FREETOWN (Reuters) - Alhaji Bangura plies his trade on Siaka Stevens street in the heart of Sierra Leone’s capital, a wad of “leone” banknotes in hand.
He is a “dollar boy,” part of a poorly remunerated army that trades foreign exchange in a country where hard currency is hard to find and labor is cheap.
“Anyone that wants to change, I can change for them, white or black,” explained the 28-year-old.
A ragtag group known for piercing cries of “dollars, pounds, euros!,” the dollar boys form a pillar of the war-scarred West African state’s economy, providing traders and companies, access to currency the central bank cannot supply.
“The reason why the economy has not collapsed and things have not come to a halt is that informal arrangements fill the gap,” said Financial Secretary Edmund Koroma, referring to both the dollar boys as well as to the bilateral deals formed between exporters and importers.
When the global financial crisis struck in 2008, it hit demand for Sierra Leone’s main foreign exchange earner — and ultimate luxury commodity — diamonds.
With forex now scarce, the elaborate “dollar boy” network provides a crucial service for everyone from small-time traders to large-scale importers.
“It’s much better from the street than the bank,” said Mohamed Musa Sesay, who imports shoes, jeans and stationery from neighboring Guinea as well as Gambia and Senegal.
“Sometimes I need up to $20,000. I get it on the street in 10 to 15 minutes,” he said.
Nasri Halloway’s Commodities Trading Company — Sierra Leone’s largest importer of rice and the local agent for agriculture giant Louis Dreyfus — has also turned to the streets when formal forex sources run dry.
“Let it be,” he said. “If you don’t allow them to buy on the street, the banks will have a sole monopoly of foreign exchange. They may try to put the prices up. This network cannot be stopped,” he said.
The dollar boys get their foreign currencies by doggedly approaching likely holders of dollar, pounds and euros on the streets of Freetown, and are able to sell the foreign exchange in bulk by pooling their resources.
Selling money on the street is illegal in Sierra Leone, but it is tolerated amid limitation of the formal system.
Since 2000, the Bank of Sierra Leone has held a weekly auction of foreign exchange where banks are allowed to bid, as are traders who can prove they are importing goods.
“Access is open, subject to you having import documents for the underlying transaction,” Ibrahim Lamin, director of the bank’s financial markets department, told Reuters.
However, the amount of currency on offer — which recently rose to $1 million from $600,000 — still only provides about 10 percent of the economy’s needs.
Despite their importance to Sierra Leone’s economy, the dollar boys’ existence is precarious and individual margins are tiny. The spread between their buy and sell prices can be as small as 10 leones ($0.002).
“Sometimes I will not make nothing,” admitted Idriss Lissa, a 32-year-old who has been changing money on the street for 10 years. “The dollar guys are many, because there is no jobs facility,” he added, in Sierra Leonean English.
For the time being dollar boys are a central part of Freetown’s street life. But their days may be numbered.
Several large mining projects are under development in Sierra Leone, and there is the prospect of offshore oil revenues following a strike in 2009.
Forex inflows are already up by 30 percent, and after its previous precipitous fall the leone has stabilized at around 4,400 per dollar.
“The situation has improved,” said Mubaiwa Mubayiwa, head of wholesale banking for Standard Chartered in Freetown. “But it’s not at the stage where there’s foreign currency in abundance.”
Central banker Ibrahim Lamin predicts that, in time, the dollar boy phenomenon will fade away: “As productivity improves jobs will be created and they will be absorbed.”
Editing by Richard Valdmanis