Since the fall of the Siad Barre regime in 1991, the Republic of Somalia has been without a government. In the northeast, the former colony of British Somaliland broke away and has been remarkably stable and prosperous, though unrecognized by the global community. The rest of Somalia remains divided amongst scores of warlords and terrorist groups, the worst being al-Shabaab. Despite the will of the people to have a functioning government, there is scarce progress on the ground. Recently elected President Mohammed Abullahi Mohammed wields little power beyond his African Union guards.
It is therefore amazing that currency from the Central Bank of Somalia has proven remarkably stable through all of this chaos. The Bank building itself was shuttered as soon as Siad Barre fled the country. It has only recently opened its doors for business. But the faith of the people in the Somali Shilling, the national currency, has proven stronger than any political or military power.
There was a famous incident in 1996: the merchants of Mogadishu petitioned infamous warlord Mohammed Aideed for more currency. He arranged for a Canadian printing company to print one billion Shillings of banknotes. British mercenaries delivered the banknotes to Mogadishu’s embattled airport, the scene of fierce fighting among warlords at the time. The warlords brokered a cease-fire just long enough for the plane to land and unload the money. The banknotes were delivered to the central market, where it was distributed among the money-lenders.
The Somalian Shilling is a currency backed by nothing. There is no state authority. No gold reserves. No financial assets of any kind. All other countries of the world faced with this reality soon suffered rampant inflation and the destruction of their currency. But not Somalia. What can explain this?
The answer lies in a large Austrian coin dated 1780. In that year, Austria’s Empress died, and the Vienna mint produced a silver dollar-sized coin in her memory: the famous Maria Theresa Thaler. The mint continued to produce them for many years thereafter. As early as the 1740s, European merchants in the Horn of Africa (including Ethiopia and Somalia) used similar Thalers for trade. It became so popular among locals that they soon accepted no other kind of money. Even today, to make a friend in Somalia or Ethiopia, just give them a Thaler.
When Europe established colonies on the Horn of Africa, they tried to introduce their own money, but the locals would not have it.
Traders in Ethiopia complained about paying for big coffee contracts with wagon-loads of Thalers – a dangerous prospect in such a wild country. The Thaler remained current in Ethiopia until the fall of Emperor Haile Selassie in 1974.
Somalia’s dependence on their Sharuq (Thaler) really came to an end after 1960. The newly independent government used brute force to convince merchants to use its national currency. Somali faith in solid silver Sharuqs was miraculously transferred to flimsy paper Shillings. But that faith has proven stronger than in any kind of regime.
Somalia’s future remains veiled in shadow. The central government remains pitifully weak. Yet, the Central Bank is open and doing more business today than at any time in its history. And so, Somalia’s faith in its beloved paper Shillings is the best hint of its ever becoming a united and prosperous country again.
Sydney Petron is a historian and political analyst currently situated in New Haven, Connecticut.
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