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Somalia: Rebels advise to accept shilling
Wednesday, 07 May 2008

Somalia: Islamist militants on Wednesday urged Mogadishu traders to accept Somali shillings over dollars to try to reduce inflation in the country, warning they would punish defaulters.

The calls followed two days of violent demonstrations against soaring food prices in which at least five died and dozens were wounded.

Protest leaders had vented anger at traders whose refusal to accept the local currency is blamed for helping to push inflation to record levels.

A shortage of dollars has led to a bumper crop of fake 1000-shilling notes — the only available denomination — appearing in market places and fuelling the inflation problem.

"We are calling on printers of fake currencies to stop the dirty business they are conducting, otherwise we will punish them," said Sheikh Mohamoud Ibrahim Suley, spokesperson for the Islamists, AFP report said.

"All traders in Somalia should accept the shilling because we will discipline anybody who refuses the shilling in favour of the dollar."

Inflation in Somalia started climbing after joint Ethiopia-Somali forces ousted the Islamists from control of parts of the country early last year, sparking a deadly insurgency that has claimed thousands of lives and displaced hundreds of thousands.

Although some Mogadishu traders, fearing for their lives due to threats from angry consumers, had already started accepting the Somali shilling, the value of the currency fell from 25 000 to 31 000 shillings to the dollar over the past two days, according to dealers.

"People cannot afford to buy things in dollars," said Mogadishu resident Abdullahi Jama.

Finance Minister Mohamed Ali Hamoud on Tuesday pledged to work towards reducing inflation by accepting the Somali shilling over dollars in tax collections. He also promised to take steps to stop the printing of fake currencies.

Although there are no official inflation figures, UN monitors say cereal prices have increased by between 110 and 375 percent in the past year as central Somalia has endured its worst drought in recent memory.

In 1991, when the country descended into lawlessness after the ouster of dictator Mohamed Siad Barre, the greenback was exchanging at an average of 4000 shillings. Since then, there has been no central bank to regulate inflation.

Global food prices have nearly doubled in three years, according to the World Bank, sparking riots and protests in several poor countries.
 
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