Sierra Leone Telegraph: 27 November 2021:
After getting himself into serious hot water for saying that the Bank of Sierra Leone had used $68 million in bribing businesses and individuals in order to stabilise the country’s currency – the Leone, now he says he used the word bribery figuratively as an economics professor, to describe his what he said is similar to consumers paying more for a product so as to get producers to supply more of the product.
But his explanation does not seem to chime with his fellow economists, who say they are baffled at such a simplistic and faulty analogy as a Banker and a professor of economics that cannot be found in any economics textbook.
Many Sierra Leoneans believe that his use of the term bribery as announced openly in parliament this week, was a serious gaff and lack of communication skills; and what the Governor should be doing instead of trying strenously and unconvincingly to justify his use of the term Bribery in this context, is to simply apologise for his mistake and move on.
There is no justification in economics textbooks for the use of the word Bribery to desctribe any legitimate economic transaction. You got this one wrong professor Kallon.
The Governor’s inability to accept his mistake, smacks of gross arrogance, incompetence and dishonesty which many would find troubling for a Governor of the country’s central bank.
So, what exactly did the Bank Governor say to MPs this week that has attracted such condemnation and lampooning?
This is what he told members of parliament that got the financial market spinning this week:
“We wasted $68 million to bribe people who were hoarding Leones to bring it into the banking system. I asked myself: we have worked so hard during the past two years to build a reserve for this country. Is it going to be sustainable for us to keep bribing people to take Leones, and when we bribe them, they bring the Leones, then they take it back; then we have to bribe them again.’’
You can watch this video of the Bank Governor trying to justify his use of the word bribery in the context in which it was used:
The Bank of Sierra Leone also issued a public statement yesterday, accusing social media commentators and newspapers of twisting what the Governor said: This is what the statement says:
“The attention of the Bank of Sierra Leone (the Bank) has been drawn to a mischaracterisation of a statement the Governor made in Parliament by some newspapers and a video clip circulating on social media, both deliberately and maliciously misconstruing the said statement. In view of the above, the Bank makes the following clarifications:
- In his pre-legislation presentation to Parliament on the 22nd November, 2021, relating to the redenomination of the Leone, the Governor, Professor Kelfala M. Kallon, mentioned the massive hoarding of Leones, starting in June 2020, as one of several factors justifying the Bank’s decision to redenominate the currency.
- To address the cash shortage that resulted from the aforementioned hoarding, the Bank started spending substantial sums of money on ordering and airlifting replacement notes, which were similarly withdrawn from circulation and hoarded. Consequently, the Bank was compelled to conduct monetary operations wherein United States dollar notes were swapped for Leone notes through the commercial banks. Customers participating in the swap would deposit Leone notes in their commercial bank accounts, which were swapped at the Bank for US dollar notes, and the US dollars paid to the customers who made the deposits. However, as soon as the deposited Leones were put back into circulation, they were also quickly withdrawn and hoarded, thereby creating a need for another round of dollar-Leone swap. By August 2021, the Bank had spent about 68 million US dollars on this operation.
- The Governor figuratively used “bribery” to describe this sequence of hoarders exchanging their Leone notes for US dollar notes and then withdrawing the recirculated Leone notes so that the Bank of Sierra Leone would be compelled to buy them back with US dollars in order to avert catastrophic shortages of cash in the banking system.
- In the Question and Answer session following the presentation, two members of Parliament asked the Governor why he used the word “bribe”, given that some journalist in the room would go and twist it in ways that the Governor would regret.
- The Governor responded that, while a professor, he had often used “bribe” in his lectures to explain to students that consumers often “bribe” producers with higher prices as incentives for the latter to increase the supply of commodities in short supply. To clarify what he meant by “bribe” in the instant case, he used the example of the willingness of consumers to pay higher prices for peppers so that farmers would supply more peppers to the market when they are in short supply. It was in this context, he concluded, that he used the verb “bribe” to explain how the Bank of Sierra Leone used 68 million US dollars to bring Leones back into the banking system.
- It is unfortunate that in spite of this explanation, some newspapers and persons on social media chose to deliberately mischaraterise the Governor’s nuanced statement as a confession that he had engaged in bribery.
- The Bank wishes to make it categorically clear to the public that all its monetary policy operations, including that between June 2020 and August, 2021, are driven by only its duty to maintain the stability and soundness of the financial system, and nothing else.
- The Bank further wishes the public to know that it is unflinchingly committed to redenominating the Leone and putting controls in place to prevent its hoarding in the future. In this regard, it further wishes to inform the public that, as soon as the legal instrument that has been laid in Parliament matures, a full-scale nationwide sensitisation of the population will commence.”