Somalia seeks $40 million to launch new shilling notes in push to end counterfeit era
MOGADISHU — Somalia’s government says it is $40 million short of the cash it needs to print a new series of Somali shilling banknotes — a long-promised overhaul officials argue is essential to restoring confidence in the currency and curbing the counterfeit notes that dominate everyday transactions.
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Prime Minister Hamza Abdi Barre told reporters the total cost of the rollout is about $70 million. Somalia has secured $30 million in external assistance, he said, and is in talks with Kuwait to cover the gap.
“Printing new currency requires $70 million. We have already received $30 million in aid, but we are still short of $40 million. We want to secure this without taking on loans. We are holding constructive talks with the government of Kuwait and hope they will support us,” Hamza said.
The announcement is the clearest signal in years that Mogadishu intends to move forward with a project once described by the International Monetary Fund as a “national priority.” It arrives at a delicate moment for an economy where U.S. dollars and mobile money platforms do much of the heavy lifting, while physical Somali shillings — many of them counterfeit or badly degraded — still change hands in markets, taxis and tea stalls across the country.
File: Proposed designs for 5,000 and 10,000 Somali shilling banknotes were unveiled in 2018 as part of an IMF-backed plan to replace counterfeit currency.
Why this matters
In Mogadishu’s sprawling Bakara market, traders are used to holding bills up to the light — searching for a watermark that rarely exists. For years, the country’s money supply has been a patchwork of genuine notes, forgeries and foreign currency, a situation born of state collapse in the 1990s and kept alive by necessity ever since. The result: a persistent trust deficit in the Somali shilling, price confusion for ordinary buyers, and a currency system vulnerable to fraud.
The government’s plan aims to reverse that. New, secure notes would give the Central Bank of Somalia the tools to control the money supply, curb counterfeiting and re-anchor prices. It could also reduce Somali reliance on the dollar for daily purchases — a shift that central bankers see as a step toward monetary sovereignty and better protection for consumers.
The plan on the table
The blueprint dates back to 2018, when the IMF and Somali officials agreed on a two-phase reform. Phase one would replace old and counterfeit notes with small denominations — 1,000, 2,000, 5,000 and 10,000 shillings — while deferring larger bills until the financial system could be strengthened. The Central Bank, which has the legal mandate to issue notes and coins, would manage the exchange and set strict controls to prevent illicit money from entering the system.
To prepare the ground, regulators have moved on digital rails. The Central Bank has rolled out the Somalia Instant Payment System (SIPS) and a standardized national QR code, SOMQR, intended to integrate with new cash circulation. Lawmakers are also debating a National Payment Bill to formalize how banks and telecom-led mobile money firms settle transactions. In theory, that infrastructure should allow merchants to toggle between cash and digital payments without friction — and without relying on counterfeit notes.
Debt relief clears the runway
Financing is the immediate hurdle. But the broader fiscal picture is brighter than it has been in decades. Somalia reached the completion point of the Heavily Indebted Poor Countries (HIPC) Initiative in December 2023, cutting external debt from around 64% of GDP in 2018 to less than 6% by the end of 2023. In April, Mogadishu signed an agreement with the Arab Monetary Fund in Kuwait to cancel nearly all of its outstanding obligations to the institution. That debt relief gives the government some room to maneuver — and a chance to pursue currency reform without new borrowing.
Officials say the conversations with Kuwait are the most advanced option to bridge the $40 million shortfall. If successful, they could unlock the procurement phase: contracting a security printer, finalizing anti-counterfeit features, and planning a nationwide exchange. That process, in other countries, typically takes months once financing is in place.
Politics, logistics — and lessons from abroad
There is nothing straightforward about replacing a nation’s cash. The IMF has warned Somalia that buy-in from all federal member states is essential to avoid the chaos of fragmented or parallel currencies. The concern is not theoretical. Puntland State’s hints that it may explore its own financial arrangements underscore the political sensitivity of a project that touches every household and business.
Then there are the practical questions: How do you move tons of paper cash securely across a country contending with security threats and poor roads? How do you verify what’s genuine and what’s not at rural exchange points? What happens to prices when new notes enter circulation alongside dollars and mobile balances?
Other countries offer cautionary tales. Nigeria’s 2023 naira redesign aimed to squeeze counterfeits and push digital payments but sparked a cash crunch that punished small traders. Zimbabwe has repeatedly introduced new currencies with mixed success amid inflation and confidence crises. Somalia’s authorities say they want to avoid such shocks by starting with smaller denominations, using digital rails to keep commerce flowing, and communicating clearly with the public.
What Somalis stand to gain
For wage earners paid in crumpled bills, a clean set of notes could mean fewer disputes at the market. For petty traders, it could reduce the risk that a day’s takings include worthless paper. For the Central Bank, it would be a watershed: the first chance in a generation to manage the money supply, collect reliable data on cash in circulation, and coordinate with banks and mobile money firms on a single, coherent system.
It could also help knit the national market back together. A taxi fare in Baidoa and a sack of flour in Hargeisa should be priced in the same money with the same value. That is the promise of a functioning currency — and the precondition for attracting investment into a consumer economy where remittances from the diaspora already inject billions of dollars each year.
What happens next
For now, the plan hinges on money to make money. If Kuwait or another partner steps in, Somalia can start the high-security work of printing, shipping and swapping out notes. If not, the government will face a choice: delay again, or seek credit it says it wants to avoid.
The stakes are larger than the cost of banknote paper and holograms. They are about trust — in the shilling, in the state, and in the promise that the currency in your pocket will be worth roughly the same tomorrow as it is today. In that sense, the currency project doubles as a test of Somali state-building itself: whether a government emerging from decades of conflict can deliver a basic public good, at scale, and make it stick.
For a country that has come this far on relief and resilience, the next chapter will be judged not only by big agreements in faraway capitals, but by the feel of a new note in a customer’s hand at a Mogadishu kiosk — and the confidence with which the shopkeeper accepts it.
By Ali Musa
Axadle Times international–Monitoring.
