Just an article talking about the Somali economy being boosted by piracy.
http://www.bbc.co.uk/news/world-africa-16534293
On a seperate note, does anyone know anything about how free banking is doing in somalia. The increased wages in this example would seem o suggest there has been excess money creation. Although I do know some areas are semi-autonomous and may have set up central banks but I do not know for sure. But I do know at least some areas have a free banking system.
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The Somali “banking” system is based on the old Islamic system of Hawala.
Hawala is an informal (meaning not-government-regulated) value transfer system based on the performance, reliability and honor of each independent broker. It’s mostly used by emigrants to send money back home but as the “national” government of Somalia only controls parts of Mogadishu it has increasingly become the dominant system in the country.
It’s a very peculiar system: for one it has no promissory instruments, being entirely honor based. Trust and extensive use of connections (family, friends, business partners etc) are widely used. Hawalars make their living on two things: commissions on money transfers and bypassing official currency exchange rates.
The system works in a very simple way: let’s say a Somali immigrant living in Europe wants to send some money to his family back home. He goes to an Hawalar, negotiates a commission fee and gives him money. The Hawalar will not send the money directly: he will contact another Hawalar, explain the details of the transaction and then will negotiate a way to pay off his debt. While obviously repayments in cash are the most common form of debt settlement, it’s not the only one and it’s up to each individual Hawalar to decide. Repayment may take form of a favor to be returned at a later date or, in the rural regions of Somalia, even payment in nature, with ammos and livestock being particularly valued.
Some Hawalar may even provide loans but, under Islamic law, they cannot charge interests for doing so. Again it’s a honor-based system and it’s up to individual Hawalar to decide.