By: Tony Morgan (Deputy Commissioner-General -EXPO Dubai )
Re-denominating the Leone is a stroke of genius on the part of the Government. It has a positive effect on the currency’s reputation. The Leone now has prestige globally. The Bank Governor, Prof. Kelfala M Kallon, should also look into creating a Financial Zone like the special economic zone in Dubai established in 2004, (Dubai International Financial Centre – DIFC) which acts as a financial hub for the Middle East, Africa and South Asia markets.
Going back to redenomination analysis, according to a January 2020 publication in the International Business Research (Impact of Currency Redenomination on an Economy: An Evidence of Ghana) the conclusion was: “There is significant improvement in the performance of GDP, Inflation, Balance of trade, foreign direct investments and globalization … the study concludes that the 2007 currency redenomination exercise has helped the Ghanaian economy by all standards. ” Based on the above conclusion, it is most certain Sierra Leone will follow the same positive trajectory.
All indications points to the next commercial revolution emerging in Africa. In preparedness Sierra Leone requires a solid foundation; hence Human Capital development is essential. In a global world with countries vying for investments, redenomination makes our currency attractive and more competitive.
Most analysts emphasized the problem is not redenomination, but how it is implemented. The banking system is usually the main player in distributing new cash and withdrawing old ones from the system. This will take time in Sierra Leone because the black economy is thriving (“Black economy” as used in this report is not intended to be derogatory, but to highlight the part of a country’s economic activity which is unrecorded and untaxed by its Government). So the Government will have to be innovative and flexible in the system it decides to adopt.
Politics is a social reality and it is no surprise that some unscrupulous individuals play it dirty for political gains. Several video and audios spreading fake news about the new currency are already trending. Fortunately these actions were anticipated by the team involved and a robust plan is in place to deal with these and other distractions.
Coming back to the issue of Sierra Leone’s creation of a Financial zone, it has the potential to be a great source of income. The idea is to attract top banks and financial service providers with very low to zero tax. These zones are associated with very good locations, at this time I recommend it should be located in the new modern day eco-friendly city to be built in Sherbro Island. The airport constructed on Sherbro Island will be state of the art, with Sherbro Island converted to one of the most beautiful new cities in recent times. With advances in building technology the infrastructure required can be constructed under 5 years. It will be a touristic masterpiece as well as a financial hub.
Concerning development, most financial economists are armchair philosophers, but the Bank Governor Prof. Kelfala M Kallon took the bull by the horns and dragged the bull kicking and screaming in the right direction. No one said redenomination will be an easy task, but to properly position Sierra Leone for the next commercial revolution, the Central Bank has a major role to play, and the Bank Governor has shown he is ready to do what is necessary. Our Bank Governor had the genius and will to re-denominate the Leone under trying conditions, I am positive, Prof. Kelfala Kallon will look into generating revenue for Sierra Leone by creating a domesticated Financial free zone for Sierra Leone.