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

Somalia hopes to issue new bank notes in the near future, marking a potentially historic turning point for a nation that has spent decades navigating extreme economic instability, civil conflict, and a near-total collapse of its official monetary system.

The nation, which stretches across the Horn of Africa, suffered through a devastating civil war between 1991 and 2006. The insurgency that followed the establishment of the Transitional Federal Government of Somalia continued through 2012, plunging the country into protracted violence. The constant warfare left Somalia as being one of the least developed nations on earth, shattering its institutional infrastructure and dismantling the formal mechanisms of the state.

Currently, there is a recognized Federal Government of Somalia, but insurgents continue to control parts of the beleaguered nation, posing persistent security challenges that complicate national reconstruction efforts. In this vacuum, traditional and informal mediums of exchange have taken root. Livestock and U.S. currency function as money alongside 35-year-old Somali banknotes that are now increasingly being refused by merchants due to their ragged, deteriorated condition. So, why doesn’t Somalia simply arrange to have fresh banknotes printed?

The answer lies in a complex web of historical, financial, and geopolitical hurdles that have plagued the country for decades. The transitional government revived the defunct Central Bank of Somalia during the late 2000s in an effort to restore order to the financial sector. However, a lack of confidence in the Somali shilling and the release of the few notes that were available inadvertently fueled hyperinflation. Consequently, the dollarization of the economy followed, as citizens and businesses abandoned the local currency in favor of a more stable medium of exchange. Somalia residents living abroad heavily encouraged this dollarization process by sending U.S. currency home through various money transfer networks and remittance channels.

Adding to this institutional confusion, the breakaway region of Somaliland declared its independence and, since 1994, has been issuing its own shilling currency through the Bank of Somaliland. Somaliland is not recognized internationally; however, the region continues to stubbornly use its own coins and bank notes independently of Mogadishu. Due to persistent inflation within the enclave, the 100-, 500-, 1,000-, and 5,000-shilin banknotes are the only denominations reported to be in regular circulation. These notes bear dates extending through 2011. Although the breakaway government planned to issue new notes in 2017 and 2022, none of those planned emissions were able to be officially verified at the time this article was being written.

As for Somalia itself, the scale of monetary decay is staggering. A 2017 International Monetary Fund report indicated that a staggering 98% of Somalia banknotes in circulation were counterfeit. Transparency has historically been a severe problem within the financial pipeline. Historical sources indicate that massive batches of banknotes in denominations of 1,000, 2,000, 10,000, 20,000, and 50,000 shillings were printed in Sudan under opaque circumstances. In 2022, former bank governor Abdisalan Omer Hadliye revealed that vast quantities of banknotes were lying idly in a Sudanese warehouse, despite those particular notes having been originally manufactured by an unnamed German company. Even though there have been continual promises from successive administrations regarding the introduction of a brand-new currency, no official rollout has successfully materialized to date.

Compounding these structural deficits, external economic pressures continue to batter the region. Through mid-2026, Somalia’s inflation rate was recorded as high as 9.34%, partially influenced by the increased geopolitical conflict unfolding in the Middle East involving Iran and the United States, which has disrupted global supply chains and driven up the cost of imported goods and fuel.

To steady the ship, Somalia’s parliament is currently considering a comprehensive Currency Board Arrangement, working to finalize bank reserve management protocols, and establishing stricter regulations regarding foreign exchange operations. Despite these legislative and administrative maneuvers, no definitive public announcement has been made regarding whether newly designed notes would actually be issued, and if so, exactly which security printers or international firms would be trusted to produce them.

Nevertheless, key government officials insist that reform is moving forward. According to Somalia Commerce Minister Gamal Mohamed Hassan, there is a process underway to get new banknotes, emphasizing that the central bank has made issuing a viable national currency and strengthening monetary policy tools a top national priority.

The Somalia government and central bank are under immense pressure to get a functional form of domestic currency into circulation as critical geopolitical safety nets begin to shift. In 2027, the United States will cease supporting United Nations logistical backing for the nearly 12,000-strong African Union Support and Stabilization Mission in Somalia. This impending withdrawal will profoundly impact the nation’s logistical capabilities, directly affecting its ability to obtain essential food supplies, fuel, medical services, and military troop transport. Furthermore, an estimated 1,100 Somalis living in the United States—many of whom have historically been supporting relatives back home by sending dollars through electronic systems—may face deportation in the near future, threatening a vital lifeline of foreign currency inflows.

Highlighting the urgency of these compounding economic and security developments, Central Bank Governor Abdirahman Mohamed Abdullahi addressed the existential need for monetary sovereignty. Speaking on September 2, he stated that authorities cannot hope to execute a coherent monetary policy without reintroducing the authentic Somali shilling, reiterating that issuing a viable national currency and strengthening monetary policy tools remains a strategic priority for the nation’s survival.