Inflation adds more hardship to war-weary Somalis
By Abdi Mohamed and Abdi Sheikh
MOGADISHU, April 28 (Reuters) - As if 17 years of war was not enough, Somalis are also suffering runaway inflation that is leaving millions angry and hungry.
Residents say unscrupulous importers have flooded the currency market with fake, locally printed Somali shillings to buy the large quantities of U.S dollars they use to purchase stocks from abroad.
That has pushed up prices, adding to the negative knock-on effect of the global increase in food costs.
"This bundle of Somali notes is made from A4 papers. Businessmen are now refusing to take them," said mother-of-three Marian Gelle, in a camp for internal refugees, after selling her ration of U.N.-provided sorghum to try to buy sugar in vain.
"I have nothing to feed my family. I am worried for their survival," she said, waving a bundle of new and old notes.
The Somali shilling was trading on Monday at 33,000 shillings to the dollar -- more than double the rate of 15,000 a year ago -- in a totally unregulated market.
Somalia has been without effective central rule since the 1991 fall of a dictator. The near-incessant violence, and piracy off the coast, are also factors driving runaway inflation.
In the commercial port of Bosasso in northeast Somalia, businessmen try to avoid the shilling because it devalues so fast and because of the nuisance of carrying it -- forcing many to keep notes worth millions from previous transactions.
"If you change $1,000 you need sacks to carry the money," trader Omar Said said, sweating as he counted wads of U.S dollars and sacks of Somali shillings piled together at his shop in the dusty streets of the coastal town off the Gulf of Aden.
"We only deal in the U.S dollar because the Somali shilling rate is changing every other minute. I have already lost 10 percent of a year's working capital because of the fluctuating rates," he said.
FAKE MONEY MINTERS
In a move to curb inflation, the owners of a private money-minting company in Bosasso said they agreed to stop their operations. But they said the local authorities knew about their facility, and that therefore their minting had been legal.
Yusuf Mohamed, a shareholder in the minting company, said they had recently destroyed six tonnes of imported paper used for minting worth $4 million U.S. dollars.
"We dismantled the machine yesterday after consultations with authorities and local clerics following the high inflation. Six foreign specialists who were working at the plant have been sent away," Mohamed said.
Somalia has been without central rule since dictator Siad Barre was ousted by warlords. An interim government formed in late 2004 after peace talks in Kenya is struggling to assert its authority and faces a bloody Iraqi-style Islamist insurgency.
Officials say the fledgling administration lacks the capacity to stem inflation because it has no effective central bank to set monetary policies.
Yahye Sheikh Amir, economics dean at Mogadishu University, blamed insecurity for the high inflation rate, and he warned of starvation if the international community failed to intervene.
"World food prices have risen but in Somalia it is worse. Inflation is the worst in years. People will soon start to starve because they have no income," he said.
More than a million Somalis are now refugees in their own country and some 20,000 flee the capital Mogadishu every month to escape the violence. (Additional reporting by Abdiqani Hassan in Bosasso; Writing by Guled Mohamed; Editing by Daniel Wallis) (For full Reuters Africa coverage and to have your say on the top issues, visit: africa.reuters.com/)
