Somalia's mighty shilling: Hard to kill (The Economist)

[fighter]

A currency issued in the name of a central bank that no longer exists

Mar 31st 2012 | from the print edition

USE of a paper currency is normally taken to be an expression of faith in the government that issues it. Once the solvency of the issuer is in doubt, anyone holding its notes will quickly try to trade them in for dollars, jewellery or, failing that, some commodity with enduring value (when the rouble collapsed in 1998 some factory workers in Russia were paid in pickles). The Somali shilling, now entering its second decade with no real government or monetary authority to speak of, is a splendid exception to this rule.

Somalia’s long civil war has ripped apart what institutions it once had. In 2011 the country acquired a notional central bank under the remit of the Transitional Federal Government. But the government’s authority does not extend far beyond the capital, Mogadishu. The presence of the Shabab, a murderous fundamentalist militia, in the south and centre of the country, makes it unlikely that Somalia will become whole anytime soon. Meanwhile, 2.3m people are in need of edible aid. Why, then, are Somali shillings, issued in the name of a government that ceased to exist long ago and backed by no reserves of any kind, still in use?

One reason may be that the supply of shillings has remained fairly fixed. Rival warlords issued their own shillings for a while and there are a fair number of fakes in circulation. But the lack of an official printing press able to expand the money supply has given the pre-1992 shilling a certain cachet. Even the forgeries do it the honour of declaring they were printed before the central bank collapsed: implausibly crisp red 1,000-shilling notes, with their basket weavers on the front and orderly docks on the back, declare they were printed in the capital in 1990.

Abdirashid Duale, boss of Dahabshiil, the largest network of banks in Somalia, says that his staff are trained to distinguish good fakes from the real thing before exchanging them for dollars. Others accept the risk of holding a few fakes as a cost of doing business (shillings are often handed over in thick bundles of 100 notes). By this alchemy, an imitation of a thing which is already of notional value turns out to be worth something.

Shelling out shillings

A second reason for the shilling’s longevity is that it is too useful to do away with. Large transactions, such as the purchase of a house, a car, or even livestock are dollarised. But Somalis need small change with which to buy tea, sugar, qat (a herbal stimulant) and so on. Many staples are not produced domestically, making barter impractical. The shilling serves as well as shells or beads would as a medium of exchange. It also has a role as a secondary store of value. Once a year the economy gets an injection of dollars when goats are sold to Saudi Arabia to feed pilgrims undertaking the haj. Herders need to find ways to save money received then for spending over the next year. The shilling is one of them.

The shilling has a further source of strength. Since each party to a transaction is likely to be able to place the other within Somalia’s system of kinship, the shilling is underpinned by a strong social glue. Paper currencies always need tacit consent from their users that they will exchange bills for actual stuff. But in Somalia this pact is rather stronger: an individual who flouts the system risks jeopardising trust in both himself and his clan.

Having survived against great odds, the shilling now faces a serious challenge in the form of dollars transferred by mobile phone. Zaad, a mobile-money service, allows users to pay for goods by texting small amounts of money to a merchant’s account, and is proving popular in Mogadishu. But the shilling’s endurance suggests it should not be counted out. If it can survive without a government, it can probably brush off modern technology, too.

Source: http://www.economist.com/node/21551492

[Lamagoodle]

Yes, I have read that. It confirms the theory of money being a valueless piece of pay underpinned by a strong trust. The thesis is that money could be stones/sand which can be used as a mode of exchange if there is trust between parties that it is acceptable

[fighter]

Exactly. It's all about trust.

I got an interesting article I read a while ago.

http://www.forbes.com/2006/09/22/trust- ... rford.html

Read it when you got the time. It's quite an interesting read.

[Lamagoodle]

Exactly. It's all about trust.

I got an interesting article I read a while ago.

http://www.forbes.com/2006/09/22/trust- ... rford.html

Read it when you got the time. It's quite an interesting read.

In economics, institutions (trust, religion, culture etc) are the fundaments of doing business. Money is defined as a mechanism of trust and in its actual sense it could be made of a paper, a stone or even minerals (see e.g. the value of gold).

[fighter]

You sound just like my professor. Back in the day, Roman workers and soldiers were paid in salt. Salt was used so food wouldn't spoil. The term "salary" is derived from salt

do you have a business/economics background?

[Lamagoodle]

You sound just like my professor. Back in the day, Roman workers and soldiers were paid in salt. Salt was used so food wouldn't spoil. The term "salary" is derived from salt

do you have a business/economics background?

I have a background in everything son; I am from the WAAN DAADSHE nation

Are you a graduate student of economics? This is a joke for you (your professor might have told you before); I asked an economist for her phone number and she gave me an estimate
True, salary is Latin salarium

[fighter]

Ahh, The All-Rounded Man. If it suits you sir, by all means.

lol nah my field is HRM. Boring @ the joke

[Lamagoodle]

Ahh, The All-Rounded Man. If it suits you sir, by all means.

lol nah my field is HRM. Boring @ the joke

HRM, so you studied Organisational theory! What Weber called bureaucratic capital. There is good money to make after your study although it is back office.

Good luck

[fighter]

Organizational Behavior was one course. Please dont remind me about that man and that theory.

Good money or not, I plan to spend the rest of my days retired in a beach somewhere in Somalia and not in some back office. If that doesn't work out, inform me of any job openings for Westerners back home in my field if any pop up. Please and thanks. (I am assuming your there)

[Lamagoodle]

Check this website;
http://unjobs.org/themes/human-resources

I will keep you informed if there is a vacancy in my neck of the hood.

I think you should consider internship as the first step because alot of international organisations require experience.

Let us hope that somalia is peaceful so that we could all retire to it.

P.s. Weber wrote a book on ethics (work ethics of prostetanism) which is a great read and helps understand why Northern Europe is economically more developed than the south (catholic). He also describd s how you could formulate a thesis using a deductive approach i.e. Ideal case.

[fighter]

You only get UN jobs through networking I have one family member working for them but he keeps giving me excuses . I am already at a position now; not going to stay forever

I'll take a look at that book you suggested.

[Lamagoodle]

You only get UN jobs through networking I have one family member working for them but he keeps giving me excuses . I am already at a position now; not going to stay forever

I'll take a look at that book you suggested.

Actually, UN jobs are easy to get. You should start in the field. There are organisations such as the red cross, red cresent, canadian NGOs that need volunteers to go overseas. You start by such a job ... gain experience through that and in a few years you get a good position.

The problem with UN jobs is that they are not permanent even though you are paid alot.

P.s. Most UN jobs have a country quota, so make sure you keep your somali citizenship and write that when you fill in the application form

[fighter]

I don't have Somali citizenship. I'll make sure to purchase one at Bakaara Market when I get a chance to visit Xamar.

Actually, UN jobs are easy to get. You should start in the field. There are organisations such as the red cross, red cresent, canadian NGOs that need volunteers to go overseas. You start by such a job ... gain experience through that and in a few years you get a good position.

Seems like a lenghty and difficult process with red tape involved. I forgot the only jobs back home are practically just NGO's too. I'll just stay here for now. When I save enough funds, I'd like you to be in Xamar for the grand-opening of the first HR consulting group ever in the Horn. God willing

[Lamagoodle]

Aren't you allowed to have double citizenship? Many countries allow that! You could carry another passport but make sure you state you are a somali citizen when applying for International postings. There are alot of jobs for somalis in FAO (ROME), UNIDO (Vienna). You could also write a letter of intent explaining that you want to work for them. The problem is that there are few qualified somalis. If you are in Canada, there is a canadian research organisation (with African HQ in Nairobi) which constantly look for people to employ.

Yes, there is red tape but where there is a will there is a way.

Try also sending your cv to International consultancy firms e.g. PWC who do some recruiting for NGOs.

Good luck

p.s. check these jobs
http://unjobs.org/duty_stations/somalia

[fighter]

Yes you are allowed more than 1 citizenship in Canada. I will apply as a Somali citizen as you recommended (I guess I can only do that after I get the citizenship). I'll look into those organizations and websites now.