Sierra Leone bans sale of foreign currency by street vendors and other unlicensed agents

Sierra Leone Telegraph: 3 March 2020:

The governor of the Bank of Sierra Leone – Professor Kelfala Kallon yesterday announced a major shake-up of the country’s foreign exchange market, banning the buying and selling of foreign currencies by street vendors and all unlicensed agencies across the country.

Anyone caught violating this ban will from yesterday pay a hefty fine, or sent to jail for three years or more.

Sierra Leone’s currency – the Leone has seen its value plummeted by more than 40% since 2016, as the country’s exports which are largely dominated by the mining industry fell.

Several mining companies are facing huge challenge in the face of declining global demand. Some of the companies have had their mining contracts terminated or suspended by the government, who says that the people of Sierra Leone are not benefiting from the country’s vast natural resources.

Sierra Leone’s over-reliance on the mining industry for export revenue has had detrimental impact on the economy, which successive governments have failed to diversify.

Yesterday’s announcement by the Bank of Sierra Leone to limit the trading of foreign currencies to commercial banks and government approved foreign exchange bureaus, could in the short term ease the pressure on demand for foreign currencies and therefore help the Leone to regain some of its lost value.

There are fears unlicensed foreign exchange vendors may now go underground or hoard their stock of foreign currencies, instead of selling them on to the commercial banks. But experts say that such action could backfire on those hoarding large quantities of foreign currencies, once the value of those currencies starts to fall against the Leone.

It is estimated that unlicensed foreign currency vendors and street traders, account for over 80% of sale of currencies to non-commercial buyers.

Some of these unlicensed vendors are owned by politicians and senior public officials who, it is suspected, will violate the ban with impunity.

But the Bank governor is determined to control the sale of foreign currencies in order to stem the decline of the Leone. In a notice published yesterday, he said “Pursuant to Section 48(3) of the Bank of Sierra Leone Act 2019, the Governor of the Bank of Sierra Leone hereby directs as follows:

  1. Foreign currency trading (meaning the buying and / or selling of foreign currency) shall be undertaken by only commercial banks and licensed foreign exchange bureaus.
  2. Commercial banks and licensed foreign exchange bureaus shall engage in foreign currency transactions at only their registered business address on file at the Bank of Sierra Leone.
  3. Street trading of foreign currency is strictly prohibited with immediate effect.
  4. Buying foreign currency from, or selling foreign currency to persons or entities that are not commercial banks or licensed foreign exchange bureaus is strictly prohibited.

“Please know that contravening any of the above directives shall constitute a violation of the Bank of Sierra Leone Act 2019. Upon conviction, violators shall be ‘liable for fine of 100 million Leones or an imprisonment for a term not less than 3 years or both’ (Section 26(5).”

One Pound Sterling was sold yesterday by a licensed vendor in Freetown before the passing of this directive for 12,150 Leones.

The expectation now is that by forcing all foreign currency transactions to go through the commercial banks and licenced vendors, the Leone could swiftly appreciate in value to about 10,500 Leones to a Pound by the end of this month, which must be good news for prices of imported goods and inflation.

According to many commentators, this move by the governor of the Bank of Sierra Leone, is the best decision he has made since his appointment by president Bio two years ago.

11 Comments

  1. While some of us who reside in the Western part of the world do benefit from “street foreign currency trade” when we travel to Sierra Leone, I’m happy that the Government is taking this measure in an effort to help control our currency. However, as many have stated on this forum, the implications are huge.

    First of all, this measure has to apply to all. What plans have been put in place for youth employment, technical programs to assist with and create employment opportunities, etc. There are college students who cannot find jobs let alone street vendors. I’m afraid that if appropriate measures are not implemented, this action will only create foreseable problems such as increase in crime. People are suffering in that country. Praying for mama Salone.

  2. People will think this is a good move by the bank governor but guess what, I promise you this will make it worse; and I promise you by the end of the week the pound will be 13000 leones. The reason is simple – those street currency exchange guys don’t have a job. The government has closed all mining companies. How do they expect the people to live.

    To me, Government should have given a chance to those mining companies to operate so people can get jobs. Then if the governor put this regulation, it will work. But trust me, by next week you will hear the latest. First of all commercial banks dont even have enough foreign currencies to sell to the business community.

  3. This is a good idea for the banking system to have control. However, such legislation would have a knocking effect on the lives of many young men and their families. Any responsible governor May have thought of that before passing this regulation. First he should prepare these people by calling a meeting to educate them and give them time to look for another source of income.

    This regulation is a big deal. It will definitely improve the lack of foreign currency in the banking system. But first, inform the general public. This command and control type of governance is not good for a fragile nation of Sierra Leone.

  4. It sounds like a good deal, if only the law is implemented evenly, regardless of status or influence. We all know and can attest that laws in Sierra Leone don’t affect influential people and their relatives. So let’s wait and see how this ban goes.

  5. I belive the move is good provided the Government can create employment for the youths. They should also ban the use of Dollars in renting houses. Our currency should be used.

  6. Indeed desperate times call for desperate measures. It appears the business model of our self-employed black market boys will cease to exist henceforth. For several decades and counting, hundreds of citizens depend on this business model to sustain their livelihoods; too bad, this group of citizens’ economic situation will now be kicked in the wilderness for no actions of their own.

  7. Fascinating stuff. Desperate times require desperate measures. Many thanks Mr. Bank Governor and may God bless you.

  8. Dear Editor,
    As a follow-up to my earlier response, it is imperative that the government identifies some jobs to gainfully employ those young people (street currency vendors) who definitely may have been affected by the ban. These young people must not be left in the cold, suddenly income less. Presumably, the currency sale wasn’t illegal because it was done in the public view of all, including the very government and public officials.

    In order to reduce or prevent sudden rise in crime,may I encourage the labor ministry to urgently develop and implement a short-term and long-term job opportunities now to sustainably engage these affected youths. What has been done is like closing one big hole in the economy and digging up another huge hole in the labor market. Much more proactive attitude is needed in order for the economy to be sustainable and viable.

  9. This is indeed a welcome news for the people of Sierra Leone, potential investors and business owners. This ban, in my opinion is one of the greatest milestones and achievements of the current government. It will surely have a ripple effect on the economy. If countries like Tanzania and Kenya can do the same successfully, I am of the candid opinion that this piece of legislation would succeed. My appeal to the Central Bank Governor is to endeavor to implement this legislation to the letter. Make Sierra Leone great again, please.
    Thanks

    • The two main parties have failed Sierra Leone miserably, especially APC who have governed the longest.Any government must not accept a contract of any nature that is detrimental to the people of Sierra Leone. Upon all the natural resources we have but Sierra Leone is still poor a nation. This is due to mismanagement and systemic corrupt government officials who will not stop at any thing but to immerse themselves in wealth. If Sierra Leone is going to be self sufficient and not reliant on foreign aid aid, the government now or in future must be ruthless in dealing with corrupt indivduals.

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