A prominent activist and philanthropist is urging U.K. banknote printer De La Rue PLC to cancel a controversial $42 million contract with Somaliland’s central bank, warning it could wreak economic havoc and impoverish millions in the breakaway region of Somalia.
In an impassioned October 5 letter to De La Rue CEO Clive Vacher, Ismail Ahmed said the deal to print 380 billion Somaliland shillings – nearly doubling the local money supply – would trigger rapid inflation and currency devaluation.
“This contract poses serious economic, ethical and legal issues, and risks plunging millions of children and adults into deeper poverty,” wrote Ahmed, founder and director of the Hargeisa-based Sahamiye Foundation aid group.
Ahmed said the poorest Somalilanders who earn primarily in local currency rather than dollars would be hardest hit by rising prices and a plummeting shilling.
“The highly unusual decision to print money, especially at a time when the country is preparing for presidential elections, is predicted to cause the value of the SL shilling to drop from 8,750 to over 20,000 per U.S. dollar,” he wrote.
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Ahmed argued previous currency printing by De La Rue has “impoverished millions in Somaliland” by fueling hyperinflation since the shilling’s introduction in the 1990s. The shilling’s value has fallen from 50 to 8,759 per dollar.
“While these transactions proved highly profitable for De La Rue, they impoverished millions in Somaliland,” he wrote.
Ahmed also suggested the no-bid contract was awarded improperly, without competitive bidding or parliamentary approval of a new 10,000 shilling note that’s part of the deal.
“The primary reason for this contract appears, then, to be rooted in corruption and De La Rue’s desire for profit,” he alleged.
Further currency devaluation would exacerbate poverty and child hunger as Somaliland deals with crises like COVID-19, Russia’s war in Ukraine and a deadly June market fire in the capital Hargeisa that left two dead, Ahmed warned.
“I therefore call on you to take a principled stand,” he wrote to Vacher. “I urge you to cancel the contract and return the $9.6 million that the Central Bank of Somaliland sent you to fund the transaction.”
The activist said that would “publicly demonstrate responsible corporate citizenship, align with the principles of ethical business conduct and avoid the responsibility for harming the welfare of millions of people.”
There are growing public protests and opposition from Somaliland politicians over the central bank’s currency printing plan. The bank says more cash is needed to pay civil servants and increase money supply.
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