Native Consortium raises concern over Leone depreciation



2nd April 2019




The Native Consortium & Research Center (NCRC) as a Think Tank that is duty bound to defend democratic and Economic Justices and livelihood issues for the ordinary man will once more like to reiterate that exchange rates and inflations lie at the economic epicenter of the Ordinary man in the Country. The current depreciation of the Leones is a serious economic concern to the bread and butter of the ordinary Citizens as Consumer Price index keeps hiking in corresponding proportion to the continuous fall of our Leones, and we don’t want a situation where $ 100 will be going for Le 1 Million when the Leones is not on a floating exchange rate regime. In that regard we hereby call on the nation’s First Gentleman, His Excellency, President Bio through his Bank Governor and the Finance Minister to take urgent measures that will defend the Leones from crumbling further down as the crunch keep biting on poor people on commodity prices. Our further appeal is to call on the president to depreciation of the Leones and the corresponding inflation effect as an economic emergency issue. The NCRC has in the last five years been collaborating with the Bank of Sierra Leone (BSL) and the Ministry of Finance through advocacy to defend the Leone and below are our findings:


  1. The Masked Black Market Manipulation and Dominance: It is no secret that Demand supply within the realm of the Black Market, which is susceptible to their manipulations, is the central driver where the real exchange no saint even in the US Federal Reserve or the Bank of England this is a game that you should play and you should play it well to defend the Leones from falling further.
  2. Flexible interest rates within Banks: It is possible to devise a system in which the BSL sets an inter-bank interest rate between a ceiling and a floor, allows this rate to change daily in response to market pressures, and adjusts this rate in a manner consistent with keeping the monetary aggregates within the projected quarterly limits.
  3. Moral Suasion/ Advocacy approach: Moral suasion is the act of persuading a person or group to act in a certain way through rhetorical appeals, advocacy and engagements. Let Take for instance when the Leones was depreciating so badly in 2016 we recommend to the former Bank Governor in a meeting, to tell the former President to make an appeal to Sierra Leoneans to use Dollar, a process called “dollarization” of the economy. Then the former President use Mobile companies to send text messages to Sierra Leoneans to stop transacting in Dollar. This was a persuasion or implicit threats, as opposed to the use of outright coercion or force people or black marketers; This measures yield very good results as the Dollar was stable at $1 equivalent to Le 7,000 from March to December 2017. The BSL should climb down from its high conservative horse and face the relevant actors and Non-state actors.
  4. Political will to pass a law for the dollarization of the economy: Government should be bold enough to pass a law that prohibits all Dealers, House Owners, Business People from asking customers or tenants to pay rent in Dollars. Government has been playing lip service over this for far too long. This ugly trend does not increase too much Leones chasing too few Dollars, but it has exacerbated more hardship and suffering on tenants. Some people can no longer afford housing but to make slum dwelling their only remedy.

  1. Currency swap: An agreement between two countries is signed between the central banks, for instance between the Central Bank of China and BSL, between the Yuan and the Leones, Later both countries will repay the amount at the same exchange rate. In return, there will be a swap rate to be decided by the two countries. Our research has proved that most Sierra Leoneans Traders buy from China. This will reduce the demand for Dollar and stabilize our exchange. Mostly often how it works in other Countries is very simple and cheap, our Foreign affairs Minister will take the first step to Beijing and start the negotiations and then the Central Bank follow, this is more than possible in two months if only the Government is serious about defending the Leones from falling further. The biggest currency Swap is between Japan and India.
  2. Capital Control: BSL can also attempt to control the currency market by using restrictive policies that prevent people from moving money out of a country, this will keep the Leones or Dollar relatively closed off as it is no secret that the Dollar is been shipped out of Sierra Leone through the black market. While these controls protect a currency to a certain degree, Black Marketers and Traders will still find a way to get money out and a country loses important monetary policy tools will help manage their economy and minimize the free for all business.
  3. The weekly auction should trickle down some other market agent to create a parallel market:

This measures has once been used by Dr. J.D Rogers the formal Bank Governor between 20014 to 2007 and works well, The weekly auction should move beyond the Big Businesses mainstream Banks, BSL should maintain a rapid response to create a parallel market to sell forex through the bureau or other informal market agents/Community Banks. The amount of firepower a central bank has is directly tied to the size of its liquid foreign currency reserves as well as its current and capital account surpluses/deficits. Therefore the Central Banks around the world have a way they manipulate the market to defend their local currency. Sierra Leone is largely an informal cash base economy, the quicker and readily means for the smaller business persons to get Dollars to go buy business out of the Country is through the Black Market. Therefore Government should use some agents and the Bureau to boost the supply of Dollar in the informal currency market.

  1. Surrender Value Obligation (SVO) on Foreign Direct Investment (FDI) should be reviewed and enforced upwards to 20%:

SVO is how much Foreign Direct Investors can surrender the forex they get from their investment locally to the Countries Central Bank’. According to the 2019 Budget, read by the Finance Minister, he said “all exporters including, large (Meaning FDI) mining companies, License Diamond, Cash Crop exporters should repatriate their export proceeds through the banking system and sell at least 15% to the BSL”. As much as we want to attract more FDI, However as a think Tank we think this 15% should be adjusted upwards to a flexible 20% where it was originally. In 2011 to 2013 when we had the boom in iron ore our former Government failed to enforce the SVO when the FDI was making huge returns with no gains from the SVO. Therefore we urge the Finance Minister to factor in the 25% in the 2020 fiscal Budget This will further boost our foreign reserve and volatility in our currency market.

  1. Central Government should Recapitalize the Community Banks and Maintain Financial Inclusion (FI): This is a straight forward way to reduce the powerful influence of the few Black market cartels. The Community Banks serve like a Bureau for the Central Banks. In 2004 the former Government recapitalized the Community Banks and its large drive business capital in the informal sector and promotes financial inclusiveness. If it can be done in 2004 it can be done in 2019.

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  1. Long term antidotes should be consistent with the short-term antidotes: As much as there is no One silver bullet to defend Local

Currency Some of our Bank Governor cannot keep the exchange rate under their belt because their long term measures areinconsistent with the day-to-day operations of the Banks.

  1. Robust fiscal policy on economic Diversification: we must diversify our economy to mobilize more revenue and attract more FDI to boost to strengthen our export and foreign reserve in sectors like Fisheries and Tourism. In our 2019 Budget the projected revenue is about $ 15 Million, when we suppose to mobilize not less than $ 50 Million Dollars per annum according to expert. This can only be achieve when we take the Chines from securing our marine waters and replaced them with a Norwegian continents that are much more robust and dependable. Moreover our laws should be strengthened for punitive measures for vessels that are found poaching our territorial waters which will serve as a deterrent.
  2. Drill deep on Agriculture: with the reactivation of the Gbomdape, Tomabom and Rokupur to curtail then One Hundred and sixty six Million US Dollars ($ 166 Million) auction the BSL sells CTC alone for rice importation per year.
  3. Boost export to attract a healthy balance of trade
  4. Increase interest rate when we have better export
  5. Set official currency rate and establish trade restrictions Conclusion

In defending the Leones knowing what has ignited the spiral depreciations of our Leones and inflation is central to providing the antidotes. Therefore as much as the Government is doing well with fiscal responsibility and reform but we want to call on the President to take depreciation of the Leones as an emergency issue like treating a cholera epidemic. There is no one silver bullet but the BSL should come down from its conservative horse to face the reality of the depreciating Leones and Inflation with a rapid response.



Edmond J. Abu (Jr)

Executive Director

Native Consortium & Research Center

Tel: 076-617240 / 099-921815