Why a Revaluation - Not a Redenomination - is What Sierra Leone Needs to Strengthen the Leone and Reduce Poverty
By Mohamed A. Jalloh (USA)
As many of you have undoubtedly noticed, recently the government of Sierra Leone admirably announced its intention to act to correct a problem with Sierra Leone’s currency.
It was an admirable announcement because it represented the first indication that the government is seriously considering taking long overdue action that could alleviate the needless impoverishment of millions of Sierra Leoneans by their own government which started 42 years ago.
I am referring, of course, to Pres. Siaka Stevens’ ill-advised devaluation of the Leone at the behest of the IMF and the World Bank. That action has now culminated in the impoverishment of every Sierra Leonean by a factor of 1.2 million percent compared to their parents and grandparents prior to 1979.
Tellingly, both institutions have since publicly admitted that they made a “mistake“ in instigating the devaluation of African countries’ currencies which they made the cornerstone of their belatedly self-admitted failed Structural Adjustment Programs (SAPs) in African countries in the 1980s. See,
https://www.google.com/amp/s/www.modernghana.com/amp/news/14077/world-bank-admits-mistakes-in-sap-implementation.html?client=safari
With the World Bank’s belated admission in 2001 of their “mistake,” the duo essentially confirmed what I had clearly told them publicly 22 years earlier on April 11, 1979. In a published article in We Yone - then the leading newspaper in Sierra Leone - I warned Sierra Leone’s Pres. Siaka Stevens that it would be a colossal mistake for his government to accede to the demand by the IMF and the World Bank for Sierra Leone to devalue its strong Leone. Cf. http://www.thepatrioticvanguard.com/how-to-immediately-alleviate-poverty-in-sl
As all of you long-standing valued members of our serious Sierra Leone Discussions forum know from your membership of its parent forum, SALONEDiscussion at Yahoo groups, the solution we have long advocated to address the impoverishment of the people of Sierra Leone is the revaluation of the Leone. That involves essentially restoring the value of the Leone to its value before it was inappropriately devalued in 1979 at the behest of the IMF and the World Bank.
Unfortunately, when the Sierra Leone government started detailing its plans for changing the Leone, it soon became clear that the government was focused on the wrong problem with the Leone.
Specifically, the Governor of the Bank of SL, Dr. Kelfala Kallon, strangely described the government’s intended national economic policy as “removing 3 zeros” from the current Leone notes - resulting in new Leone notes.
Trained economists would recognize that as a redenomination of the Leone - a far cry from the revaluation of the Leone that is the key to reversing the needless impoverishment of millions of Sierra Leoneans directly attributable to the 1979 devaluation and its aftermath.
Accordingly, in a bid to help the government of Sierra Leone avoid committing another mistake to compound its 1979 mistake that I had similarly warned against, I have been posting helpful essays showing what the solution to the problem caused by the 1979 devaluation is: revaluation - not redenomination.
As I have shown in those posts, revaluation will reduce the cost of living by increasing the value of the Leone and thereby reduce the cost of imported goods which is the main driver of exponentially escalating inflation. In stark contrast, redenomination will have no effect on the exchange rate of the Leone.
In short, to put it in terms the Governor of the Bank of Sierra Leone would hopefully readily understand, with regard to alleviating poverty in Sierra Leone:
REMOVING 3 ZEROS” WOULD LEAD TO ZERO!
In Part 2 of this series, I will further demonstrate that truism in another analysis of Ghana’s July 2007 revaluation of its currency. Notably, Ghana’s revaluation was similar to the revaluation of the Leone that Sierra Leone’s Pres. Kabbah failed to implement when our SALONEDiscussion Think Tank suggested it to the Sierra Leone government in January 2007.
It was also similar to the plan to revalue the Leone that our SALONEDiscussion Think Tank delivered to Kabbah’s successor, Pres. Ernest Koroma in November, 2007. See, “An Analysis of the DFID/EC Strategy for Sierra Leone” in The Patriotic Vanguard. http://www.thepatrioticvanguard.com/an-analysis-of-the-dfid-ec-strategy-for-sierra-leone
Like Pres. Kabbah, Pres. Koroma failed to implement the plan. Sadly for the people of Sierra Leone whose interest and welfare both had sworn to promote, both Pres. Kabbah and Pres. Koroma unconscionably refused to revalue the Leone in the same year that the president of Ghana successfully implemented the revaluation of the Ghanaian currency. See, “A Plan to Alleviate Poverty in Sierra Leone” in The Patriotic Vanguard. http://thepatrioticvanguard.com/a-plan-to-alleviate-poverty-in-sierra-leone
Today, the people of Ghana are far better off. Predictably, in contrast, the people of SL are far worse off.
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