By Saio Marah and Kemo Cham
A last-ditch effort by opposition lawmakers to halt the planned introduction of new currencies failed on Tuesday, hours before the deadline set by the Bank of Sierra Leone (BSL).
Parliament, in a rather controversial process, voted on Tuesday to kick out a motion by a member from the main opposition All People’s Congress (APC) seeking to delay the redenomination to allow for proper scrutiny of the legal instrument presented by the Central Bank.
The ‘New Leones’ are scheduled to go into circulation on July 1st, in Sierra Leone’s second currency redenomination since independence.
The last time the country redenominated its currency was in 1964, when the Leone was introduced as the new legal tender of the newly independent nation. It replaced the then British West African Pound.
While 58 years ago it was a total change of currency, this time around the BSL is only removing the last three zeros from the four notes currently in circulation – Le1000, Le2000, Le5000 and Le10,000. A new note, Le20, is being introduced as the most valuable bank note.
Another difference is that the Leone is currently depreciating.
Officials have mostly defended the decision to redenominate the leone on the basis of security and portability of the currencies, reasons that have appealed to only some fanatic supporters of the government.
For people like Alusine Karifa Marah, an Orange Money Agent, the major concern is how to deal with customers with limited knowledge of the new currency.
“For some of us with basic education, it will not affect us as much as our sisters and aunts who sell at the ‘Fannah Market’,” says Marah, who also deals in electrical appliances at his store in Wilberforce.
But with his money transfer business, Marah anticipates problems.
“If someone tells you to send him Le5, 000 and it happens that you have such amount in your wallet, you may mistakenly send it and that will translate to five million Leones,” he says.
“Before we get used to it, it will not be easy. We may have to undergo lots of losses,” he adds.
Besides these, experts and opposition politicians say there are more questions unanswered by BSL.
Hon. Mark-Mahmoud Kalokoh, who raised the parliamentary motion, said the Bank didn’t follow the right procedure in the redenomination process and he wanted that rectified.
In his Private Member Motion, he also argued that BSL Governor Kelfala Kallon and his team failed to adequately sensitize the public on the redenomination process.
Kalokoh and his colleague MPs who supports his motion, wanted the BSL to explain the benefits of redenomination to the economy, at a time the country is reeling under a tough economic situation, with the leone rapidly losing its value to the US Dollar.
The opposition lawmaker also notably argued that the statutory instrument presented by BSL for parliamentary approval failed to meet the 21-day maturity threshold. He told fellow MPs on Tuesday that the process should be annulled and the BSL be made to follow the due process.
After a heated debate, Speaker of Parliament Abass Bundu called for a vote on the motion. But the opposition rejected the idea of voting in open ballot, against the desire of the Speaker, but which is in line with the standard operating procedure of the House.
To get the motion passed, the opposition would require two third of the votes, which is about 98 votes. That was unlikely with an open ballot system.
Eventually, 44 MPs voted against the motion, as the APC MPs boycotted the process.
The statutory instrument needed parliamentary approval for the BSL to go ahead with the re-denomination process, starting with the announcement of the date of commencement of circulation. But even before that approval, the Bank had issued a statement, apparently in anticipation that the document will sail through, regardless.
In its statement issued last week, which the opposition saw as pre-emotive, the BSL declared Thursday, June 30th a bank holiday, to allow for time for financial institutions to upgrade their systems for the new currency.
Businesses operating within the financial sector followed suit with public announcements, alerting their clients of impending changes in their operations. While mobile operators announced plans to start charging in the new currency, banks asked customers to apply for new cheque books, among others.
Guaranty Trust Bank, for instance, informed its customers that all its branches and alternative banking services, including internet banking, POS and ATM will be out of service. It urged customers to ensure that they do all their transactions before 30th June.
According to BSL’s directive, the public has three months [July 1st to September 30th] to replace all old currencies.
But opposition MPs say a lot more time is needed to not just prepare the minds of Sierra Leoneans but to provide answers to all unanswered questions.
Kalokoh’s parliamentary motion was seconded by fellow APC MP Hassan Sesay, who is the Whip of the party.
Hon. Sesay recalled during Tuesday’s debate an engagement lawmakers had with Governor Kallon, during which a resolution was issued for further engagement with relevant stakeholders for proper education on the process. Sesay said Governor Kallon failed to respect that directive, insisting that if the redenomination process proceeded, it would have far-reaching implications on especially people in rural communities with limited understanding of the issue.
“What is supposed to be done has not been done,” says Hon. Sesay.
Saa Emerson Lamina, Leader of the opposition C4C party in the House, is one of the MPs who voted against the motion. He defended his decision during the debate, noting that countries like Ghana and Zimbabwe which had re-denominated their currencies, had reaped economic boom in return.
Ghana redenominated its currency, the Cedi, in 2007. The Ghanaian government at the time gave two main reasons for the decision – increasing difficulty in maintaining accounting and statistical records, and problems with accounting and data processing software.
Sierra Leonean researcher Abubakar Jalloh says while the redenomination of the leone makes some sense in terms of security and portability, it misses out on other important questions.
“The Leone has lost the quality of security and portability due to its dramatic depreciation in value over the years. Imagine that you have to withdraw or deposit Le140 million (about $10,000) cash at your bank. Transporting the cash will not only be expensive but also risky,” says Jalloh, who is the Founder and CEO of the Freetown based SANUSI Research and Consulting.
He notes that the Ghana experience holds two lessons for Sierra Leone.
“I think the lesson Sierra Leone should learn from Ghana is that currency redenomination is only beneficial when you print banknotes with a face value that reduces volume.
“The other thing that Sierra Leone should learn from Ghana is that printing a new currency is not the only cost of currency redenomination. After fifteen years, some Ghanaians are still struggling to convert the old currency to the new one, including market women, partly due to low literacy rate.”
