Sierra Leone’s exchange rate has been sky rocketing with no end in sight. One day, $100 U.S. dollars will equal Le 365,000. The next, it has jumped to Le 370,000. And it only seems to be increasing (now about Le3,900).
Good news for people exchanging dollars into Leones; bad news for the state of the Leones on an international level.
Businesspeople in Freetown have been feeling the pain that the exchange rate has had on them.
Azad Watfa is the proprietor of Chicken Land, a business that imports chickens, mainly from South America. His grandfather started the business when he came to Sierra Leone from Lebanon in 1819 and now he is the third generation to run the business.
Watfa estimates that he is losing 25 percent of his business due to the exchange rate, as the strength of the dollar dwindles and demand for the Leone falls.
“(Importing companies) can’t take Leones,” he said. “It’s been a very big problem for us.”
Government officials say they have no control over the exchange rate and that it is a matter of supply and demand.
“It is basic economics. Sierra Leone cannot control it,” said Beresford Taylor, public relations officer of the Central Bank of Sierra Leone.
As demand for a certain commodity goes up, prices will increase and vice versa, he said.
Samura Kamara, minister of finance and economic development, also agreed that not much could be done to directly manage the exchange rate, but he acknowledged that the erratic fluctuation has been a problem for Sierra Leone.
He said that focus should be put on the exchange of imports such as rice and petroleum in order to stabilize the exchange rate.
Experts say that the root of the problem lies in the recession that is happening in the United States. The States’ subprime mortgage crisis – in which banks issued home mortgages to unqualified buyers who eventually could not afford them in the long run – has heavily affected the rest of the world such as Sierra Leone, particularly in the form of remittances – money sent overseas.
John C. Konteh, a license practical nurse living in Seattle, Washington in the United States, regularly sends money back to five relatives in Sierra Leone on a regular basis.
“Sometimes I send $500 a month, and sometimes I send a thousand dollars a month. Sometimes, I send $200 a week. It all depends on the situation and what people ask for,” he said.
Much of his money goes toward basic needs, such as transportation and living expenses. Some of his money is also being used toward constructing a new house and is also put aside for emergencies such as visits to the doctor, if need be.
However, the state of the world’s economy has limited what his family members can buy. Prices in Sierra Leone have raised and the strength of the U.S. dollar has not caught up with it.
“So the amount we send back home does not buy much anymore, which puts more pressure on us to send more money,” Konteh said.
The impact of less powerful remittances has also been felt outside of the capital city of Freetown in the rural provinces.
In Kabala, the capital city of the Koinadugu district about 185 miles northeast of Freetown, is a rural and largely undeveloped area that depends heavily on agriculture.
Kabala has only one bank, a branch of the Union Trust Bank of Sierra Leone. Along with the basic bank services such as lending and opening accounts, the bank also has a Western Union money transfer station which is constantly busy.
Abdul Meyenkeh, the accounts clerk for Union Trust Bank, estimated that 70 percent of Kabala’s economy relies on remittances from the United States, Canada and Australia. He said that receiving that money accounts for a majority of the bank’s business.
“Because of this economic recession, the dollar is not stagnant, especially in (Sierra Leone). The value of money is constantly devalued, so the dollar fluctuates” he said.
He said that the fluctuation has been difficult for Kabala. Many residents of the farming community are poor and work long hours in the fields, making about Le 5,000 a day, or roughly $1.50 in U.S. dollars. The city has massive agricultural potential, with its fertile land and suitable climate, but commercial export has been nearly impossible due to the undeveloped roads that make Kabala difficult to access.
And even when transport outside of Kabala is successful, the profit usually isn’t.
“All profit is consumed by transport,” Meyenkeh said.
The accounts clerk that there is too much dependence on remittances, but the extreme poverty of the city has not helped to improve that situation. He admitted that he also has relatives sending him money as well.
“(But) I think I’m OK,” he said.
Back in the States, Konteh admits he gets frustrated about sending money to relative in Sierra Leone.
“But it’s an obligation that we have to our country and our family members because we have the opportunity that they do not,” he said. “But sometimes, we get really frustrated because people in Sierra Leone don’t know how hard it is for us to make the money in America.”
Hamidu Mansaray, another Sierra Leonean-American from Seattle, echoed that sentiment.
“(Relatives in Sierra Leone) think money just grows on trees in America when it does not. This gets frustrating, but we understand because they have never been to America and don’t know how hard it is to get money,” he said.
By Judy Vue in Washington DC