What has been the concern of many Sierra Leoneans, including MPs, Economists and business people is the current introduction of a new currency by the Governor of the Bank of Sierra Leone, Dr. Kelfala Kallon, especially as there has been little sensitization about the money to the general public, as well as the absence of the necessary collateral to back the currency. Ghana’s collateral is Gold, whilst Nigeria is Oil.
Despite the many concerns raised by experts over the introduction of a new currency amidst the instability of the old Leone and the consequential economic repercussions on the country, the Bank Governor, who has been described as a textbook economist, failed to listen to their warning and has insisted that the new currency becomes a reality.
During the debate in Parliament, MPs raised concern over the inability of the Finance Minister and the Bank Governor to give them full details about the amount of the old currency in circulation and the amount printed. Experts are of the opinion that this situation will provide the enabling environment for money laundering in the country, as fake notes of the old Leone will be returned to the commercial banks in exchange for the new notes. This will in effect see a substantial increase of the old notes, especially as the officials do not know about the amount of money in circulation.
It could be recalled that since taking up office as Bank Governor, Kefala Kallon had tried in various ways to turn around the value of the Leone, albeit with failed policies, which have all proved counter-productive. Governor Kallon had on several occasions auctioned the dollar in the hope of getting people to bring Leones into the banks, but those actions have all failed, instead it had only helped to increase the value of the dollar against the Leone. Several attempts were made to print new notes of the old Leone, but these have simply disappeared. Kallon had been told in a World Bank meeting held in Freetown at the Radisson Blu Hotel that those actions in auctioning the dollar were counter-productive, a situation he acknowledged, and in one engagement with the press, he confessed having to bribe commercial banks with over $68 million, which became the topic for huge debate and calls for his resignation. But that was not to be as the ACC boss explained the meaning of the statement, that it was not actual bribery, but enticing banks to use the dollar to retrieve the Leone, which was short in the banks. Customers found it very difficult to get whatever amount of money they wanted from their accounts, because there was not enough money to go around.
Thus, this ‘Textbook Economist’ felt that introducing a new currency (re-denomination) was the solution. Unfortunately, when the Bank Governor announced that a new currency will soon be introduced, all hell was let lose, as business people exchanged their Leones for the dollars in the black market, which has now led to an exponential increase in the value of the dollar against the Leone and a scarcity of foreign exchange for importers to use to bring in vital commodities.
What is worrying is what will happen when people in the rural areas refuse to accept the new currency, since they do not understand anything about it? Traders will find it very difficult to do business with people as they too do not understand how the currency works. Some concerned Sierra Leoneans are worried about paying transport fare to drivers or riders who do not understand the new currency and how to give change. One elderly woman said that the said re-denomination is even not fully understood by the educated people let alone talk of the illiterates. It is therefore not surprising that the MPs raised that concern and even called for further consultations and massive awareness raising on the currency across the country. They even volunteered to help the Bank popularize the currency, but they too have not been fully engaged on the said currency.
At the moment the dollar continues to rise, with the exchange rate now going for Le1,430 to a dollar. One wonders what the situation will be in the next weeks? If this trend continues, the value of one’s money in the bank will reduce. Thus, if one is to buy a thousand dollars at the current rate and later finds that the exchange rate rises again, the same amount he used to buy that same $1,000 will be astronomical, making nonsense of his money in the bank.