Letter to editor

Is it time to do away with the Leone?

11 April 2010 at 00:06 | 730 views

By Jonathan Rose, USA.

Getting rid of the Leone will not solve the multitude of Sierra Leone’s problems. In my opinion, the currency we use for domestic transactions is irrelevant because it is only for the exchange of goods between the relevant parties. The problem arises when we have to trade outside our borders, and then the value of the currency becomes relative. I don’t believe the wage system we inherited is a problem in itself but, it becomes a problem in the broader context of goods and services bought outside our borders for domestic consumption. You will agree with me that one of ways to keep a lid on real wages is through a competitive marketplace. That is non-existent in Sierra Leone, as you can tell, and the sellers/producers of goods and services sell their products for the highest price the market can bear. I don’t believe there is any correlation between wages and the real cost of living, which creates a host of other problems, especially for the middle class.

In order for competition to be free and fair, we must have a certain level of trust between the public and private sectors regarding the rule of law, property rights, the sanctity of contracts, and, ethics and morality. (It is really amazing how all our problems in the country seem to revolve around law and order). If someone is selling a bag of rice for LE60,000 and I know I can probably sell that same bag of rice for LE30,000, I should not be frustrated in my efforts to secure the necessary permits to start trading rice because someone else has the necessary connections to the powers that be. This is one way to keep a lid on rising prices and raise the standard of living of everyone. The problem with this concept, though, is that almost all the people that have the capital to invest in such a venture don’t base their selling prices on their total costs but, the prevailing market price, so, the average Sierra Leonean feels the brunt of the pain.

As we think about capital inflows into the country, we definitely have to give serious thought to the wage structure because the average Sierra Leonean is impoverished and the owners of capital will, more than likely, come from outside the borders, whether Sierra Leonean or otherwise. That being the case, the economic divide will continue to grow without any attempt to correct the wage structure. I agree with you whole-heartedly that the failure of successive governments to understand the ultra-critical roles that currency value and wage levels play in a sustainable economy is one of the major reasons for the problems we are facing today. Throw in the rule of law, or lack thereof, and we have a complete picture.

Source: Sierra Leone Discussion Forum.