Bricks of Shillings
Somaliland has issued its own currency since 1994, through a central bank that belongs to no international institution because no state recognises the government behind it. Then its own citizens dollarised the retail economy from below, using a mobile-money system run by a phone company, and left that central bank presiding over small change.
On Independence Avenue in Hargeisa the money changers work at trestle tables on the pavement, and what is stacked on the tables is not a float in a drawer but bricks — shrink-wrapped blocks of banknotes, a foot high, sitting in the open with nobody obviously guarding them. Visitors photograph this constantly and usually read it as a story about trust, which it partly is. It is more precisely a story about weight. The largest note in circulation is worth well under a euro, so a sum worth having is heavy enough that stealing it means carrying it, in daylight, down a street where everyone knows everyone.
The notes say Baanka Somaliland — the Bank of Somaliland. It is the central bank of a territory that declared the restoration of its independence on 18 May 1991, has held four direct presidential elections since 2003, has twice handed power to an opposition party after losing one — in 2010 and again in 2024 — and is recognised by no country on earth. Which raises a question with an unusually concrete answer: what is a currency, when the institution issuing it is a member of nothing?
A currency with no counterparty
Somaliland introduced the shilling in 1994 and made it the only legal tender shortly afterwards, demonetising the old Somali notes that were still washing around from the collapsed state to the south. The Bank of Somaliland was established alongside it. What it did not get was any of the plumbing that ordinarily comes with a central bank: no membership of the IMF or the World Bank, no seat at any clearing house, no correspondent relationships that let a domestic bank settle a payment abroad in its own name. Notes are printed by commercial security printers overseas and paid for in hard currency up front, because no one is extending credit to a monetary authority that does not legally exist. The largest denomination, five thousand shillings, was introduced in 2011 to stop the bricks getting any taller. It has not entirely worked.
What people actually use
For anything above the price of a meal, the answer for a long time was United States dollars in cash, which is normal enough in the region. What is not normal is what happened next. In 2009 Telesom, the largest mobile operator in Somaliland, launched Zaad — mobile money, transferred by handset, with no transaction fee on the basic service, and denominated in dollars rather than shillings. Dahabshiil, the remittance company founded in Burao in 1970, followed with eDahab through its own Somtel network in the middle of the next decade. Adoption was extraordinarily fast, and successive surveys have put the share of adults here using mobile money among the highest measured anywhere. Rent, salaries, hotel bills, livestock: all of it moves as a text message denominated in a foreign currency.
The shilling did not lose to another government's money. It lost to a telephone company's ledger, which is a different kind of defeat and a harder one to reverse.
The bank that was left behind
The result is a central bank whose currency has been pushed down to the bottom of the price range and largely left there — good for a bundle of qat, a taxi, a sack of charcoal, and not much above that. A monetary authority that issues only small change has very little monetary policy to conduct. It cannot meaningfully influence the cost of credit in an economy whose credit is denominated in dollars it cannot print, and it cannot use devaluation as a lever when the prices people care about are already quoted in the other currency. The bank has argued this openly for years and has pressed for rules that would push more transactions back into shillings and bring mobile money under proper supervision. The argument is not merely institutional pride: a dollarised retail system running through the ledgers of one or two private companies concentrates a very large amount of the country's payment infrastructure in places the regulator does not fully control, and there is no deposit insurance behind any of it.
Where the state's money comes from
Non-recognition closes the other doors too. There is no concessional lending from the IMF or the World Bank, no sovereign bond, and for most of its existence very little conventional aid arriving through government channels rather than around them. Somaliland therefore funds itself to an unusual degree out of what it can collect: customs duty at Berbera, and tax on the livestock trade that fills the port. Sheep and goats leave for Saudi Arabia in enormous numbers, with the volume rising sharply before the Hajj, and the fiscal health of the government tracks that trade closely enough that an import ban in Riyadh registers as a budget crisis in Hargeisa. The thirty-year concession signed with DP World in 2016 and the container terminal that opened in June 2021 are, read this way, less a logistics project than an attempt to widen the tax base of a state that cannot borrow.
The recognition question, restated
Somaliland's case is normally argued in diplomatic terms: the borders are those of a distinct colonial territory that was briefly independent in 1960 before the union with the south, the union was never properly ratified, the state that resulted collapsed and has not been rebuilt. Those arguments are made in conference rooms and have not moved anyone. What the money shows is the cost of losing them, in a form that is measurable on a pavement in Hargeisa.
A government that runs elections, courts, a police force and a functioning port, and that has held most of a corner of the Horn out of a war now in its fourth decade — most, not all, as Las Anod showed in 2023 — still cannot give its citizens a currency they are willing to keep their savings in — because the credibility of a currency is partly borrowed from the institutions standing behind it, and there are none. So the population built its own workaround out of a telecom licence and someone else's dollar, and it works. That is the achievement and the indictment at once, and the changers on Independence Avenue, sitting behind bricks of a currency almost nobody saves in, are the exact place where the two meet.