Nairobi, Kenya(Bloomberg) — Somaliland’s central bank will begin exchanging 7 billion Somali shillings ($4.37 million) of notes for its own currency next month as part of a plan to stop using the Somali currency in the autonomous region by mid-June.
“We are preparing for the Somaliland shilling to be used all over Somaliland,” Central Bank of Somaliland Governor Abdi Dirir Abdi said in an interview on April 24 in Hargeisa, the capital. Abdi said the rate at which the currency will be exchanged has yet to be determined.
Somaliland, a former British colony, declared independence in 1991, following the ouster of former Somali dictator Mohammed Siad Barre. No sovereign state has formally recognized the region as independent.
The Somaliland shilling was introduced in October 1994, according to the government’s website. At the end of 2008, the currency was valued at 7,500 per dollar, it said. The Somali shilling is currently valued at 1,601 against the U.S. currency according to Bloomberg data.
The central bank of Somaliland expects lawmakers to enact a draft banking law by June enabling commercial lenders to extend credit to borrowers for the first time, Abdi said last month. Somaliland is in talks with Banque pour le Commerce et l’Industrie, based in neighboring Djibouti, and two other lenders to grant them banking licenses, Abdi said. The nation of 3.5 million people currently has no banks.