Puntland President Said Abdullahi Deni has robustly defended the 2021 decision to stop using the Somali shilling, asserting that the shift to the U.S. dollar has shielded the region from economic instability and widespread poverty.
“We have $7 million worth of Somali shillings stored with no way to use them. There’s no central government to exchange it for other currencies. If we hadn’t taken this step, our people would be impoverished today,” Deni stated.
The decision comes amidst significant political and economic tensions between Puntland and the Somali Federal Government. In March 2024, Puntland withdrew its recognition of the Federal Government following constitutional amendments it claimed breached the federal pact and favored specific interests.
These amendments included provisions for direct presidential elections and increased presidential powers, which Puntland argued could destabilize the federal arrangement and undermine regional autonomy.
The strained relationship has had wide-reaching implications, affecting security and development initiatives in the region.
Puntland’s Ministry of Information recently denied federal reports that Somali army forces and international partners killed 20 al-Shabab militants in the region, asserting its capability to manage its own security.
Additionally, development projects such as the Barwaaqo and Somalia Food Systems Resilience Project (SFSRP), focusing on water management and food system resilience, have resumed after being halted due to political disputes.
Education is another area impacted by these tensions. Somalia’s Minister of Education, Farah Sheikh Abdulkadir, urged Puntland lawmakers to accept federal educational resources.
The federal government has been accused of politically blocking educational projects worth $16 million intended for Puntland. Abdulkadir emphasized that educational matters should not be entangled with political disputes and that Puntland’s education system should be on par with the rest of the country.
President Deni elaborated on the economic benefits of shifting to the U.S. dollar, highlighting how the decision has protected the wealth of Puntland’s poorest citizens. He revealed that counterfeiters had set up operations outside Puntland, printing fake Somali shillings and flooding the market with worthless currency.
“We took seven million dollars, but we controlled 100 million dollars that would have been similarly stolen if we had continued using the Somali shilling,” Deni explained.
Since its March declaration, Puntland has operated independently and vows to do so until a more inclusive and representative constitutional framework is established.
