For decades, the shilling remained in the hands of people who could least afford to abandon it:
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MOGADISHU, Somalia — The Somali shilling was never supposed to last this long without the institutions that give a currency its power. It survived the 1991 fall of President Mohamed Siad Barre’s government, the collapse of the Central Bank of Somalia’s effective authority, years of civil war, waves of counterfeit notes, the spread of the U.S. dollar and the rise of mobile-money platforms that now dominate everyday payments.
For decades, the shilling remained in the hands of people who could least afford to abandon it: market women selling vegetables, bus passengers paying small fares, displaced families buying food and rural households outside the reach of formal banks.
Now, the old notes are running out of public trust. Across Mogadishu, traders and transport operators are increasingly rejecting torn, dirty and aging shilling bills, exposing a crisis that has been building for more than three decades. Somalia is again facing a basic question of sovereignty and survival: Can the national currency be rebuilt into a trusted legal tender, or is the country watching the final decline of the money that once helped define the republic?
From national symbol to civil-war survivors
The Somali shilling began as a state-building project after independence. In its historical account of Somalia’s currency, the Central Bank of Somalia says the government introduced the Somali shilling by decree in 1962 and put it into nationwide circulation on Oct. 15 of that year. The bank says the “Somali Government introduced a new national currency” as part of the young republic’s monetary system.
The currency’s early history followed the country’s political evolution. The National Bank of Somalia became the Central Bank of Somalia in 1975, and new notes carrying the updated name entered circulation in 1978. By 1990, severe devaluation had already forced authorities to issue higher-value notes, including 500- and 1,000-shilling bills.
Then came the rupture of 1991. The central government collapsed, the central bank ceased to function as a reliable national monetary authority, and Somalia stopped officially issuing new banknotes. The shilling, however, did not disappear. It became one of the stranger economic survivors of state collapse: fragile, counterfeited, deeply devalued, but still used by poor households, small traders and local markets. Later assessments of Somalia’s monetary system, the World Bank said the Central Bank of Somalia had not issued legal-tender banknotes since the collapse of the state. The International Monetary Fund has also described the scale of the problem, estimating that almost all Somali shilling notes in circulation were counterfeit.
The shilling solved one dilemma — and created another
For years, the Somali shilling served an economic purpose that dollars and mobile money could not fully replace; small, daily transactions. Street vendors, vegetable sellers, transport users, internally displaced people and rural households needed cash for low-value purchases. In reporting on Somalia’s financial inclusion challenges, the World Bank said the “lack of a legitimate local currency undermines” household wealth-building and access to formal financial services.
At the same time, the shilling’s weakness helped create Somalia’s dual economy. Larger transactions moved into U.S. dollars. Mobile-money platforms, most of them dollar-denominated, became the dominant payment tool. In its 2018 Somalia Economic Update, the World Bank said, “Mobile money has superseded the use of cash in Somalia.” The bank estimated that about 7 in 10 Somalis regularly used mobile-money services and that monthly mobile-money transactions were worth about $2.7 billion.
That innovation gave Somalia speed, security and financial access after the collapse of formal banking. But it also left the poorest people exposed. Those paid in dollars or connected to mobile wallets could adapt. Those holding old shillings could not.
The crisis sharpened in 2026. In a report from Mogadishu, The Guardian said traders in the capital had begun rejecting greasy, torn and aging shilling notes, with shops, businesses and bus drivers following. Muse Omar Jama, an exchange trader in Mogadishu’s Bakara market, told the newspaper: “It’s like we went bankrupt overnight.”
TRT Afrika, reporting on the currency crisis in Mogadishu, said the Banadir Regional Administration moved to enforce use of the Somali shilling after widespread rejection pushed the market exchange rate above 31,000 shillings to the dollar. Mogadishu Mayor Hassan Mohamed Hussein said: “Any refusal to accept the national currency constitutes a violation of the law.”
But enforcement is only one part of the problem. The shilling’s deeper threat is structural: no fresh legal currency, widespread counterfeiting, heavy dollarization, digital-payment systems that exclude some poor households and political risk across Somalia’s federal system.
The future — reform, replacement or disappearance
Somalia’s government says it wants to restore the shilling, not abandon it. Hiiraan Online reported in September 2025 that Prime Minister Hamza Abdi Barre said Somalia needed $70 million to print and circulate new banknotes. He said the government had secured $30 million and still needed $40 million. Hamza Barre said the government wanted to raise the remaining money without adding new debt: “We want to secure this without taking on loans.”
The IMF says the plan is moving forward. In a December 2025 assessment of Somalia’s economic program, the IMF said the Central Bank of Somalia had made progress in institutional and regulatory capacity. It also said preparations for “the reintroduction of the Somali Shilling” and a currency-board arrangement were advancing.
The reform comes as Somalia tries to rebuild its financial sovereignty after major debt relief. Reuters reported in April 2025 that Somalia had signed a $306.5 million debt-relief agreement with the Arab Monetary Fund, following Paris Club debt cancellation and broader efforts to rejoin the international financial system. Finance Minister Bihi Egeh called the agreement “fundamental to re-engagement with the fund.”
Somalia’s economic future is broader than currency reform. In a 2025 economic update, the World Bank said Somalia’s growth outlook remained positive but was being slowed by uncertainty over foreign aid. The bank identified digital technology, agribusiness, fisheries, energy and manufacturing as sectors expected to support diversification under Somalia’s National Transformation Plan and Centennial Vision 2060. World Bank Country Manager Kristina Svensson said Somalia must “strengthen its domestic revenue mobilization” to build a more self-sufficient state.
The shilling’s future will depend on whether those reforms reach ordinary people. A new banknote alone will not save the currency unless Somalis trust it, traders accept it, federal and regional authorities coordinate it, counterfeit notes are removed, and mobile-money systems are integrated into a legal shilling-based financial system.
For now, the Somali shilling remains both a symbol and a warning. It shows how people kept trading when the state collapsed. It also shows the cost of leaving a national currency to age, tear and die in the hands of the poor.
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