The President of the Republic H.E. Ahmed Mohammed Mohamud Silanyo has now formally given a 9 point directive on tentative ways and means to control inflation and the soaring costs of living.
The Head of State’s orders are hot on the heels following an earlier 17 point directive that was to address this issue released on the 24th of January 2017 after the 212th Council of Cabinet decision which was voted for unanimously.
The yesterday’s press Release (Saturday 28th January 2017) signed by the Presidential Spokesman Eng. Hussein Adan Egge strongly orders for the safety nets meant to address the inflation crisis and soaring costs of living to be abided by and adhered to by all concerned.
This short-term emergency decision is fundamentally to streamline the management of the monetary circulation in a manner that both the local legal tender (currency) and Somaliland central Bank besafeguarded, capacitated, boosted and empowered respectively.
This, accordingly as reiterated by the Head of State, is a decision incumbent upon him as per constitution in safe-guarding the local currency and combating inflation hence tether the exchange rate such that the Demand/ Supply equilibrium may be balanced.
The two prong committee thus came up with tactical ideas and mode thereby adopted for the emergency short term control measure of the crises.
The President has thus ordered:-
1. That the use of the local currency is a pre-requisite for the whole population within the country whether a citizen or a foreigner; this is because the act of not using the local Legal Tender is in itself against the law.
2. It is prohibited for the civil servants, security personnel (military)and all senior state officials to change their salaries to foreign currency (US Dollar)
Local money changers too are prohibited to conduct business in the Central Bank or around its vicinities.
3. The exchange rate of the local currency shall be 7,000 SL/Shs to the US Dollar.
4. The major monetary entrepreneurs of Dahabshiil International and Telesom Group are prohibited to change foreign currencies
So too are large entrepreneur institutions who import or export goods like Oomaar International or Indadero Group should not indulge in the exchange business whether directly or indirectly.
5. The electronic cash service providers like the Zaad and E-Cash should avail the services in SL Shs (local currency only) for amount of less than 100 dollars (thus two digits) and not US dollars.
6. The use of the local currency (SL Shs) through the electronic cash system MUST be without limited.
7. As per the central Bank law No 32 the Legal Tender (currency) of Somaliland is SL Sh, hence operators of services provision and those dealing in goods purchases must transact their businesses in the local currency (SL Sh).
In the same manner basic bills like electricity or water services, school fees, rents, telephone credits etc. should be based in local currencies.
8. Private Banks must avail accounts based (operating) on the local currency.
9. In line with the Central Bank laws Sect2, Article4 Paragraphs B,T,J, the committee saw it imperative that the authority of the Central Bank be capacitated and stepped up (hence safe guarded) such that it may execute the duties it is expected of; Viz:-
a. Formulate, adopt and executively establish the Somaliland Monetary Policy
b. Formulate adopt and executively establish policies and procedures on Foreign Money Exchange and currency Trading Policy
c. To treasure and manage foreign currency reserves.
d. That the Central Bank is the agency concerned with (or has the incumbency upon) the licensing, Supervisory and )ifneed be) de-registration of monetary commercial institution of monetary commercial institutions or dealers.
In order for the speedy execution of the orders directed, the President named the following committee to do the necessary:-
1. Governor of the Central Bank
2. Finance Minister
3. Presidency Minister
4. Internal Security Minister
5. Trae and International Investments Minister
6. Attorney General
In the earlier 17 point directive, the President had noted the need for the building of the trust of the Central Bank.
This envisions the need of establishing a Board of Directors hence operate as per international standards hence the independence of the bank will boast its long term objectives of being a credible national treasury.