Monetary Dependence in Africa: the Case of Sierra Leone

Abstract

The exchange rates of several African countries have historically been specified as units of certain ‘master currencies’ of former imperial powers, notably the pound sterling and the French and Belgian francs. The fact that these countries might notionally be said to have belonged to ‘common currency areas’, the Sterling Area and the French and Belgian franc zones, has variously been commended and criticised. To some observers, the break-up of such monetary groupings, following the establishment of national currencies by some African governments shortly after independence, was a retrograde step. This process had offered no alternative basis for rationalising regional monetary and economic co-operation. Others have emphasised the limitations under such arrangements as regards national freedom of initiative in managing exchange rates – even though they would accept that some restrictions may not be inconsistent with the logic of common currency arrangements.