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Re: Currency devaluation crisis in Somalia. March 15, 2013

Press Release, To: Somali Federal Government.
C.c U.S Political Office Somalia.
C.c United States of America
State Department ,Bureau of African affairs.
C.c Media and International Community.

Re: Currency devaluation crisis in Somalia.
March 15, 2013
On behalf of Somali Diaspora in the United States of America, we I would like to share an urgent appeal to International community, especially the United States of America. It’s clear that “Somalia is one of the top recipients of U.S aid in Sub-Saharan Africa, the U.S bilateral economic aid to Somalia from 1954 to 1987 totaled $677 Million”. The efforts of the U.S to promote democracy, peace and security in the region and the humanitarian assistance its providing through its various programs is something to be noted and applauded.

I have in the past illustrated the benefits of backing a commercial financial system in Somalia and I stand behind my recommendations even more so now. The effectiveness of the private monetary transfer systems ability to transfer money into and between the regions is undeniable. Most of which is funded by outside sources such as the Somali Diaspora. These transfer companies some of which are quite advanced, are the principal reason the Somali economy has been seeing steady growth in the last decade irrespective to the civil turmoil. This is due to the substantial although unmeasured private investment that these services provide, which enables the country to gain support from outside sources such as the Somali Diaspora.
Despite we said this before, we have new evidence to support a source’s claim, the current system known Al Hawala , make money from money is not functioning properly and not helping the local business to grow and prosper. And I have no hesitation to say this system led the country’s economy to dead end road.

This is unsustainable in many obvious ways, as the nation develops and growth trends continues most of the nation’s emerging industries will seek credit and it is hoped that many of these transfer companies will attempt to convert to commercial banks which is in a way the single most important step to continued stability. This however is an implausible sequence of events, with the exception of a few private firms; the expectation of establishing credit after further stability is in many ways backwards.
Current financing is largely realized by the extensive willingness of Somalis living abroad to fund their home country. Naturally utilizing this system suppresses the scale of the Somali economy and the amount of credit readily available to an amount intended for aid. As such I find it pertinent to note once again that to see continued sustained growth it’s necessary to back the creation, establishment and capacity of these commercial banks. This will create business, build the economy, offer tools such as letters of credits which are necessary to conduct trade and it will compound the growth of one of Africa’s most technologically advanced telecommunications industry.
The implied benefits are immense and it is why I am such a strong proponent of this recommendation. I understand that the Somali federal government is doing all they can, but it is obvious that they lack the funding to undertake such an immense task. As such we ask that the aid being spent be re-evaluated and optimized to encompass some of these key strategies. I want to make it clear that we aren’t against the current monetary transfer system but are for updating the countries national financial system so as to be able to leverage its capability to compete the global economy.

Best Regards, Ahmed Egal


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