The Governor of the Bank of Sierra Leone Sheku Sambadeen Sesay has promised to reposition the Bank of Sierra Leone to meet the challenges in the financial sector as part of global economic and financial system by spearheading efforts to ensure that the financial system is robust enough to withstand any future shocks.
He was speaking at the Governor’s Annual Dinner held at the Bank Complex Kingtom, on Friday night witnessed by the President, Dr.Ernest Bai Koroma and Vice President Chief Sam Sumana, Cabinet Ministers, Bankers, Financial Sector executives, Civil Society representatives and the Media.
The Bank Governor said, “The domestic economic front projected real GDP growth in 2010 was higher at 4.5% compared to 3.2 % in 2009, a reflection of government’s efforts to stimulate economic activities through investment in agriculture, energy and infrastructure.”
“There was also an increased global demand for agricultural commodities and mineral exports which also improved the country’s balance of payments position. Furthermore new mining lease agreements have been signed with foreign companies which would increase returns in this sector in the medium term” he said.
The Bank Governor also stated that during 2010, fiscal policy was geared towards enhancing revenue mobilization to support government’s expanded capital expenditure requirement. Emphasis was therefore placed on improving tax administration by reducing inefficiencies in tax collection and increasing the level of compliance.
“Inflation rate remained in double digits in 2010 with a year -on- year rate of 18.3 % in November 2010 which was attributed to the impact of the GST in January 2010, coupled with the increases in fuel prices as a result of the gradual withdrawal of subsidies and the depreciation of the Leone” he said.
He further stated that the Bank has been providing foreign exchange through the auction system but with our import bill increasingly higher than our export earnings; pressure on the Leone has intensified, and expressed the need for a concerted effort in ensuring that export proceeds are repatriated in to the country to ease the pressure.
The depreciation of the Leone in 2010 the Bank Governor said was only 7.7 % compared to almost 30% in 2009, it is expected that with the promotion of an interbank foreign exchange market, stability of the Leone will be enhanced in 2011.
On the financial sector development in 2010 the number of Commercial Banks was reduced from 14 to 13 with Procredit Bank being taken over by Eco Bank due to an increase in the capital requirements which did not fit in with the Procredit Bank’s business model.
Provisional figures for the banking industry in November 2010 reveal an 18 % increase in total assets in the last 12 months to almost Le2.0 trillion while the industry profits increased by 238 % based on unaudited figures with five of the Commercial Banks recording a loss compared to seven last year.
“Domestic interest rates remained generally stable with the exception of interest rates on government securities which rose due to increased borrowing by Government” the Bank Governor said.
He also expressed concern over the manner in which the nation’s currency is handled and cautioned the public to observe proper handling to increase their circulation life noting that 93% of the old notes have already been withdrawn.
He also spoke about plans to strengthen the supervisory role of the Bank of Sierra Leone to ensure financial stability especially with the multiplicity of Banks adding that the Banking Act is also being reviewed.
Infrastructure of the Bank is being upgraded to state of the art IP based data communication network, preparedness of the Commercial Banks for connectivity to Bank of Sierra Leone in a bid to ensure the efficiency of payment systems is also in the process of being reviewed, and arrangements are also underway for the adoption and printing of cheques in compliance with the West Africa Monetary Zone (WAMZ.)
The Bank Governor stated that the Bank seeks in its operations to go beyond monetary policy to promote poverty reduction, create employment and growth through enhancing access to finance in the rural areas which constitutes a significant proportion of the economy.
On the Global financial development the Bank Governor said the global economy is recovering, though at a slower and unbalanced pace. Additionally stating that the regional financial trends have been reasonably unaffected by the crisis due to the low level of exposures of its economies to international trade and financial flows.
However the Bank Governor said as a result of the recent financial crisis member states could not meet the macroeconomic convergence criteria to establish the Eco as the single currency which are part of the requirements, and a decision was taken by Heads of State and Government to postpone the launch of the single currency and the establishment of a West African Central Bank to not later than January 1, 2015.
The Bank Governor concluded by expressing gratitude to the Government, development partners and stakeholders for their support in achieving their goals.
Distribution of an award to a long serving staff and students benefiting from the Bank’s educational fund project formed a high point of the ceremony.
By Saidu Bah