Sierra Leone’s economy is badly hit as inflation persists in the face of growing depreciation of the domestic legal tender.

The Leone is constantly depreciating in value against the soaring United States Dollar. A wide margin exists between the Leone and the US dollar in terms of exchange rate. For instance, US $ 100 is sold at Le 2,200,000 (as per old leones).

“Now, if you want to buy the US dollar you need to go to black market sellers. I understand the banks are short of more dollars,” Sierra Leone Importers Association’s Secretary General, Mr. Rashid Conteh, said last week while responding to a media interview.

Gripping fears

Although Sierra Leone’s low export base may have given rise to the persistent devaluation of the Leone, the hoarding of US dollars and Leones by few weathy business people in Sierra Leone remains a serious concern.

Like Guinea, few shop owners now control Sierra Leone’s economy as they store home large quantities of the two legal tenders without saving it into the banks.

The likelihood of high interest rates in the Central Bank is keeping these business people and others away to conduct transactions at commercial banking institutions.

This strange phenomenon is sure to present growing weaknesses in lending banks as Bank of Sierra Leone previously attempted to add value to the domestic currency.

Recently, BSL printed new leones adding up to the old fashion leones.

The Bank of Sierra Leone had wrapped up a policy on discouraging informal street trading of foreign currency especially with the US dollars.

Ex-bank governor, Professor Kelfala Muana Kallon, had been chasing after those illegally exchanging the US dollars.

Professor Kallon had announced a number of sanctions and arrests against defaulters who hoard foreign currency particularly the US dollar.

Around December 2021, he also pronounced a stipulated amount on the domestic tender which a customer should withdraw from any of the banks in Sierra Leone.

This among other policies might have sent chilling fears in customers and investors who now hoard the US dollars and instead buy the currency from black marketers.

Despite tougher policies and laws, the bank governor was unable to make headway owing to his wrong approach then which came with stern public criticism.

“We are not informed early about the ban and most of us depend on the trade to get a living” according to some views by business people selling dollars in the capital Freetown.

Currently, there is a worsening situation as banking institutions are gradually running out of US dollars in supply.

While Sierra Leone’s black market thrives with appreciable notes of foreign currencies, most commercial banks are starving.

Relying on explanation around the critical issue, a senior bank worker has hinted this medium saying a storm of uncertainty is about to fall within just three months this year.

He says while the US dollar is few in quantity in the banks there is a likely possibility that it will triple up between May and July.

That is US $100 will be bought at around Le 3,500 or 3,500,000 (as per old leone) by July.

As it stands, the Leone is weakening rapidly after the US dollars, causing hardship and suffering for Sierra Leoneans. People are buying foodstuffs at higher prices. A bag of rice, the country’s staple food, is now sold between Le 500 and 600. And the price is surely going to hit Le 1,000 or 1million as per old leone for the same bag of rice in three months time.

And it seems from the look of things, Sierra Leone is sure to experience persistent hyperinflation, which means the real value of the local currency is lost as prices of all goods increase.

A possible hyperinflation will render businesses to fall and severe hardship is said to toll hard on Sierra Leoneans as prices on basic commodities leapfrog in the not-too-far coming days.