By Umaru Fofana
In the Ghanaian capital last week I changed 100 Euros. The teller at the bureau de change close to the hotel I was staying at, knowing me to be a journalist he admitted he had admired for years, said to me: "I am sorry Mr Fofana".
I thought he was sympathising with me on the loss of my colleague BBC journalist, Komla Dumor whose funeral I had gone to Accra to attend. "My sympathies to you too" I said, adding that we were all in the bereavement together since the late man was a Ghanaian.
"Oh yeah you are right" he said, "but I am not saying 'sorry' for the loss of Komla". I asked why he was sympathising with me or saying "sorry" and he retorted: "Too many cedis to have in your pocket for just 100 Euros". It was 330 cedis (three hundred and thirty cedis). I giggled and said "thank you"; and walked away.
I giggled because obviously the teller did not know how much he could get with 100 Euros in Sierra Leone. If he did he would be proud of the cedi.
In the last few weeks the leone has taken a very serious knock - probably unprecedented in its loss of value with virtually every day bringing new exchange rates against the US dollar, the British Pound and the Euro. Every day since the reintroduction of the restrictions on withdrawals of foreign exchange from our banks, the already weak currency has further tumbled down. And while the dollar and the euro, for example, have become scarce at the banks, they are still getting on to the streets through unorthodox means. Why not!
The reintroduced foreign exchange restrictions seem to be spelling misery for Sierra Leone and Sierra Leoneans. While the reason for them - keeping the leone stable - is understandable and desirable, the piecemeal approach and the lack of effective structures are making them have a boomerang effect.
The truth is that despite assurances that the central bank put up a million dollars the other week for an auction, and that only US$ 100,000 was demanded, the commercial banks are admittedly short of foreign exchange for the country's traders and those others who need it for some other transactions.
For many reasons these piecemeal restrictions are unhelpful, but let me try to put out the basic ones which affect ordinary people day-in day-out. Whoever told the central bank of Sierra Leone that dollars are only needed by international business people or overseas travellers ! There are many landlords, for example, who charge their rent in dollars. Nothing less! There are government institutions that peg payment on the US dollar. Try the National Telecommunications Commission, for example, that charges radio stations in US dollars or its current equivalent in leones. I think the reverse should be the rule where pay is in leones and an international broadcaster be given the current exchange rate to pay in.
Additionally, who needs telling that almost all landlords and landladies who have a decent house charge in dollars? Like the government institutions that charge in foreign exchange, these landlords and other people who charge in dollars, take luxury in pegging their own exchange rate if you want to pay in leone.
One would have expected that a deliberate and fundamental broad policy or even a law would have been put in place before the implementation of a foreign exchange policy such as the central bank is doing now which it says is as old as the bank itself. Soon my rent expires and my landlord does not want to hear a word beyond paying his rent IN DOLLARS. Or I pay him in leones at an exchange rate of Le 4,650 and not the official rate of le 4,295. Yet no one cares. All that concerns them is that I should withdraw my dollars which I keep piecemeal to pay my rent, whould be withdrawn in leones leaving me with the headache of looking for dollars and pay an excessive difference.
Essentially, prices are pegged by the dollar and the chameleonic colour change of the leone means it keeps oscillating and vacillating by the day. The real thing should be that all prices are pegged in leone and whoever can only pay in dollars will have to contend with the current exchange rate. Not the reverse.
A similar fiscal regime has been introduced in Ghana, for example. Theirs is better thought out and more sensible. There is a ceiling which an account holder is not allowed to exceed. And in Ghana, unlike here, there is a much broader policy and law on transactions in local currency, and it is implemented. And also unlike here, there are bureaux de change dotted all over the main towns that I have visited.
Now it is becoming increasingly clear that foreign exchange is being smuggled from neighbouring Guinea, with Liberia being speculated, and sold on the streets of Freetown if only to satisfy the needs of the yearning and yawning hungry traders who need it but cannot get it. Even is at cutthroat rates. This brings in the issue of regional agreement on such issues. This should have been considered and implemented jointly by the central banks in the four Manro River Union countries. The lack of that means that the streets of Guinea, Liberia and Ivory Coast are awash with foreign exchange while Sierra Leone's streets are starving. There is only one option to pursue there - go across the border and use unorthodox means to bring in dollar and euro through the porous and compromised crossings points.
Now the Bank of Sierra Leone drew some exemptions to people who are allowed to withdraw foreign exchange from their accounts. They include diamond dealers. In my view this defeats the entire notion of keeping foreign exchange off the streets. These dealers will be doing transactions with ordinary Sierra Leoneans who will be paid in dollars. These dollars will find their way back onto the streets and the Dollar Boys will continue to have brisk business. So where is the policing of the dollar to strengthen the leone?
I can assume, I think safely, that no commercial bank outside Freetown can muster a cash of US$ 1 million. In which case a diamond dealer who needs even half that amount in leones in, say, Kono or Kenema, will have to strip bare such a bank. But if that is the rationale for the exemption then let the truth be told by the central bank.
The Ghanaian teller would have cringed, I reckon, if I had told him the battering my own leone is under, or even the huge amounts of dollars a diamond dealer is allowed on the streets even if for diamond dealers. The next time I see him I will be honest to tell him the truth. Long live the leone!
(C) Politico 27/02/14
