What Is the Currency of Somalia?
Since the fall of Siad Barre in 1991, Somalia is yet to have a stable government. The war torn country is experiencing internal conflict and the rise in militias, such as Al-Shabaab, which is linked to the Islamic state. According to the World Bank, Somali's GDP stood at $6.2 billion in 2016, the country's per capita income was $450, and the poverty rate was a staggering 51.6%. The country largely depends on imports from neighboring states and exports account for only 14% of GDP. Since the fall of the Siad Barre regime, the country has not printed any currency, but depends on previously existing coins and banknotes. The official currency of Somalia is the Somali shilling. The Somali shilling uses the symbol Sh.So., the code SOS, and is subdivided into 100 senti.
After the war began in Somalia, the currency value became unstable and uneven, which meant that same currency had different value in the different parts of the country. As a result, the Central Bank of Somalia closed its operations, and there was the emergence of other currencies, such as the Na shilling. Forged currencies began to circulate and led to the drop in value of the Somali shilling to about $0.04 US dollars per 1000 Somali shillings. The US dollar became the accepted medium of exchange for large transactions. After the establishment of the Transitional Federal Government, the Central Bank of Somalia was revived and reassumed the role of formulating and implementing monetary policies. Boosted by improved security and the return of investors, the Somali shilling gained strength against the US dollar and by 2014 it had risen by 60% against the USD.
History of Currency in Somalia
The East African shilling was introduced to Somalia in 1921 when it was part of British Somaliland protectorate. After independence, the Italian somalo was introduced to Italian Somaliland, which is a different state from Somalia. In 1962, the Somali shilling replaced the East African shilling at a par value, which was also equal to the somalo used in Italian Somaliland.
The National Bank of Somalia (Banca Nazionale Somala) is responsible for regulating the circulation of the Somali shilling. In 1962, the bank issued notes in denominations of 5, 10, 20, and 100 shillings. In 1983, the 50 shilling note was introduced, in 1989 the 500 shilling note was introduced, and the 1000 shilling note was introduced in 1990. In 1991 there was an unsuccessful attempt to reform the currency at a rate of 100 to 1.
Initially, the East African shilling and the Italian somalo circulated together at par. In 1967, the Somali shilling coins were introduced in denominations of 5, 10, and 50 senti and 1 shilling. In 1976 the coins were remodeled and the name Somali Democratic Republic was added.
The autonomous region of Somaliland uses the Somaliland shilling as its currency. The currency of the self-declared republic is not recognized by the international community and cannot be used as a medium of exchange for international trade.