Tuesday March 14, 2017
By Justina Crabtree
A customer at a bank in Mogadishu, Somalia on June 7, 2015. Abdulfitah Hashi Nor | AFP | Getty Images
Somalia has drafted in the help of the U.S. Secret Service to train officials to identify fake dollars as part of its plan, with the help of the International Monetary Fund, to reintroduce a national currency in a country where almost all of the money in circulation is counterfeit.
The country faces an uphill struggle: Somalia is one of the poorest nations in the world. According to World Bank data, the country's gross domestic product per capita was $549.30 in 2015 – compared to $56,115.70 in the U.S. Plus, in its Corruption Perceptions Index for 2016, Transparency International ranked Somalia as the world's most corrupt country.
Mohamad Elhage, IMF mission chief to Somalia, told CNBC via telephone that the training took place in Nairobi, Kenya in February of this year, during an IMF technical assistance mission on currency reform.
Currently, Somali shillings are the third most common method of payment in the country, after U.S. dollars and mobile transactions. The Central Bank of Somalia has no control over the exchange rate or monetary supply, and Elhage said that authorities were "in the process of rebuilding (the institution)."
CNBC has contacted the U.S. Secret Service for comment.
Somalia made headlines last week which indicated that the country would soon take control of its currency with the help of the IMF. This would be the first time in over 25 years that Somalia's printing presses have been fired up. No currency has been issued since 1990, with the civil war beginning the following year. Elhage confirmed that the "new shilling would be issued with a high level of security features."
But, the process of issuing a new currency is not so simple. Elhage said that the Central Bank of Somalia's Board of Directors, with technical assistance from the IMF, was currently drawing up 24 measures "related to the operational and legal (framework)" of introducing a new currency, which would help the country "start addressing the distortions in (its) economy." Only after these are met will new shillings be printed. These include a "roadmap for distribution" of the banknotes and what exchange rate will be set.
"The timing (for the new currency) will be determined by when the authorities have implemented (the) measures agreed on," Elhage detailed.
"Somalia for the foreseeable future will continue to be a dollarized economy," Elhage added.
He confirmed to CNBC that the new money will be released in stages, with the first consisting only of 1,000 shilling notes – worth roughly 5 U.S. cents.
Somalia elected a new president last month, Mohamed Abdullahi Mohamed, one of whose campaign pledges was to tackle graft.