On the Issue of 800 Billion Leones Missing
I listened to the bank governor Prof Keifala Kallon talk about the the issue of 800 billion leones missing from the bank and how the government is spending millions of dollars to print new notes. Here’s my take and suggestions to address the problem.
We as a country are still heavily reliant on physical cash for transactions mainly because there are no reliable digital systems for cashless transactions.
For example, the UBA mobile app can only send money to other UBA accounts. You cannot send to other banks (I have tried it and it did not work) and same with the SLCB mobile app. It would be good to seamlessly transfer money from one bank to another even if you need to pay a small transaction fee. Also, the mobile banking apps are not reliable in that the services are not always available when needed.
The USSD mobile banking (eg using *9737# for GTB) is a good approach especially for hard-to-reach communities where there are no good/reliable internet. It’s limitation at the moment are that you cannot transfer money from one bank to another and that the services are also not always available.
The mobile money companies (i.e., OrangeMoney and AfriMoney) are collecting high charges for every transaction made (about 3% fees to transfer SLE 15) and the mobile money itself is not always available in most of their cash points. At the end of every month, there’s always chaos at the mobile money cash points. Most often they say “money nor dae for sen” and one would have to “bribe” them to send from their phones.
This is where I think the government should step in to incentivize/support and upgrade the already existing systems to a desired state.
The government can address this issues by helping the the banks to develop reliable and interoperable digital systems for cashless transactions. Create the enabling environment for banks to interoperate, which would allow the banks to incorporate features to easily transfer from one bank to another. The government can also help or require the mobile money companies to introduce a low monthly services charge instead of the existing fees per transaction. This would allow people to pay for goods and services without being worried about the transaction fees.
With such digital systems in place, people would not need physical cash for most of their transactions. Ones we have reliable digital systems for cashless transactions, there won’t be issue about the government spending millions of dollars to print money. Instead, they can use some of that money for maintenance of these systems.