Abstract:
This thesis examines the factors that contributed to the rise of inflation in
Somalia during the period (1990-2005). These factors include the fake shilling,
wars, and lack of central authority. It also identifies the various impacts of
inflation on Somali economy especially its impacts of economic growth, income
distribution, and saving and consumption and balance of payment.
In order to assess the causes and impact of inflation on Somali economy, the
researcher adopted an analytical descriptive approach; two types of data had
been used, namely primary data which include questionnaire conducted with
different groups of people (e.g. merchants, household, and bankers),
secondary data which include references, NGOs and UN publications, Somali
central bank publications.
The thesis reveals that inflation has a negative impact on many aspects of
Somali economy the most important of which is its impact on poverty and
employment, decline in the Somali people’s real income, and hampering the
business activity of Somali people by creating uncertainty among savers and
investors.
To stop the continuous rise of rates of inflation in Somalia, a national unity
government which includes all Somalis should be formed; this government
should introduce economic policies that aim at increasing the productivity,
inducing public saving, allowing Somali shilling to appreciate and controlling
the growth of money supply.
