(ERGO) – Abdiqadir Mohamed Abdi, a grocery shop owner in Buur-Shabellow IDP camp in Baidoa, has saved up wads of torn, tattered shilling notes from his business earnings, faded and bound together with string or rubber bands – but he can’t use any of them today and is now completely broke.
Since April, however, traders – beginning in Mogadishu – have started refusing to accept the battered, oily Somali shilling notes. Other businessmen have followed suit, leaving small traders bankrupted overnight.
Abdiqadir’s shop has completely shut down after suppliers refused to accept the 500 million Somali shillings he had saved up to buy new stock.
The business was the sole source of income for his family of 13. “We can no longer provide for our family,” he said, in shock. “Before the Somali shilling disappeared from the market, our business earned enough income and we never worried about food. Every month I could provide what my family needed.”
Abdiqadir was making between 264,000 and 330,000 Somali shillings a day, enough to cover household expenses and save some money – but the cash savings he accumulated over four months are now worthless.
He and his family were displaced from rural areas near Baidoa in 2023 after repeated drought forced them to abandon their three-hectare farm. He started the business two years ago with a $500 grant from the Norwegian Refugee Council (NRC). Before receiving that support, he survived doing casual labour jobs, borrowing, and even begging.
The closure of his shop has affected every aspect of his family life. He has been unable to pay the $20 monthly rent for the iron-sheet house where his family lives, including water and electricity costs. He has been told to vacate the property if he cannot settle the arrears.
Small shops inside displacement camps in Baidoa like Abdiqadir’s are a lifeline for poor local people, as well as providing a livelihood for many such small traders.
Families bought food and household essentials using Somali shillings, the only currency many displaced people can access. They can’t exchange the crumbling shilling notes for US dollars to use on the now ubiquitous mobile money systems.
Six of Abdiqadir’s children dropped out of primary school after he failed to pay $60 in fees in April. Although he has money in Somali shillings, schools no longer accept it.
“I have money, but I can’t buy anything with it. Everywhere I go people tell me they cannot sell to me. The move away from the Somali shilling has affected us deeply. Our businesses have collapsed,” he said.
The family has debts of around $1,000 owed to wholesalers who supplied his shop. He was going to repay them using his cash savings.
The rejection of the Somali shilling began in the capital Mogadishu, where traders stopped accepting worn and damaged notes, citing lack of confidence in the notes and the absence of currency
replacement by the authorities. New official shilling notes have not been printed and circulated since 1991, before the civil war. The practice of rejecting the notes has now spread to many regions, affecting the poorest and most vulnerable.
Abdirashid Adow Abdi’s shop selling fresh produce also closed after suppliers stopped accepting Somali shillings. The displaced father of six lost a daily income of between 297,000 and 396,000 Somali shillings that had enabled him to pay for food, water, education, and healthcare.
“Our lives have declined sharply. Before this happened, we were managing well. Now the money we have cannot buy anything, while the cost of living keeps increasing. We have money in our hands, but it is useless,” he said.
Abdirashid is surviving on occasional credit from local shops. He holds 70 million Somali shillings that he saved over several months to expand his business, but he cannot convert it into dollars or use it to buy stock.
His family fled Goof-Gaduud Buurey village near Baidoa in 2022 after water shortages destroyed the four-hectare farm that had supported them for years. He launched the business in the IDP camps two years ago using $840, including personal savings and assistance from international NGO, World Vision.
Three of his children dropped out of school in May after he failed to pay two months of fees totaling $60. He also owes 45 million Somali shillings to creditors who continue demanding repayment even though he has no alternative source of income.
Like many camp traders, his customers were displaced families who relied on cash transactions in Somali shillings. Everyone has been left stranded as the shillings are refused as legal tender.
Mahmud Mohamed Nur, an economics lecturer at Zamzam University in Baidoa, said the decline of the Somali shilling was linked to the absence of a functioning currency replacement system and the growing use of digital mobile money that excluded the poor.
He suggested that emergency loans for affected traders and focusing on better adaptation to digital payment systems could help reduce the impact of future currency disruptions.
