Somaliland is a nation on the Horn of Africa that has been running its affairs independently and nears to be recognized soon by the world countries is now dealing with a painful inflation. Living amongst them, I came to realize that the people are fed up with inflation which badly affects their living standards.
Most ordinary people, some traders and money changers informed me that food inflation is very high in Somaliland and has become a very serious issue. The businessmen usually favor for selling their items in dollars rather than Somaliland shillings, therefore, the exchange rate resulted in increased food prices that made the cost of buying Somaliland Shillings high.
Inflation has been and will be a risk to peace and social stability especially during the Ramadan fasting since the dollar rate has reached unprecedented rate. The living conditions have been invariably affected by the increase of dollar rates since the market is based on a dollar as a currency.
In this context, inflation is simply the rise in prices of commodities and devaluation of Somaliland currency against the dollars that directly influenced the living conditions and made many households face difficulty to get their basic necessary commodities.
According to my observation, inflation has been going up for the last 6 months particularly the price of services and exchange rates after the government executive orders to deal with the inflation phenomenon failed for poor implementation.
In January this year, when the government of Somaliland had issued a new executive orders against inflation and unfair prices but nothing has been achieved as the local producers and service providers are pricing their goods and services in dollars seeing as Somaliland Shilling fluctuates irregularly which made the business people not to rely on their currency. For example, every service is priced in dollars, like schools fees, foodstuff, health services, rents, etc.
Why do the executive orders from the government always fail? Is a question every person wants a response for. This means that there have not been any researches done against the real causes of inflation in Somaliland. The committee established to fight against inflation in Somaliland has not been closely working with local universities for researching on the real causes of inflation.
At present, the poor people are living in a dire situation to survive the high cost of living in Hargeisa and other big towns have gone up progressively. The prices of all goods increased to some extent in line with increasing rate of exchange. Many parents are facing a poor economy as the exchange rate of $ 100 still above One Million Somaliland shillings that made many parents not to be able to buy something for their children particularly those employees get their salaries by Somaliland shilling while everything is priced in dollars.
I have confirmed that the market price of various items including livestock, Food, Clothes, housing and household equipment, Furniture, Construction Materials, Transportation, Health care and many others increased very high for the last 6 months due to the dollar rates. Whenever the value of Dollar appreciates, the value of the Somaliland Shilling depreciates which hits, especially hard on laborers, daily wagers and government employees including civil servants, police, and other national troops, because their salaries are paid in Somaliland Shillings. If not addressed immediately, this problem will bring a negative effect on the peace and tranquility in Somaliland.
Thanks to the current government led by Muse Bihi Abdi seems to be committed to deal with this problem after realizing that this problem can’t be ignored by anyone. The government is now giving awareness to the local people to be ready for increasing their locally produced foods and has allocated special budget for the ministry of agriculture for the first time in the history of Somaliland.
Inflation directly hurt the living standards of Somaliland people particularly, the poor ones. I came to know that high dollars rates and hard living conditions are what really affecting the people of Somaliland during this Ramadan.
Therefore, rising inflation is one the unsolved tribulations in Somaliland, and the government must come up with political willingness and plans to deal with inflation. According to my observation, the government must give consideration to the recommendations below:
1/ The government must encourage local production since imported goods are causing inflation or contributing to the current worsening conditions. The business people and local restaurants should use the locally produced goods instead of the imported ones just to encourage those who produce the local food with lower prices.
2/ In other words, the government should come up with a policy to empower the central bank in order to manage the exchange.
3/ The government should also set rules and regulations which control exchange rate, and also encourage financial institutions be accessible in collaboration with small businesses and engaging in increasing the value Somaliland Shilling. The financial institutions, entrepreneurs, government, families and all people who live in Somaliland should collaborate with each other in order to reduce inflation which jeopardized Somaliland economy.
4/ All bills have to be paid in Somaliland shillings to make the people value their currency instead of dollars. In addition to that, Khat poses a serious currency problem and huge dollars are sent to Ethiopia every week, the government should act and Khat traders should agree with a plan to use Ethiopian Birr instead of dollars when sending the money to Ethiopia.