The study focused on the effect of dollarization on Somali economy it had three objectives, including identifying the sources and factors contribute to dollarization in business transactions in Somalia, obtaining a possible solution to eliminate this dollarization problem and finally to identify the responsibility agencies towards to this problem. Foreign currencies have found a place in all transaction of Somalia businesses this was attributed to the collapse of Somali central bank. US dollar remained the reliable currency as a medium of exchange in the market either in physical or in value for more than a decade. The root cause for the current price scramble, relentless devaluation of Somali shilling and the general economic turmoil is believed to be the use of US dollar in Somali market while the dollar is depreciating universally. An option to avoid further loses in business might be the exercise of a basket of a foreign currencies whilst developing ideas to attain strong domestic monetary system.

Ahmed Hussein Ali - Faculty of Economic and Management.