BY Abdisalan Ahmed
Somalilandsun Inflation refers to the rise in the price of goods and fall in the value of money. Inflation refers to the problem of rising prices Inflation creates distortion in the allocation of resources and definitely hurts certain groups. It tends to discourage saving and encourage consumption at fast rate to stay ahead of rising prices. Moreover, the declines of saving rate discourage the capital investment. Unfortunately, it means the economic growth at side of productivity tends to slow down, the fall in productivity means that the supply of new goods and services cannot keep pace with rising demands, putting further upward pressure on price leading to what is known as inflation.
A five hundred Somaliland shilling today in Somaliland doesn't buy as much as it did 7 years back. The cost of living has doubled, tripled and still rising. The main factor is the increase of general price level and it’s called .In general, the most commonly used measure of the level of prices is the consumer price index.
The problem has been with us for a long time now. The trend rising prices has, in time, aroused dismay, consternation and anger.
It has been witnessed that with the passage of time, the rich have become richer and the poor still poorer. In spite of a bad agricultural year, and shortage of rain. But it is not scarcity that is troubling people so much as the continuing erosion of their purchasing power. Hence, we are nowhere near the goal of an egalitarian society which we had set out to achieve.
The current rate of inflation is alarming. The rapidly increasing prices in Somaliland has been a topic of discussion at all levels during these days.
Economists and some other people have been attempting scientific analyses to:
determine how far the prices have risen,
why they have risen,
by what methods they can be held in check, and
how far those methods can be successfully.
While all this has been going on, people have been patiently suffering, and for all we know, will continue to suffer for a long time.
Causes of Inflation in Somaliland.
In-spite of the fact that Somaliland has witnessed huge economic development in the past 10 years, yet we are not able to control inflation. It is sure that something has gone wrong somewhere. There are many reasons for Inflation in Somaliland
There has been a lack of a social awareness in general which has prevented the benefits of planned development from percolating to the lowest levels.
There has been an increase in the cost of living.
Lack of control and check over government spending.
Hoarding of essential commodities by greedy traders.
Inadequate mechanism to control and fix the prices of essential commodities in the marketplaces.
The benefits of government spending does not reach the common man. There are inadequate checks in the government-spending.
It would not, however, be correct to place the blame wholly at the door of the government or the trader. The consumer is no less to blame for the state of affairs. Some consumers allow themselves to be robbed for fear of a precarious supply position and consistently adverse price trends. Such practices not only deprive the country of much-needed resources but also serve as bad examples for those who’s who cannot afford to pay such high prices.
How to control Inflation in Somaliland?
Inflation can be controlled by close collaboration and effort of both the government and consumer.
Suitable Distribution System: Inflation directly effects the life of the common people. In order to reduce the danger of runaway price increases in the future, it is very necessary that a suitable distribution system should be developed.
Proper Checks: There should be a system for proper checks to ensure that traders does not charge excess money for the commodities.
Control Hoarding: Some traders indulge in hoarding of goods. They create artificial demand for the goods and charge high prices for the goods. The government should ensure that such malpractices doesn’t exist in society.
Price Control: The prices of all the essential commodities of daily use, such as rice, wheat, potato, milk, sugar, and basic needs etc. should be fixed and controlled. And adequate measures should be taken to ensure smooth supply of these items.
Buy at Fair Price only: Some consumers allow the greedy trader to charge high prices for essential items. They pay very high prices for fear of inadequate supply in future. This practice should strictly discouraged. finally The current Administration says ‘that cause of inflation is electronic transfer money known in Somaliland ZAAD or e-DAHAB, but what are really causes of inflation?
The cause of inflation is a sustained increase in the price level. The main causes of inflation are either excess aggregate demand (economic growth too fast) or cost push factors (supply side factor).
The Author Abdisalan Ahmed is a graduate from a local Somaliland university and an experienced university lecturer.