Somaliland: What Are the real causes of inflation? – By Prof.Kayse Ali Geedi


The current Administration says ‘that cause of inflation is electronic transfer money known in Somaliland ZAAD or e-DAHAB, but what are really causes of inflation?

The cause of inflation is a sustained increase in the price level. The main causes of inflation are either excess aggregate demand (economic growth too fast) or cost push factors (supply side factor). There are at least seven items that can cause inflation and they are following:

1- Demand pull inflation: (Baahi badan oo la abuuro) Demand pull inflation is increase need for limited supply of goods and services, wanting to cause consumer prices to increase. This factor is the most factor that cause inflation in Somaliland simply because Somaliland the current regime does not bather to regulate incoming products from abroad.

2- Cost Push Inflation: (sicirka maceeshada oo kor u kaca) Cost push inflation is inflation in which increased production costs or increased import product prices. In Somaliland import products prices increase continuously which cause inflation.

3- Raw Material Prices: (Waxa debada laga soo iibsado qiimaheedu kor u kaco) if import raw material prices is increased, it causes inflation specially oil products and other needed material.

4- Profit Push Inflation: (Marka shirkaduhu kor dhiyaan sicirka alaabta) When companies rise the prices of their products, the rose prices cause inflation. In Somaliland companies continuously rise the prices of their products and Somaliland the current regime does not bather to regulate.

5- Decline Productivity: (Wax soo saarka oo hoos u dhaca) If less production occurs and allow costs to rise, this invariable leads to inflation. Somaliland, the main production is livestock and livestock export is postponed therefore this causes inflation.

6- Higher Taxes: (cashuuraha oo la kordhiyo) Somaliland current administration continuously increase all taxes that it collects from tax payers since it became to the power. Also the majority of taxes increased. The current regime increased taxes twice or triple what used to collect the previous administration.

7- Printing More Money: (lacag layska daabaco) It is notorious for Somaliland current regime to print new money. Somaliland current administration has been printing new money since it became to power and this causes the main inflation that has been occurring in Somaliland since it became to power.

Now do you find the above items and item indicates that the electronic transfer money causes inflation. If it yes then the electronic transfer money causes inflation. If it no then the electronic transfer money does not cause inflation. In reality the above items not included that the electronic transfer money causes inflation. In conclusion we can say that the  motive of the decision of the Somaliland administration toward ZAAD SERVICES and E-DAHAB is obviously political and it wants to get rid of ZAAD SERVICES and E-DAHAB. In my opinion the electronic transfer money is a device that enables people to conduct business when they are far from each other. Simply, it is a convenience way for doing a business. Instead the administration to give rewards to these companies, it is sad the regime to intend to get rid of these companies. Remember Somaliland people need so badly these services.

By: Professor Kayse Ali Geedi