_{Written by Al-Amin Turay, currently a Science student at the University of Sierra Leone}

Sierra Leone seems to have gained ignominy recognition for massive depreciation of the Leone despite its pre-eminent assets; namely, natural resources. Since independence in 1961, the country underwent currency evolutions from coins to banknotes – Pounds and Leones, respectively.

The Leone was introduced on the 4th August 1964, replacing the British West African Pound at a rate of 1 Pound being equivalent to 2 Leones. That is to say 1 Leone at the time equaled 10 shillings. 1 Leone was worth precisely half a pound sterling, equivalent to 1.40 US dollars. In simpler terms, it was worth more than the U.S dollars until the 1980s when the currency experienced rapid devaluation. Years later, the U.S dollar skyrocketed at the expense of the Leone. The U.S dollar became worth thousands of Leones in the early 2000s.

Due to high inflation (13.4% in 2020) the Bank of Sierra Leone in August 2021 announced that Sierra Leone would drop three zeroes from its currencies as well as reintroduce coins. The removal of the three zeros is termed REDENOMINATION, a frequently used term mostly in the country’s capital, Freetown.

At this point I want to briefly say something controversial about the redenomination. Redenomination is a simplification of the normal value of a currency by reducing digits (zero numbers) without actually improving its value. It does make no sense! When inflation is high, redenomination could potentially increase selling prices and this could well continue to happen with the new Leone introduced last week in the country. Based on research, currency redenomination by itself does not improve economic growth conditions.

On the other hand, redenomination can be an effective monetary tool where hyperinflation is involved, making it necessary to facilitate commerce. Unless there’s redenomination, simple things like toothpaste and soap can cost billions in whatever currency plagued by hyperinflationary pressures. Sometimes, old currencies continue to circulate at a fixed value against new notes. While all these information may serve as substantial justification to redenominate, to me, they are just fascinatingly complex to explain all economic situations.

I feel Sierra Leone has noteworthy pressing issues to address and least of them is redenomination. This explains the many fuss among Members of Parliament some of who voted against redenominating the Leone.

Citizens are challenged by daily financial hardships, job losses, stagnant economy and rampant corruption. At least, targeting and tackling some of these perennial problems would have been much better than paying huge sums of our foreign exchange to print new notes. This begs the question: Redenomination! Is it really necessary at this time?