In the absence of a central bank in Somalia to regulate Somali currency, how does the Somali shilling survive and circulate? In fact we live in a situation where no one can predict what the dollar exchange to the Somali shilling would be next day or within the day itself as changes can happen drastically inside a few hours.
No one controls how much Dollar can the market take or how much of it should be sucked away to stabilize the market. It is like rain. It just comes in any amount it wishes and it is up to the nomad to decide which way he would decide to fetch the water.
In Somalia pastoralism is not limited only to nomadic life but it also affects the political and business life of the whole nation as there is no one in control of the market forces on which we so much depend.
Dollar in-flow is peak during the last days of each month when people receive remittances from their relatives in abroad and that is the time when the Somali shilling gains some relative strength. It is estimated that milliions of US dollars are injected into the Somali economic mainstream each month due to transmittal of funds from abroad in the form of Hawala.
But a huge amount of Dollar would soon leave the market for business deal in abroad and that is the time a severe shortage of dollar is felt which in turn gives rise to devaluation of the Somali currency.
The Somali economy is growing in a way that only the rich become richer by exploiting the poor and keeping them in the margins of despondency. The highest money note we have is 1000 and nobody accepts to neotiate with you on business terms it you have the 500 note or 100 etc. The bus fare from K4. all the way to Hotel Florence near Sinai used to be 500 but now it is 1000 shillings, like it or not. .
Paradoxically enough, there are situations whereby you buy a certain item with an amount of 600 or 800 and the seller has no money smaller than 1000. What do you think he will give you as a change? He will give you a matchbox or chewing gum or pieces of sweets.
From the huge profits these merchants generate out of this uncontrolled business, nothing would come back to the general public in the form of public welfare, as they do not contribute to building roads, hospitals, schools, wells etc
They do not pay tax as there is no such authority that can have a capacity to embark on a revenue collection scheme in a wider scale. These businessmen give extortion money to militia manning roadblocks who wield a gun to show that failure to pay would cost them a much higher price: Death..
And to recover from the money they had lost to the gunmen they increase the price of the commodity thereby placing unbearable load on the shoulders of the local consumers. When such things are rife, revolution is ripe.
Now with the arrival of African Peacekeepers in Mogadishu are we noticing any positive changes in the dollar-shilling exchange? No, to make a long story short. Worse still, prices are skyrocketing and the purchasing power of the shilling is further diminishing (though not nose-diving)
Can we compare this mission with that of UNOSOM in the early nineties? UNOSOM has been a rich peacekeeping mission, which had brought huge amounts of money in the form of dollars and employed thousands of Somalis in its expensive projects. UNOSOM came at a time when the exchange rate of one dollar was 8000 shillings but immediately cut this soaring inflation to more than half.
Every week they paid close to one million dollars to local merchants and contractors in exchange of Somali Shilling to pay its local staff and other local-based operations. Can the African Peacekeepers do that? I guess not. So unless we increase our local production to earn hard currency or get other means of supporting our economy, we shall remain swimming in the pools of inflation. Please share this poem with me:
In his fat but weeping pockets
He has heaps of Somali shillings
Rich is what you think of him
But in the pits of chronic poverty
He wails on the walls of poverty
With the money he earns a month
He feels warm for only a few days
Behind it he tries to hide from hunger
But only falls in the jaws of starvation
Speaking as cold as the food he eats
He is a Somali teacher in Mogadishu
Trapped in a web of tribal intricacy
Torn apart by inflation and anarchy
Terrorized by the sound of rockets
But behind the ramparts of evil
This teacher sees a ray of hope
Shining at the end of the tunnel