Somalia Hopes to Issue New Banknotes Amid Ongoing Economic and Political Challenges

Somalia, a nation stretching across the strategic Horn of Africa, is once again pressing forward with long-delayed plans to issue new banknotes as it struggles to rebuild a functional monetary system. Decades of devastating conflict have left profound scars on the country’s infrastructure, institutions, and economy. Between 1991 and 2006, the nation suffered through a brutal civil war that shattered its central governance. Even after the establishment of the Transitional Federal Government, a persistent insurgency continued to destabilize the region through 2012, cementing Somalia’s status as one of the least developed nations on Earth.

Today, while a recognized Federal Government of Somalia operates from the capital, insurgents continue to control parts of the beleaguered country, complicating governance, security, and nationwide economic integration. In this fragile environment, daily commerce has had to adapt in unusual ways. Livestock and U.S. currency function as primary mediums of exchange alongside 35-year-old Somali banknotes. These aging legacy bills are now increasingly ragged, torn, and worn out, leading merchants across the country to reject them outright. This daily friction raises a fundamental question for economists and citizens alike: why doesn’t Somalia simply arrange to have fresh banknotes printed to replace the crumbling currency?

The path to currency reform has been fraught with structural and political obstacles. During the late 2000s, the transitional government successfully revived the long-defunct Central Bank of Somalia. However, a profound lack of public confidence in the domestic currency, combined with the poorly timed release of the few genuine notes that were available, inadvertently fueled rapid inflation. This loss of faith triggered the widespread dollarization of the economy. At the same time, members of the Somali diaspora living abroad heavily encouraged and accelerated this dollarization process by sending vital U.S. currency back home through informal and formal money transfer networks.

Adding to the monetary confusion, the geopolitical landscape of the region remains fractured. Somaliland, a self-declared autonomous region that broke away from Somalia, has been issuing its own distinct shilling currency since 1994. Although Somaliland is not recognized internationally as a sovereign state, the region continues to independently utilize its own unique coins and banknotes. Severe inflation has taken a heavy toll there as well, leaving 100-, 500-, 1,000-, and 5,000-shilin banknotes as the only denominations reported to still be in circulation. These notes carry dates extending through 2011. While the breakaway regional government previously announced plans to issue new batches of notes in 2017 and 2022, none of those proposed print runs could be independently verified at the time of this writing.

In Somalia proper, the crisis of confidence and authenticity in the national currency reached unprecedented heights. A striking 2017 International Monetary Fund report indicated that an astonishing 98 percent of all Somalia banknotes remaining in circulation were counterfeit. Transparency and accountability have historically plagued the currency procurement process. Historical sources indicate that various batches of banknotes—in denominations of 1,000, 2,000, 10,000, 20,000, and 50,000 shillings—were previously printed in Sudan. Highlighting the chaotic paper trail, former central bank governor Abdisalan Omer Hadliye stated in 2022 that large supplies of banknotes were sitting idly in a Sudanese warehouse, despite having originally been manufactured by an unnamed German printing company. Despite continual, high-level promises from successive administrations that a brand-new currency would soon be introduced, no official rollout has successfully materialized to date.

Compounding these domestic monetary difficulties, external economic pressures continue to weigh heavily on the population. Through the middle of 2026, Somalia’s annual inflation rate climbed as high as 9.34 percent. This inflationary spike was influenced in part by broader geopolitical conflicts unfolding in the Middle East, particularly involving tensions between Iran and the United States, which disrupted global supply chains and commodity prices.

To address these compounding crises, Somalia’s parliament is currently considering a comprehensive Currency Board Arrangement. Lawmakers are working to finalize crucial mechanisms regarding bank reserve management and strict regulations concerning foreign exchange. Despite these legislative steps, no definitive public announcement has yet been made regarding whether newly designed notes will actually be issued, nor has the government disclosed which printing firm or international partner would be entrusted with manufacturing them if a contract is awarded.

Nevertheless, government officials insist that foundational work is actively taking place behind the scenes. According to Somalia Commerce Minister Gamal Mohamed Hassan, there is a serious process currently underway to secure new banknotes. He emphasized that the central bank has made the task of issuing a viable national currency and strengthening the country’s monetary policy tools an absolute top priority for the administration.

The urgency driving the Somalia government and its central bank has reached a critical juncture due to looming geopolitical shifts. In 2027, the United States is scheduled to cease its direct support for United Nations logistical backing of the nearly 12,000-strong African Union Support and Stabilization Mission in Somalia. This impending withdrawal threatens to severely impact the nation’s capacity to secure essential supplies, including food, fuel, medical services, and vital troop transport logistics. Furthermore, broader diplomatic and immigration developments could compound these strains; an estimated 1,100 Somalis residing in the United States—many of whom have consistently supported their families back home by routing U.S. dollars through electronic transfer systems—face potential deportation in the near future, which could sharply diminish inward remittances.

Underscoring the strategic necessity of monetary reform, Central Bank Governor Abdirahman Mohamed Abdullahi stressed the gravity of the situation during a public address on September 2. As he bluntly stated, the nation cannot effectively manage or execute monetary policy without reintroducing the Somali shilling, reiterating that issuing a viable national currency and strengthening monetary policy tools remains a vital strategic priority for the country’s economic survival.