May 25, 2011 ·24 Comments
The Central of Bank of Somaliland stopped the use of the Somali shilling in its second largest city of Burco as the self-declared republic embraces to start blanket operation of its own currency by the end June this year.
The Governor of the Central Bank of Somaliland Abdi Dirir Abdi on Tuesday declared that the longstanding Somali shilling will no longer function as a means of currency in the markets of Burco and its surrounding environments.
The Bank official said they have so far collected about 20 billion Somali shilling which is equivalent to 10 billion Somaliland shilling that are meant to be withdrawn from the local markets of the entire Togdheer region.
“Starting from today we will be using the Somaliland currency in all our regions and towns. We will be using our currency to collect revenues and in other monetary payments” said the governor while addressing the local population of Burco
A few weeks ago the self-declared government of Somaliland had officially announced its plans to halt the use of Somali shilling indicating the emergence of a functioning government which is trying to control its own economy.
Authorities in Hargeisa have been engaged in an operation to wipe out the much valueless Somali currency from the province of Togdheer which local economist say is groaning under the weight of hard economic times.
The Central Bank of Somaliland is sending a message to its citizens in the affected region that they should start adapting their own currency said the governor. It is believed that the changing of currency was part of pre-election pledges of the current authority of Ahmed Silanyo who has promised to marshal widespread economic reforms in a region that is yet to be recognized by the international community.
Earlier in April Somaliland’s Central Bank began exchanging 7 billion Somali shillings ($4.37 million) of notes for its own currency as part of a plan to stop using the original Somali currency.
The Somaliland shilling was introduced in October 1994. And by the end of 2008, the breakaway region’s currency was valued at 7,500 per dollar. The Somali shilling is currently valued at 1,601 against the U.S. currency according to Bakara market data.
Somaliland lawmakers are expected to enact a draft banking law in few days time in order to enable commercial lenders to extend credit to borrowers for the first time in the region’s history.
Somaliland is a former British colony which declared independence in 1991, following the ouster of former Somali dictator Mohammed Siad Barre.