''All that is necessary for the triumph of evil is that good men do nothing'' - Edmund Burke


S I E R R A  H E R A L D

Vol XI No 3

The tendency sometimes to protect perpetrators for the sake of peace...doesn't help society. Impunity should not be allowed to stand. - Kofi Annan on Waki report

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Monday August 4, 2014 - Fifty years ago today in 1964, Sierra Leone launched the first Central Bank - the banker of all banks in the country - the Bank of Sierra Leone. Fifty years on, the ideals of the bank remain largely unattained with political machinations making a mockery of the dream of the founding fathers.Former Central Bank Governor Samadeen - did he step out of line?This five-leone note was rare among ordinary people under Gordon Hall

Without any fanfare, without any of the usual state media haw-hawing, Central Bank Governor Sheku Sambadeen Sesay was shown the red card by the government of the rat with some in the know insisting that he was not given the sack, but that his five-year contract had ended and that the government was not in the mood to renew it.

Not so surprising was the fact that not a squeak was heard from the rat on why he thought it prudent and wise to have the man replaced and one news outlet told us that the former head of the central bank was becoming quite an embarrassment -implementing policies that were inimical to the free market as well as not consulting enough with his handlers at State House.

The AWOKO news outlet carried an article in which one former holder of the post lambasted the policies of the central bank that led to the sacking of a number of key qualified and experienced bank officials in institutions such as the Rokel Bank and the Commercial Bank, a bank owned 100 percent by the Sierra Leone tax payer. We cannot vouch that Mr Sampha Koroma was the ideal banker of bankers but what he told AWOKO is worthy of consideration.

“Equally troubling” he went on “are the unwarranted prudential restrictions that stifle our customers businesses by distorting banking operations and financial intermediation.”

The “most senior active practitioner in the trade” then went on to deliver a below the belt blow when he disclosed that in the banking industry in Sierra Leone “it is an open fact that there is hardly any dialogue or an avenue for appeal and conflict resolution in the industry.”

Apparently referring to the sacking of the former Managing Director Crispin Deigh and his Deputy from the Sierra Leone Commercial Bank, the UTB CEO pointed out that “in 2013 we witnessed unilateral and preemptive decisions in our industry that plunged into limbo meticulously nurtured careers of senior colleagues with far reaching implications for the individuals and the institutions concerned” adding that “these decisions were taken in flagrant disregard to existing governance arrangements.”

Stating that this is “serious” and “worrisome” Sampha Koroma noted the “disturbing developments and the public outcry” which has accompanied what he referred to as “the Central Bank’s current conundrum on the implementation of the Foreign Exchange Control Act.”

The UTB CEO pointed out that on “any banking day, a customer of Standard Chartered can enter the banking hall of his or her branch in London or New York City or Shangai or Mexico City, and purchase cash in any currency of his or her choice.” Without mincing his words he attacked the regulation saying “to render that same common facility illegal in Standard Chartered Bank in Freetown, Sierra Leone, is not only a retrogressive step, but is also clearly out of tune with conventional international banking practice.”

We believe that the former bank governor's attempt to control what he sees as the extraordinary and bizarre use of foreign currency in transactions within the borders of Sierra Leone must have touched a very raw nerve - causing unease in the corridors of State House and other institutions. It is no secret that rents for certain buildings, be they for accommodation or business are set in foreign currency taking such areas out of reach of the ordinary Sierra Leonean who depends on the country's national legal tender, the leone.

Indeed feathers at State House must have been ruffled a bit with the open secret that the rat has quite a handsome cache of foreign currency that he uses to bribe political opponents as well as to satisfy his unquenchable thirst for more and more acquisitions.

In an address to Parliament the former Governor made a speech in which he did his best to justify just why foreign currencies must not hold sway above the leone in transactions within the country's borders. The address to the law makers could be found on the bank's website - part of which reads -

The main purpose of my address is to explain the rationale for the Bank of Sierra Leone’s intervention in the foreign exchange market.

Mr. Speaker, Honourable Members, you would agree that Sierra Leone though richly endowed with substantial mineral wealth had in the past failed to derive maximum benefit from this wealth. The new mining policies under the Agenda for Change have greatly improved the outlook from the mining sector. The Bank of Sierra Leone has observed that following the restoration of macroeconomic stability under the Agenda for Change and the consolidation of these gains under the Agenda for Prosperity, the increased FDI inflows from US$324.8million in 2012 to US$$483.44 in 2013 have not been reflected in the economy in particularly the exchange rate of the Leone against the US Dollar.

...our intervention was due to a number of observations:

 Despite the increase in foreign dire

 Unproductive use of our foreign exchange

 The Leone is legal tender but we observe pricing of goods and services such as rent, cars, land, satellite tv, school fees are denominated in foreign currency (dollarization) when the vast majority of Sierra Leoneans are not paid in foreign currencies, giving rise to a second / parallel currency in our country.

 All the issues mentioned previously, if not checked it would reverse the macroeconomic stability which the economy now benefits from.

Dollarization has negative consequences. In the short term it puts the domestic currency under pressure as people demand more dollars for local transactions thereby distorting exchange rate on the foreign exchange market.

In the long term, it leads to ineffective monetary policy, systemic risks, higher transaction costs, tax evasion and capital flight.

These factors would result in loss of confidence in the economy with inherent negative implications. Against this background, the Bank resolved to address those issues by invoking the relevant Acts and Public Notices in the short term to arrest the situation. 

 Enforce the regulation requiring the use of the Leone as the Legal tender for all domestic transactions. This requires collaboration of the legal and law enforcement agencies;

 Develop the culture of using the financial sector for payments among economic agents. This requires increased bank branches, continued banking education and development of electronic points of sale infrastructure.

 Establish legally registered foreign exchange bureaus, and prohibit vigorously the selling/purchase of the foreign currencies on the streets;

 Continue sensitization and public education through the media about the Leone as the only legal tender for domestic financial transactions.

 Ensure the use of official exchange rate for dollar denominated services such as satellite TV, airline tickets, boat services etc.

 Strengthen mechanisms to help minimize capital flight

 Collaboration with the law enforcement and other relevant agencies to ensure strict compliance with the law requiring the use of the Leone as the only legal tender in Sierra Leone; and

 Sustain macroeconomic stability, to ensure the attractiveness of the Leone as a medium of exchange and store of value.

It does not require the brains of a genius to know that implementing this regimen would have greatly and negatively affected the foreign exchange accounts of the rich and corrupt and would have put the dollar boys out of business, not to talk of the legal and constitutional implications of having a rat at State House who relies on the use of foreign currency within Sierra Leone to carry out his many nebulous activities.

It is a good move and something we had always advocated to be implemented in the country of the leone.

Now you know why former Central Bank Governor Sheku Sambadeen Sesay was given the red card - the colour of the party that employed him in the first place.

Kindly recall that four years ago we brought you this insight into the chequered history of the central bank - this should give an indication of just how rotten the system has become and why politicians who are also businessmen and women would want things to remain unchanged.

Yearning for the mother country?

The right choice is Kevin McPhilips Travel

©Sierra Herald 2002