I have always admired Central Bank Governor, Professor Kelfala Kallon for his candour. It would however seem I incurred his ire when I wrote in this column that he had played with three lions at a resort. He clarified the issue in an interview on Radio Democracy, saying that I had fallen prey to a forged picture showing he was playing with the lions at a resort when in actual fact the incident was in “the poorest part of one of the poorest states in the US” whilst he was on vacation. Whether Jonah swallowed the whale or the whale swallowed Jonah, the fact remains that some swallowing was done! Anyhow, a thousand apologies, Sir!
His interview, which waded through his 5-year tenure as Bank Governor left me with the distinct impression that rather than think he was a brave man who played with lions, the beleaguered governor may actually be a lamb led to the slaughter in his day job.
Let us get back to the interview. The Governor touted his successes. He had some initial successes and managed to stabilize the exchange rate during his first 18 months in office and prices were fairly stable. During his tenure there had been no Bank failures, even where countries like USA had several. Financial inclusion had improved and he had ensured Banks did not discriminate against women. He had got the Collateral Registry Act passed. People maintained confidence in the Banking system and there were no attacks on Banking institutions-quite unlike Nigeria. He ran a tight ship at the BSL, honouring checks only when funds were available.
But alas, according to the Governor, COVID and the Ukraine war set in. The world had never faced the accompanying financial crisis of such a magnitude since the great depression and Sierra Leone’s economy as an integral part of the global economy was badly affected. As Bank Governor he considered the national interest paramount. Whereas the IMF was pushing for price stability, he was pushing for state stability in our fragile state. Even during these trying times, we have experienced no “kata kata”, he continued. Fuel, rice and essential good were available and there were special credit facilities for oil companies.
So much for his triumphs. The Governor was refreshingly honest about his challenges. He said that insincerity, corruption and inefficiency were at the heart of our problems. “Everyone cuts corners. You can have the best policies but under the prevailing atmosphere it is difficult to implement these policies”, he said. The law that unlicensed operators should not deal in foreign exchange was being flouted right under his nose on Siaka Stevens street with the Police standing by. The law prohibiting house owners from charging rent in dollars was openly flouted. He related the story of handing over someone who was caught smuggling $40,000 into the country through the Gbalamuya border. This case went from the FIU, then to the CID and finally to the Law Officers’ Department, which released him on the grounds that when he arrived at the border at night it was closed! He confessed that many ostensibly honourable people often came to him with indecent proposals. According to him, this is a country in which parents cheat for their children.
All was not lost however and there were still come honest people in this country. He related the story of how a Policeman who had found his wallet containing $800 tendered it at the Eastern Police station.
He had strong views about Sierra Leone not earning enough from the mining sector. Sierra Leone had exported $2.5 billion worth of minerals between 2018 and 2022 but only earned 3% of this which amounted to $75 million (not quite correct as it is the Effective Tax Rate that matters, which includes not only royalties but corporate tax, PAYE and other taxes).
Then the inquisition started by the alert Radio Democracy interviewers. Why had he talked about bribing business people $6m? This, according to him was a gross misunderstanding that had even earned him the dishonour of being a guest of the ACC for six hours. According to the learned Professor, “bribe” in economics is a euphemism for “economic inducement”. The professor gave a brief lecture on the Principal-Agent problem which outlines the conflict in priorities between a person or group and the representative authorized to act on their behalf-an agent may act in a way that is contrary to the best interests of the principal. He insinuated that in Sierra Leone, the Principal may lay down policies but it is the agents with insider knowledge in the various institutions who know where “all the dead bodies are buried”.
The interviewers were particularly punchy in their questions on his redenomination of the national currency but he mounted a robust defense of his decision. He had reckoned that since the currency had too many zeroes, people would be more careful in spending money that had a greater value. Redenomination, according to him does not change the value of the exchange rate. People expected wrongly that redenomination would solve all our problems. But why had he extended the period of latest period for usage of the old currency? He was forced to do this. People had complained to our external partners that the short period was a ploy to stop them using money for political campaigns. When they had the parallel run, people came to the banks with numerous bags of monies. The Bank had misjudged how much money was out there. Also the US central Bank raised interest rates making people save in dollars.
It is however his interpretation of Sorie Kondeh’s story that left me in stitches. Remember the story about Sorie Kondeh, the musician who was presumed dead and was featured on one of the new coins, but was later found to be very much alive? Well, Radio Democracy could not help but ask the Governor again about this. He said he did not even know Sorie Kondeh but he had been reliably informed he was a famous Sierra Leonean musician who had passed away. He only realized there was snafu when other living musicians he met at a function also wanted their faces on a coin like Sorie Kondeh. “But why did you do it for Sorie when he is alive”, they asked. It was then it dawned on him that Sorie’s death had been grossly exaggerated! The interviewer continued-“But will you use the coin or will you wait till he is truly dead? The Governor for once was lost for words.
The questions were fast and furious. How do you describe the economy? Will you continue with your policies if you are reappointed? Do you in fact want to be reappointed? Do you still talk regularly with the President? He was unruffled. “We need to be productive in this country. The Sierra Leone economy is one of distribution, exchange and consumption”. Yes, he does speak to the President often. He values his staff at BSL immensely because they are the ones that do the hard work. He had not made up his mind on what he wanted to do but should he continue, he would like to engage the AU on matters like the issue of unfair contracts entered into by African countries.
When Professor Kallon was appointed, his lofty ideas and initial successes were soon tempered by worldwide crises whose strong winds he could not control. This has not however been helped by the other locally manufactured problems he has outlined. It seems obvious that understanding the informality of this economy is a herculean task that has broken the back of many a governor, including the learned Professor. Meanwhile, our economy still seems to be on life support.
I can’t end if I do not maul over a few issues. Will the Governor be given another term? If not, who will replace him? Do we expect the economy to continue being epileptic, considering the uncertainties related to the Ukraine war and the global economic squeeze or do we have locally engendered solutions to the dire economic straits in which people find themselves? When do we start using the “Sorie Kondeh” coin-before or after he goes to meet his maker? How much longer can we continue using the old Leones? No doubt these will feature in future “ponderings.
The Governor came, he saw, but found it difficult to conquer.
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