I am absolutely against the transfer
power of instrument in the country such as (the currency) to private oriented
business companies which are scandal to the standard of banking system. Having
said that, I am going-back on 31st January
1995 when Somliland has issued Somaliland shilling and accepted it as a legal
tender in Somaliland. Since that central bank provides exchange rate service from that
date. Although, In 2000 the official exchange rate of the Somaliland central
bank was 4,550 shilling for 1 US dollar. Later in December 2008, the official
rate had risen to 7,500 shilling per US dollar and from that date the value of
currency has been fluctuating.
As we all aware of, in 2002 Somaliland
telecom companies established and were given licence to operate in Somaliland
within objective based to provide and supply the local market with GSM, Mobile
service, fixed line and internet service. Today, these telecom companies are
currently busy on new system of electronic digital transaction in the country
which is not a valid tender in some part of Somaliland, especially in East,
South Sanag, Sool and Ayn region of Somaliland. As result of lack
community acceptance and willingness to use and trust it. In addition to
that, the coverage of these companies they operate their business entities is
limited. Another setback emerged last week by Wikileaks disclosures and
disseminated information concerned about Somaliland telecommunications are
involved a surveillance program towards tendency security issues. And this it
may hazardous adversely affect the trusteeship to use it both means of
communication and as a bank with respect to sharing information into third
party.
In
the worst scenario, I have experienced that the government digitization policy
of Somaliland shilling invest part of large inflation rate exhibits a
depreciation value of shilling as its purchasing power increases relative to
dollar which associated increased money supply which inevitably causes
inflation rather than to decrease the rate of inflation.
As
the article 3 of the 1994 Law stated that the principal objectives of the Bank
of Somaliland as being: “… fostering monetary stability, maintaining the
internal and external value of the Somali shilling, and promoting credit and
exchange conditions conductive to the balanced growth of the economy of the
Republic, and within the limits of its powers, it shall contribute to the
financial and economic policies of the State”
In
my conclusion, If the central bank’s policy towards digitization Somaliland
shillings go ahead as the planned to transferring private business sector. It
means that central bank is an able to provide services and state of defaulted
its own obligation to control monetary policy.
I
personally believe the only open option which the government could overcame
this inflation is to create a wise austerity measure by reducing unnecessary
government expenditures and restore back to it’s obligation and regulate the
country’s central bank.
I
have the below questions to be answered:-
§
The dilemma, I have
concern is at what extent do merchandises has to convert X amount of dollars
into shillings? Or at what limit them not to overdue theses private companies
into digital transactions?
§
At what role do the
central bank play to monitor the private sector not to public shown fake figure
of digital money?
Adam Ahmed Adam
Economist based in Erigavo, Sanaag region of Somaliland
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