The business industry in Sierra Leone is locked in a quagmire of being stifled from responding to the forces of production, as the Bank of Sierra Leone’s directives on over the counter cash withdrawals within the banking system in the country has adversely affected operations of the business sector.
Since 8 July and on 15 July this year, the Bank of Sierra Leone (BSL) has imposed the condition of withdrawing cash not exceeding NLe30,000 or Le30,000,000 for individuals and NLe100,000 or Le100,000,000 for corporate entities from the commercial banks.
This condition, Forum has learnt, has created serious hue and cry from particularly the business community in the country as both individuals and corporate economic players in the business or commercial sector are feeling the pinch of the directives or policy established by the Bank of Sierra Leone.
Many private sector members, both individuals and corporate, have raised concerns about the new policy, saying it is adversely deterring the smooth operations of their businesses. According to reports, some private sector members did engage the BSL authorities severally to get the BSL to drop the plan of imposing such over the counter cash withdrawal directives.
“These directives by the Bank of Sierra Leone are seriously affecting us,” one merchant, says. “I am a sole proprietor who has a lot of business operations; so limiting the cash I withdraw from the bank to Thirty Thousand Leones (Le30, 000,000) or Hundred Thousand Leones (Le100, 000,000) is deterring. I would not be able to make much transactions in my business dealings or even make payments for the goods that I take from other business partners.”
A petty trader, Alie Suma, says he finds it heartrending that the BSL should impose such a condition on over the counter cash withdrawals as that would impede business transactions and cash flow in the country. “I am seriously affected by this directive from the Bank of Sierra Leone. This situation is preventing me from getting enough money from the bank to buy business and make payments for good and services rendered to my business,” Mr Suma says, adding: “This is killing business operations in the country.”
It is worth mentioning that the BSL has come up with some of these monetary policies or directives it calls ‘cash management policy’, to forestall the hoarding of the new Leones. This was due to the observation that the NLe800 million or Le800 billion (old Leones) the Bank dispensed some four weeks ago had somehow disappeared in circulation or thin air. Hence to put a stop to it, the Bank Governor decided to come up with such directives that are now considered adverse and counterproductive to business growth and development in the country.
After the directives issued on 8 July this year, which state that commercial banks and other deposit-taking financial institutions’ limits for over-the-counter withdrawals for individuals and corporate entities should not exceed NLe30,000, and NLe100,000 respectively, the Bank issued another set of directives on 15 July specifically directed at corporate entities.
The July 15 directives state:
TO: ALL LICENSED COMMERCIAL BANKS AND OTHER DEPOSIT TAKING FINANCIAL INSTITUTIONS
FURTHER to the Public Notice dated 8th July 2022 issued by the Bank of Sierra Leone on the aforementioned subject, the Bank of Sierra Leone hereby states as follows:
- Over the counter limits for corporate entities shall not apply to government Ministries, Departments, and Agencies (MDAs).
- Over the counter limits for corporate entities shall not apply to diplomatic missions and international organisations with diplomatic status.
- Where a deposit taking microfinance institution, foreign exchange bureau or other corporate entity is desirous of withdrawing an amount in excess of Le100,000,000.00 (One Hundred Million Leones) / NLe100,000.00 (One Hundred Thousand Leones), it shall write a cheque for the amount so required and submit same to its relevant commercial bank or other deposit taking financial institution.
- The relevant commercial bank or other deposit taking financial institution referred to in (3) above shall endorse the said cheque where there are sufficient funds in the relevant account from which amount is to be withdrawn in relation to (3) above, and submit said cheque to the Bank of Sierra Leone for encashment.
- Where any deposit taking microfinance institution, foreign exchange bureau or other corporate entity that has withdrawn any amount(s) pursuant to (3) and (4) above, is desirous of making a subsequent withdrawal in excess of Le100,000,000.00 (One Hundred Million Leones) / NLe100,000.00 (One Hundred Thousand Leones) it shall first submit evidence to the Bank of Sierra Leone of use or expenditure of the previous amount withdrawn in the circumstances referred to in (3) and (4) above.
While this could have been done in good faith and to promote decent cash flow of the new Leone and economic development, it is however counterproductive since it is now adversely affecting the private sector and business community in the country.
It must be noted that economics is concerned with the efficient utilization or management of limited productive resources for the purpose of attaining the maximum satisfaction of human material wants. However, what Sierra Leone is experiencing under the watch of the current Bank Governor, Prof. Kelfala Kallon, is the opposite.
The present directives that have been imposed by the Bank Governor are efforts deemed to achieve greater distribution of cash flow and finances but with the current adverse effects to the business community, the directives may weaken interests and incentives to invest, innovate, and take business risks, to promote rapid economic growth in the country.
