Bank Governor’s Decision to “Bribe” $68M was Indeed Prudent

By Amin Kef Sesay

The Governor of the Bank of Sierra Leone, Professor Kelfala .M. Kallon was on the 23rd November 2021 responding to the request by Members of Parliament to give a professional justification behind the rationale redenominated the LEONE, the country’s Legal Tender.

During the course of enlightening the Honourable Members of Parliament, the Governor stated that the sum of $68m was used from the reserve to buy the ‘Leone’ from hoarders through the Commercial Banks during the shortage of the “Leone” in the Banking Industry.

To use his actual words:  “We wasted $68 million to bribe people hoarding the Leones”.

In the wake of the parliamentary engagement, specialists in spinning, especially the Political Spin Masters, quickly rushed at the “red meat”, giving all sorts of out-of-the-context interpretations of the Bank Governor’s statement with some even going to the extent of calling the attention of the Commissioner of the Anti-Corruption Commission, Francis Ben Kaifala, to take note and act. Social Media platforms are awash with misinterpretations of what the Governor intimated Parliamentarians to such an extent that some are even adding salt and pepper to it in order to make it more politically appetizing.

However, this should not be surprising in a country where the illiteracy rate is high and everything is highly politicized. Listening carefully to the Bank Governor, this medium discerned that he was referring to the act of salvaging the Leone shortage crisis as “a bribe” simply because the aforementioned amount spent in doing so should have been used to do something developmental.

As a matter of fact the Governor laid bare the need for the redenomination of the Leone when he told parliamentarians that he asked myself, “After working so hard for the past two years to build a reserve for this country, is it 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?”

It was that point that the Bank Governor was hammering home as one of the justifications for the re-denomination of the Leone. Put contextually, the Bank Governor intimated Members of Parliament that the sum of $68m was used from the reserve to buy the ‘Leone’ from hoarders through the Commercial Banks during the shortage of the “Leone” in the Banking Industry.

Many could vividly recall that in the recent past there was a shortage of the Leone which resulted into customers of Commercial Banks having to queue just to conduct banking transactions, especially to make withdrawals. It was such a messy and embarrassing situation or crisis for which the very Bank Governor was scolded and held responsible until it became clear that the country was a victim of the existential COVID-19 pandemic which placed restrictions on the entity that prints the country’s legal tender and even made it extremely difficult for the transportation of consignments of monies printed to be placed in circulation.

Put in other words, what the Bank Governor actually meant was that when the COVID-19 breakout, the Bank of Sierra Leone made an emergency request for the “Leone” to be able to break-even the increased demand for cash and for Government’s day-to-day operations.

According to him those monies arrived but lamentably were hoarded by people.  He furthered that when the Central Bank supplies the market with, say, 1000 Leones, they expect to receive at least 800 Leones in return, but emphatically stated that such an expectation had not been met.

Professor Kallon underscored that with a view and an objective to remedy the situation, for normalcy to prevail, he had to reverse the Bank’s order or decision of not holding the Dollars but rather to sell them to people who were hoarding Leones. The sole purpose, he stated, was for the Leones to be returned to the banking system.

The Bank Governor categorically stated that such a prudent decision cost the Bank of Sierra Leone $68M.

In a nutshell, what the Governor of the Bank of Sierra Leone was explicitly telling Members of Parliament was that the amount in question, $68M, was sold out to people in order to encourage them to take the Leones they have hoarded to the banks.

At this juncture it is important to note that the Bank of Sierra Leone, do from time to time, auction dollars to Commercial Banks like the Sierra Leone Commercial Bank, Rokel Commercial Bank, Union Trust Bank etc.

Literally, that was exactly what the Bank Governor termed or referred to as $68 million was used to bribe or lobby people who were hoarding the Leones.

Some may argue that the choice of words by the Bank Governor was not appropriate. But as far as this medium is concerned it was the effect of COVID-19 pandemic which led to the tampering of the Bank’s reserve in order to auction $68M, which as he rightly stated, could have been otherwise used on a developmental project.

COVID-19 forced the country into such an inevitable situation.

It must be pointed out here that the Bank Governor’s statement to the Parliamentarian is now being deliberately misinterpreted or blown out of proportion in order to mislead the public.

Political spinners are on it right now giving it an interpretations to mean that it was a reckless way of spending public funds when in actual fact all what they are, probably unconsciously doing, is exposing their folly and silliness. However, what is clear is that it is Professor Kallon who has the last laugh and it will be the loudest because he will be the last one to laugh.

Press Release
26th November, 2021.

Misrepresenation Of A Statement Made In Parliament By The Governor Of The Bank Of Sierra Leone

Freetown SL: 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:

1. 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.

2. 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.

3. 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.
4. 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.
5.  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.
6. 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.
7. 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.
8. 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.
   END

Response from the Bank Governor;  https://fb.watch/9wRp2l0g1M/