are taking over the Somali economy and operations of transactions and finance.
One would ask why this currency crisis is particularly acute in Puntland, that exists nowhere else in Somalia?
If you don’t want to call the spade a spade, you would always be beating about the bush. This Puntland market crisis is a result of ill-advised Puntland government intervention. It has been instigated by the Government demanding taxes at Bosaso Port to be paid fully in US dollars to the resistance of merchants and importers/exporters, also by making further damages by imposing minimum US$1 restrictions in Sahal payment, hurting low-income residents in towns. Additionally, by imposing a fixed exchange rate without guaranteed available exchange centers willing to carry out government ruling or orders.
Now, it looks that merchants and President Deni are in loggerheads in a new economic power struggle with religious, factional underpinnings.
If not managed carefully, this Puntland situation could develop into political explosion and economic catastrophe.