Somaliland: 30% of Remittances Payable in Local Currency-Central Bank

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Currently money transfer companies pay remittance fees in motley of foreign currencies dominated by the US dollar

By: Latifa Yusuf Masai
HARGEIOSA (Somalilandsun) – As from the 15th June 2014 recipients of remittances shall receive 30% of their money in local currency.
This order which negates the prevalent 100% dollar payment to remittance recipients was issued to all money transfer companies operating in Somaliland by the Central Bank-CB.
The CB order conveyed through SMS messages to mobile phone users subscribed to Telesom and Somtel telecommunication companies justifies this move as per dictates of the banking act approved by parliament and signed into law by President Ahmed Mahmud Silanyo.
The Somaliland Central Bank – Xeerka Baanka Dhexe – Law No. 54/2012 was signed into by the President on 12 April 2012 and come into force on the same date.
will the somaliland Central bank enforce the order come 15th June 2015According to law #54/2012 “the principal objectives of the Bank of Somaliland as being: “… fostering monetary stability, maintaining the internal and external value of the Somaliland 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”.
While this law has been in existence for some time it is just recently that the ministry of finance started campaigns to eliminate the porous use of foreign currencies in the country and make the local currency the only legal tender.
Shortly after Ms Zamzam Abdi Aden assumed the ministry of finance portfolio upon transfer from the education docket earlier in the year several meetings towards institutionalizing the Somaliland shilling as only legal tender ensued.
Use of Dollars has made the Somaliland shilling valuelessAfter a series of meetings between ministry of Finance, Central bank, Major commercial companies and the two telecommunication companies of Telesom and Somtel that provide a mobile money transfer- MMT Technology services the finance ministry announced on 20th April 2015 that all were in concurrence in adding sl sh as a medium of mobile banking.
This was followed by meeting between the state, Chamber of Commerce and major business concerns held on 25th May 2015 at the Somaliland ministry of finance headquarters in Hargeisa where it was unanimously agreed that prices of all commercial transactions from now henceforth shall no longer be pegged on the dollar or any other foreign currency.
In a related development of 31st May the Dahabshil group announced that its mobile banking service provided by Somtel has decided to make the eDahab Somaliland Shilling operational as a money transfer unit compatible with the company’s mobile wallet system,” as per CEO Abdirahman adding that the decision stemmed from customer demand precipitated by the unstable, fluctuating foreign currency rates at both business and household levels .
Somaliland Finance minister Ms Zamzam Abdi and other ministry officials at the dollar as legal tender elimination meeting in Hargeisa/archiveWhile this is perfectly apt and shall go a long way in alleviating price fluctuations that result while converting from either local to foreign currencies the government should be bold and go the whole 100% way thus total elimination of foreign currencies as legal tender in Somaliland

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