Garowe (PP News Desk) — Businesses in the Puntland State of Somalia have begun to turn away customers with Somali shilling, in favour of the US dollar. The Exchange Rate Crisis Committee led by the former Puntland State President Abdirahman Farole tasked the incumbent government of President Said Abdullahi Deni with enforcing recommendations of which mandatory use of the Somali shilling for transactions is the most salient.
The Committee recommended that mobile money operators include the Somali shilling in their electronic wallets. Local business briefly felt obliged to transact business in the local currency. This week most businesses in Puntland refused to accept the Somali shilling for transactions.
A Puntland Post reporter has gone to three convenience stores in Garowe to purchase water in a plastic bottle. The shop assistants told the reporter upfront that the Somali shilling “is no longer a legal tender.”
As if the monetary situation in Puntland is not dire, traders have rejected to conduct any transactions below one dollar. Traders demanded from our reporter to wire US$ 1.30 for a bottle of water costing $0.30 so that the trader can send $1 as a change to the customer. Conversely, the trader can send $1 to the potential customer who will send $1.30 to be able to buy a bottle of water.
Telecom companies have included the Somali shilling in their electronic wallets.
Consumers have been reluctant to use the electronic Somali shilling for business transactions partly because of an unstable exchange rate. Prices are quoted in dollars. Due to the absence of uniform exchange rate for the Puntland-printed Somali shilling, some traders quote an excessively high exchange rate to dissuade customers from using the Somali shilling. The two exchange rates — one for the market and the other for selling to the government — add to the jittery exchange rate regimes in Puntland State.
“It seems to me that Puntland State government has thrown in the towel when it comes to enforcing the use of the Somali shilling for business” said Mohamud Adan Ali, a business economist in Bosaso.
© Puntland Post, 2021