By Lawrence Williams
Almost two weeks after the redenominated currency came into force, some commercial banks in the country are experiencing cash shortages. The last two days have seen new restrictions imposed on the amount of money individuals are permitted to withdraw from their accounts. Many banks, including the United Bank for Africa, Rokel Commercial Bank, etc., capped over-the-counter withdrawals for individuals at NLe1,000 (1 million leones in the old currency).
It was reported to Fritong Post that some clients who went to the banks to withdraw more than NLe1,000 were utterly disappointed after being told that the maximum amount they could withdraw is NLe1,000. One of the banks mentioned above informed Fritong Post that the withdrawal limit for cash transactions was NLe1,000. The bank said this was due to an insufficient supply of cash from the central bank.
The official spokesman for the Bank of Sierra Leone (BSL), Beresford Taylor, said in a telephone interview yesterday morning that the central bank was unaware of this situation. Taylor denied any knowledge of this ugly development.
“There has been no such notice issued to any commercial bank in the country, and the BSL is unaware of this,” said Taylor. When contacted again in the afternoon, Taylor acknowledged that the central bank was aware of the situation and had authorised steps to address it.
In accordance with Section 65 of the Bank of Sierra Leone Act of 2019, the Bank Governor (photo) issued a directive on 8 July stating that over-the-counter cash withdrawal limits for individuals and corporate entities should not exceed NLe30,000 (30 million leones in old currency) and NLe100,000 (100 million leones in old currency) respectively. According to the Act, this directive was to be complied with until otherwise revoked or suspended by a notice published in the gazette.
In section 5 (a) of the Act, the central bank is responsible for issuing and managing the local currency. This authority is further reinforced in Section 27 of the Act, with a particular emphasis on subsection 5, which states that the bank is responsible for “maintaining an appropriate supply of banknotes and coins” in order to maintain financial stability of the economy.
In Section 65 of the Act, the central bank is required to issue orders, directives or guidelines to bodies, institutions or organizations under its regulatory authority. These institutions are mandated to comply with those orders, directives, or guidelines issued by the central bank. It is also important to note that commercial banks and other financial institutions regulated by BSL are prohibited from imposing restrictions that contravene the central bank’s authority. So it is understandable why BSL claims that the limiting of cash withdrawals to NLe1,000 was not sanctioned by them.
But while this situation is concerning, it raises the question of whether the country has enough of the recently issued bank notes in circulation. Additionally, it imposes a duty on Parliament to summon the Bank Governor to explain to the nation how much of the re-denominated currency was printed, and why we are still undergoing this kind of economic crisis.