How to strengthen Sierra Leone’s currency – the Leone

PUAWUI DR SAMA BANYA: Sierra Leone Telegraph: 14 August 2019:

I am not an economist. The nearest that I dabbled in the economy of Sierra Leone was when I was Minister of Finance, Planning and Economic Development in the One Party government of the then President Siaka Stevens.

I lasted for a year but mercifully I left with my chin up and a smile on my face. In my school days, the Prince of Wales school was the only institution that offered sixth form subjects in the country. Even at that it was only in Science subjects which again were taught only by the same great school.

It was not strange that for us who planned to be medical doctors or engineers the practice was to enter the Prince Of Wales School after the Cambridge School Certificate examination. We all flocked to King Tom where for a long time one man, Pa Constance Tuboku-Metzer taught almost all the science subjects. (Photo: Dr Sama Banya).

He was dedicated, and it was great fun to watch him demonstrate “Simple Harmonic Motion,” a “To and Fro motion.” Still we gazed and still we wondered how one head should carry all that we knew!

In order to certify the requirements for a Pass or credit in the examination, one was required to satisfy the Cambridge examiners in a General Paper as well as in The Principles of Economics as subsidiary subjects. That was the extent to which I and my contemporaries dabbled in Economics.

Our currency – the LEONE began its downward slide against the United States dollar towards the end of last year. The erstwhile government of President Koroma had in their view done everything to shore up the economy but it became a daunting task.

As if in an act of desperation, the Finance Minister introduced what was supposed to be an austerity budget. Among the measures was a moratorium on spending, on new recruitment into the public service, etc.

But the measures were not worth the paper on which they were printed. In hindsight it was business as before, because as far as the APC ministers and their cronies were concerned the measures only applied to the rest of us.

One only needs to read Lara Taylor-Pearce’s annual audit reports which continued to be treated with absolute disdain.

While the government was screaming about moratorium on recruitment it had surreptitiously brought through the back door some thirty recruits into the Foreign Service, and with no reference to the Public Service Commission.

By the time the Bio administration took over the reins of government, not only was the kitty empty but the new government inherited an almost insurmountable external as well as internal debt burden.

This, the government is now valiantly trying to unburden and at the same time carry out much needed and much applauded development strides in education, health, infrastructure, etc.

While this is going on APC and their followers came up with what they hoped would be an embarrassment to the new administration. Yes, their slogan was “di gron don dry,” meaning that the kitty was empty and there was nothing on which people would rely.

From the general response, whoever coined the expression must be walking around with their head down.

A regular APC apologist – Mohamed One Drop, or is it Two drops made a ridicule of the state of the economy and of the free fall of the Leone in particular. Of course the Leone continues to depreciate against a generally weak United States dollar. Are we in a kind of quagmire? And if so what is the solution?

First it must be admitted that in Professor Kelfala Kallon the Bank Governor and J J Saffa the Minister of Finance (Photo), one is bold to state that the economy is in the hands of two knowledgeable, efficient and reliable individuals.

They may themselves be wondering “What Next?”. Here comes Puawui the aging fool who is daring to tread where angels are keeping off. In the first place my own suggestions are not wholly original.

Over the years I have been close friends of business people, mainly importers but also some exporters of our produce and minerals. I have always maintained my friendship regardless of my status and they and I have frank discussions on many subjects, but especially on the current state of the economy.

From those exchanges my advice to both our financial gurus is to resist any temptation to increase taxes. Samuel Jibao and Jeneba Sillah-Bangura are you with your uncle?

Such a step may prove to be counterproductive and to benefit mostly smugglers. On the contrary, the government should take the bold step to impose a thirty percent duty on the export of iron ore, cocoa and coffee, rutile and bauxite, yes fish products, etc.

What a real bonanza that would bring. Just think about it.

5 Comments

  1. Measures the New Direction government should adopt to stabilize the value of the LEONE are:

    1. Increase taxes on exports such as minerals mined in the country. 2) Remove or reduce taxes on agricultural produce. 3) Central Bank to be the only institution to deal with foreign exchange. 4) Close all outreach foreign exchange bureaux across the country. 5) Reduce the employment of heavy earners. 6) Control foreign visits by some high-placed government officials.

    Allow ambassadors to do the work in their respective locations across the globe. Let’s try these in the remaining 3 years and 8 months, maybe, “betteh go Kam”.

  2. I live and work in Tanzania. The Tanzania shilling recently took a hit. Despite the Tourism season which brings in Millions of Dollars and other foreign currency to Tanzania, the value of the shilling went down. An investigation by the Tanzania Central Government found out that all the foreign currency accrued where being smuggled out of the country.

    The government mitigated this malaise by putting a temporary ban on all Foreign Exchange Bureaux. Only Banks and approved Bureaux at the Airport where licensed to conduct foreign exchange business. The result is that the shilling has gained strength again.

    The Tanzania government knew that thousand of jobs were affected. Now a new policy has been rolled out to make sure that the people running these Bureaux do not get involved in anything that would help smugglers. Prior to this crisis, Tanzania did not have people on the street trading Black Market foreign Bureau and yet they were plagued by smugglers.

    Now to Sierra Leone and other West African countries. It is a daunting task to control and monitor the flow of foreign currency in and out of the country. The reason is that we encourage open black market trading. Recently, the Government of Sierra Leone released over $28M dollars to ease the lack of foreign exchange for business people.

    In no time everything varnished into thin air. Last year, a Lebanese man was caught at the Freetown International Airport smuggling huge sums of Dollars, British Pounds and Euros out of the country in his hand luggage which he did not declare. After the initial noise, the matter died a natural death.

    What the authorities did not know was that they were closely being watched by the smugglers and economic saboteurs to see how that matter was handled. Since it was business as usual, the Smugglers and Economic Saboteurs have been having a Field day. A Sierra Leonean friend who trade Black Market foreign currency in Central Freetown in my last visit to the country, said that many people in the former government and their sympathisers have been busy buying dollars from them at higher prices. They wondered where these people are taking all these monies they are buying. But since trade is good for them and since the black market trade is a fait accompli, they care less.

    The only logical conclusion is that someone somehow in a coordinated activity have been involved in draining away from the country the little foreign currency that have been coming to the country. There are many ways to fight a regime. One effective way is economic collapse and the Bio regime is in big trouble.

    The quick term solution! As the regime in Tanzania did, put a temporary ban on all Foreign exchange Bureaux and clamp down heavily on Black Market Foreign exchange business. Only have the banks deal in this business. Yes it would put some people out of business. But if properly managed as it was done in Tanzania, the end will justify the means.

  3. We need a peaceful Nation for a better growth. May Allah “God Almighty” see us through all trials. PEACE and LOVE.

  4. I fervently believe that the Minister of Finance should immediately mobilize a rapid response team of seasoned national economists within and outside the country, to brainstorm in order to develop and implement some very aggressive economic policies and measures that will address the current economic situation in the country.

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