Somalia Hopes to Issue New Banknotes as Economic Pressures and Counterfeit Crisis Mount

Somalia hopes to issue new bank notes in the near future, taking a critical step toward restoring a functional national currency after decades of conflict, rampant counterfeiting, and widespread reliance on foreign cash.

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 instability. The constant warfare left Somalia as being one of the least developed nations on earth, shattering its institutional infrastructure and obliterating its formal financial systems.

Currently, there is a Federal Government of Somalia striving to reassert central authority, but insurgents continue to control parts of the beleaguered nation, complicating governance, security, and economic development. In the absence of a stable national currency, daily commerce has had to adapt in unusual ways. 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 severely ragged condition. Decades of wear and tear have left these legacy notes tattered, taped together, and practically disintegrating in circulation. So, why doesn’t Somalia simply arrange to have fresh banknotes printed?

The answer lies in a complex history of political fragmentation, institutional rebuilding challenges, and severe economic instability. The transitional government revived the defunct Central Bank of Somalia during the late 2000s in an effort to regain control over the nation’s monetary affairs. However, a deep lack of confidence in the newly handled Somali shilling and the release of the few notes that were available inadvertently fueled inflation. Citizens and businesses quickly lost faith in the value of their domestic money, and the dollarization of the economy followed swiftly. Somalia residents living abroad heavily encouraged this dollarization by sending U.S. currency home through money transfer networks and informal remittance systems known as hawala, injecting massive amounts of American dollars into the local market.

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 as a sovereign state; however, the region continues to operate independently, using its own distinct coins and bank notes for all local transactions. Due to severe regional inflation over the years, the 100-, 500-, 1,000-, and 5,000-shilin banknotes are reported to be the only remaining denominations actively in circulation. These notes bear dates extending through 2011. Although the breakaway government previously planned to issue new batches of notes in 2017 and 2022 to replace aging currency, none of these planned issues were able to be officially verified at the time this article was being written.

Meanwhile, the situation regarding the official Somali shilling grew even more dire. A 2017 International Monetary Fund report indicated a staggering 98% of Somalia bank notes in circulation were counterfeit, rendering the official money supply virtually useless for legitimate macroeconomic management. Transparency has historically been a major problem in managing the country’s monetary supply. Historical sources indicate that bank notes in larger denominations of 1,000, 2,000, 10,000, 20,000, and 50,000 shillings were previously printed in Sudan under opaque circumstances. In 2022, former bank governor Abdisalan Omer Hadliye revealed that large shipments of bank notes were sitting idly in a Sudanese warehouse, having originally been printed by an unnamed German company before political complications stalled their delivery. Despite continual promises by successive administrations of a new, secure currency, no official new notes have been successfully introduced and reported to date.

Economic pressures have continued to compound these structural difficulties. Through mid-2026, Somalia’s inflation was recorded as high as 9.34%, an alarming rate partially influenced by the increased geopolitical conflict going on in the Middle East involving Iran and the United States, which has disrupted global supply chains and driven up the cost of imported goods, fuel, and food staples.

To combat these pressures, Somalia’s parliament is currently considering a comprehensive Currency Board Arrangement, finalizing crucial bank reserve management protocols, and establishing strict regulations regarding foreign exchange to stabilize the financial sector. Despite these intensive legislative preparations, no official announcement has yet been made regarding whether newly designed notes would be issued, and if so, exactly which international security printing firm would be contracted to produce them.

According to Somalia Commerce Minister Gamal Mohamed Hassan, there is a serious process underway to get new banknotes into the hands of citizens. He emphasized that the central bank has made issuing a viable national currency and strengthening monetary policy tools an absolute national priority.

The Somalia government and the central bank are operating under immense pressure to get a form of reliable domestic currency back into circulation before external safety nets 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 and its ability to seamlessly obtain essential food supplies, fuel, medical services, and critical troop transport across a still-contested landscape. In addition, compounding these looming economic anxieties, an estimated 1,100 Somalis living in the United States—many of whom have been reliably sending U.S. dollars home to their families via electronic systems for decades—face potential deportation in the near future, threatening to drastically reduce the flow of crucial foreign remittances.

Highlighting the urgency of the situation, Central Bank Governor Abdirahman Mohamed Abdullahi addressed the public on September 2, stressing that the country cannot function economically in the modern global landscape without addressing its monetary vacuum. He stated that they cannot have a 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 future stability and sovereignty of the nation.