By Amin Kef Sesay
In life, there is the saying that states that no one single individual has a monopoly over knowledge. There have been instances when expressed views have been challenged either in their entirety or in certain aspects.
The Governor of the Bank of Sierra Leone, Professor Kelfala M. Kallon, is no exception to that rule as the Speech which he delivered at the 2022 meeting of the Sierra Leone Bar Association
at De Wizzard Conference Hall in Bo on “The Reasons for, and Effect[s] of, Redenomination of the Leone on Sierra Leone’s Post-COVID-19 Economy” has been vetted and commented on by an Economist of high reputation in the person of Prince Jacob Macauley.
Prince Jacob Macauley commended the Bank Governor for establishing the fact that the redenomination of the Leone will prevent the huge quantity of banknotes needed to conduct simple transactions that imposes huge transaction costs on economic activity. He also agrees with the notion that it will ease other economic burdens which the old currency poses and as he rightly puts it, “can support economic growth”.
Jacob said in as much as the Bank Governor mentioned about sensitizing the general public about the transition from the old currency to the new currency after the redenomination process he ,however, failed to explain in detail what that will entail in terms of shape and form, through which means and the impact that such will have far and wide.
There’s no detail in the speech on the likely size of the ‘shoe leather and menu’ costs arising from the redenomination. These will be significant for some businesses.
As stated by the Bank Governor there will be a transition period of not less than 90 days during which the two currencies shall be legal tender. He continued that during that period, the prices of goods and services shall be displayed in both the New and Old Leones. Thereafter, the Old Leone shall cease to be legal tender and all prices shall then be set in the New Leone.
Prince Macauley said the Governor’s stated three months change over period seems to be extremely short particularly given the limited reach of Commercial Banks in Sierra Leone. He furthered that people in rural areas who may not have easy access to commercial banks should be given more time to swap the old notes for the new ones.
Macauley stated that in the Governor’s speech he did not clearly stated what the policy coordination is between the Bank of Sierra Leone and the Ministry of Finance should be. He said, for example, how is the Government debt held by the Central Bank going to be treated?
He further asked the question: Does the redenomination increase liabilities on the Central Bank’s balance sheet?
Jacob maintained that the actual speech is highly theoretical arguing that taking into consideration the Sierra Leonean audience and the transition, such a speech that deals with practical issues associated with the redenomination of the Leone should have been tailored in such a way that the vast majority of the citizenry could easily follow through and understand.
He was so curious to know whether the Central Bank has the capacity to carry out the re-denomination. Also, how could the Bank prevent counterfeiting and the outright theft of money during the transition period?
Those are few questions which the Economist believes should be answered / clarified.
