Mr. Sambou:
Okay, your analysis takes the form of market forces. I have no problem with that. But the reality of the issue is that if every seller values his or her sales price in dollars or pounds sterling, the direct conseqence is a lack of confidence in the dalasi. Within a short-run, the dalasi will devalue because there is less demand for it.
We must understand that the functional currency is the dalasi. Have you ever seen any product sold in the U.S. denominated in any currency other than the U.S. Dollar? The prevailing issue is that the Gambian dalasi is the functional currency. If we disregard the Gambian dalasi at the selling point, we are directly inferring our lack of confidence in the currency.
The Ministry of Finance should encourage merchants to denominate their selling prices in dalasi. Though market forces might prevail, our objective is to have confidence in our functional currency, which is the dalasi.
Naphiyo,
M.L. J. Conteh
-----Original Message-----
From: Joe Sambou <[log in to unmask]>
Sent: Feb 5, 2004 2:55 PM
To: [log in to unmask]
Subject: Re: The Gambian Dalasi-LEKBI
Conteh, thanks for your response. I believe you are using the US model of
valuing the components of the sale of a home, such as crime stats., average
value of homes in the neighborhood, etc. That does not apply in Gambia, for
if I had it, I can build a $500,000 house in my old neighborhood with no
problems. That is what is rife in Gambia - A high-rise right next to a reed
house and none is jealous of the other. I still do not see any problem of
Taf recognizing revenue in Dollars or Dalasis for a particular sale. The
government will get its cut in taxes, no matter the currency, so, what's the
problem.
"If you live in Brufut and you are are farmer, my dear question is, can you
afford to buy a house from Taff at such ridiculous price? Taff and others
are part of the devaluation of the dalasi. If we can logically value cost
incurred in building a house, it will reveal how Taff is robbing the Gambian
people."
Conteh, let the market dictate the outcome. I cannot afford a lot of
things, should that be a concern for sellers of the things I can't afford?
I think that's a weak defense for the poor. Have you heard "cut your coat
according to your size"? If a farmer in Brufut can only afford a $5,000
house, then that is what he should build. However, if the farmer is willing
to establish a mortgage agreement with Taf, I think that is the farmer's
problem to solve.
As to your cost accounting/manufacturing analyses, it does not apply to
Gambia. If Taf over price his houses, the market will drive him to sanity
when his homes are over taken by weeds for lack of offers. You saw what Taf
was offering and walked past it without buying, so would I and many others.
However, if someone decides to ignore the going rate and buys a $12,000
house from Taf for $120,000, then the joke is on the buyer. Besides there
are plenty of contractors that Gambians can go to, and Taf is not putting a
gun to their head.
Regarding Taf taking land illegally from the good folks of Brufut, I agree
that was robbery aided by the government and is wrong and they should be
compensated accordingly. Did you think to bring that up with Mafy Jarjy or
S.M. Dibba during your recent trip? :-)! Just kidding.
"Now, Mr. Sambou, at what price should this house be? Did cost of goods
(house) sold equal $60,000? I can bet my life it is probably less than
$10,000. Why should this house be sold at $120,000? Only a fool will buy
this house at such a rediculous price. Taf is robbing Gambians. No wonder
the Dalasi continues to slide."
Yes, indeed only a fool will buy the house at $120,000, but you have to let
the fools make that decision - willing seller and a willing buyer = Market.
Sale price is nothing but a meeting of the minds of the seller and buyer as
long as each receive consideration in the process - give up something to
receive something. Now, how does this devalue the Dalasi? I still cannot
see it. Thanks for your thoughts.
Chi Jaama
Joe Sambou
>From: Jassey Conteh <[log in to unmask]>
>Reply-To: Jassey Conteh <[log in to unmask]>
>To: [log in to unmask]
>Subject: Re: The Gambian Dalasi-LEKBI
>Date: Wed, 4 Feb 2004 10:51:13 -0500
>
>Mr. Sambou:
>
>Taff is selling his houses in US Dollars and not in Gambian Dalasis. The
>realization point is that when a sale takes place, Taff wants to recognize
>revenue in Dollars and not in Gambian Dalasis.
>
>One disturbing thing is that Taff builds houses in areas with average book
>value of no more than $2,000. Please be aware that these houses are built
>around native Gambians with income of less than $1,000 per year. How are
>houses and other tangible properties priced? Are they not valued at the
>aggregate or average market rates of other properties around. Crime,
>income level, and other unities are equated also. One thing that we have
>to understand and realize is that this may in fact bring resentment because
>of disappropriate distribution of wealth.
>
>If you live in Brufut and you are are farmer, my dear question is, can you
>afford to buy a house from Taff at such rediculous price? Taff and others
>are part of the devaluation of the dalasi. If we can logically value cost
>incurred in building a house, it will reveal how Taff is robbing the
>Gambian people.
>
> 1. Raw materials--where were they purchased and what price?
> 2. + Direct labor--cost incurred and paid to Gambian workers in
>Gambian Dalasi
> 3. + Manufacturing overhead allocated--based on either predetermined
>raw material costs or direct labor costs
> = Total manufacturing costs incurred for current period
> + Beginning work-in-process
> = Total manufacturing cost accounted for
> Less ending work-in-process
> = Cost of Goods manufactured
>
>Now, I will transfer these cost to finished goods inventory:
>
> Beginning finished goods inventory
> + Cost of Goods (houses) manufactured
> = Cost of Goods (house) available for sale
> - Finished Goods inventory
> = Cost of Goods (house) Sold
>
> Note that Taff is not paying a dime for the land. This land was
>forcefully taken from poor farmers and Taff
> is running and smiling with greed. Taff is a culprit.
>
>Now, Mr. Sambou, at what price should this house be? Did cost of goods
>(house) sold equal $60,000? I can bet my life it is probably less than
>$10,000. Why should this house be sold at $120,000? Only a fool will buy
>this house at such a rediculous price. Taff is robbing Gambians. No
>wonder the Dalasi continues to slide.
>
>Naphiyo,
>Muhammad Lamine J. Conteh
>
>
>
>-----Original Message-----
>From: Joe Sambou <[log in to unmask]>
>Sent: Feb 3, 2004 7:52 PM
>To: [log in to unmask]
>Subject: Re: The Gambian Dalasi-LEKBI
>
>Mr. Conteh, could it be that the favored currencies of the Pound and Dollar
>are targeted for folks living abroad/tourists? Are you saying that these
>foreign currencies are demanded from local customers? More so, if
>government and a small circle of crooks are gobbling the foreign currencies
>in the country, how would the tourist industry earn foreign currency,
>especially when their services are sold to foreigners/outsiders? Should
>the
>commercial banks get a monopoly of foreign currencies in the country? What
>does that do for the country, that the hotel owner will not doing?
>
>In the case of Taf, let's say I decided to buy one of his houses, coming
>from the US, at $300,000, can't I buy the house by giving Taf that amount
>straight from my pocket, in dollars, or do I have to give that money to the
>bank and then turn around and pay Taf in Dalasis, just for Taf to rub
>shoulders with Government and other insiders to get to the same dollars
>from
>the bank, in order to buy his materials in foreign markets? I highly doubt
>that Taf is looking to locals to sell in Pounds/Dollars, and if that is the
>case, then market forces will wake him up to sanity. As a consumer, I will
>be a fool to buy a house from Taf in dollars at inflated prices. If
>anything, I will be buying that house at a discount for providing him
>foreign currency. I'm talking the language of market forces here. Just
>looking at the same issue from a different perspective.
>
>Chi Jaama
>
>Joe Sambou
>
>
> >From: Jassey Conteh <[log in to unmask]>
> >Reply-To: Jassey Conteh <[log in to unmask]>
> >To: [log in to unmask]
> >Subject: Re: The Gambian Dalasi-LEKBI
> >Date: Tue, 3 Feb 2004 11:23:14 -0800
> >
> >Comrades:
> >
> >The functional currency is the domestic currency relative to
>international
> >financial transactions, particularly when these goods and services are
> >produced and marketed in the domestic market. It is the hope that
>entities
> >in the Gambia are engaged in business to sell their goods and services to
> >their respecitive customers. It also the hope that these entities
> >formulate strategic costs incurred that do not exceed benefits derived
>from
> >their money measure approaches. These entities should record their sale
> >prices denominated in the Gambian Dalasi.
> >
> >It is thus practical and economically sound that entities in the Gambia
> >follow the realization principle of pricing their goods and services
> >denominated in the Gambian Dalasi. One patriotic duty is that it
> >illustrates confidence in the Gambian Dalasi.
> >
> >Analyzation principle, which consists of both financial and nonfinancial
> >data entails, for example, market surveys. These surveys may affirm
> >customer tastes and preferences. If one successfully pinpoints customers
> >tastes and
> >preferences; direct materials or services, direct labor and
> >manufacturing/service overhead allocated are valued as production costs.
> >My question is, did the entities in the Gambia pay their Gambian workers
>in
> >foreign currencies? No! These costs were paid in the Gambian Dalasi,
>even
> >if raw materials were purchased internationally. A case in point is that
>a
> >pro forma statement is prepared by a bank prior to a purchase of foreign
> >goods, and that the purchaser pays invoice prices directly to a Gambian
> >bank. It is categorically true that these entities are not directly
>paying
> >the foreign seller. It is also true that Gambian banks denominanate the
> >Gambian Dalasi as the money measure amount owed to a foreign seller.
> >
> >When total manufacturing or service costs are valued, the notion is that
> >the entity hopes to make a profit. In this regard, realization principle
> >takes form when a sale or purchase is made. Realization principle is
> >defined as the point of sale or purchase, from which a transaction is
>first
> >recorded in the book of original entry called the general journal. Are
> >entities in the Gambia recording their transactions in foreign
>currencies?
> >I hope not! If this is true, then the Dalasi will continue to devalue at
>a
> >significant rate.
> >
> >Even if an entity that is located in the Gambia is a subsidiary of a
>parent
> >headquartered in a foreign country, asset = liabilities + owners' equity
> >should be measured in the Gambian Dalasi; thus affirming that at point of
> >sale these transactions should be recorded at historical value. This
> >affirms the notion that assets recorded at historical
> >values assert that inflation is temporary and that changes in prices are
> >minimal. But if the entity chooses to ignore its funcitional currency,
>its
> >is directly affirming its lack of confidence in its own domestic
>currency.
> >
> >Foreign currency adjustments in the form of comprehensive income will not
> >be necessitated by an entity such as
> >Taff. The principle is further affirmed that the only entity making
> >foreign currency translation adjustments should be the Central Bank of
>the
> >Gambia. A subsidiary entity located in the Gambia plays no active role
>in
> >the determination of asset = liabilities + owners' equity on a
> >consolidated basis. Do we even have such entities? No. Why? Because
> >policies enacted or lack of sound fiscal policies are cultivating
>negative
> >trends in the viability of the Gambian's economic output. This policy
> >should be above politics because it directly affects every Gambian.
> >
> >A note of caution is that since we have numerous merchandises and hotel
> >industries in the Gambia, why should a price at point of sale be
> >denominated in the U.S. Dollar and the British Pound Sterling? Does this
> >signal that these entities have no trust in the Gambian Dalasi? Why
>should
> >one pay Taff Real Estate foreign currencies at realization point of
> >obtaining property? Does Taff have authority directly selling foreign
> >currencies to respective foreign governments? Is Taff Real Estate now
>the
> >Central Bank of the Gambia?
> >
> >Are other Gambian entities also directly selling those foreign currencies
> >with respective foreign governments? I state emphatically that this is
> >totally impossible. Are these entities mediating as the Central Bank of
> >The Gambia? No. If this is in the affirmative, then we have a fiscal
> >crisis in the Gambia. Are these entities deposing their daily
>transactions
> >denominated in the Gambian Dalasi with commercial banks in the Gambia? I
> >concur affirmatively.
> >
> >A case in point is that the Gambia Central Bank is the intermediary of
> >foreign currency sales between affected foreign governments. Is this not
> >of sound fiscal policy that our house be in order. This in my
> >interpretation should be above politics. I practically and sincerely
> >affirm constructive engagement. The APRC government should change course
> >and listen to its critics. We all have stakes in the Gambia, and thus it
> >is prudent that the realization principle not be violated by these
>entities
> >and the Gambian government.
> >
> >Naphiyo,
> >Muhammad Lamine J. Conteh
> >
> >
> >-----Original Message-----
> >From: Abdoul Njie <[log in to unmask]>
> >Sent: Feb 3, 2004 11:52 AM
> >To: [log in to unmask]
> >Subject: Re: The Gambian Dalasi-LEKBI
> >
> >Mr. Jasseh,
> >
> >At your convenience, for those of us who are not savy in the fields of
> >accounting and financing, could you kindly elaborate on the realization
> >principle( Revenue Recogniton Principle) and the effect such practices
> >have
> >on the devaluation of the Gambian Dalasi?
> >
> >
> >Welcome back and hope you had a wonderful time.
> >
> >
> >As always to You- BEST REGARDS,
> >
> >
> >Ablie Njie- Lekbi
> >
> >
> >
> >
> >
> >
> >Best Regards,
> >
> >
> >Ablie Njie0- Lekbi
> >
> >
> >
> >
> >
> > >From: Jassey Conteh <[log in to unmask]>
> > >Reply-To: Jassey Conteh <[log in to unmask]>
> > >To: [log in to unmask]
> > >Subject: The Gambian Dalasi
> > >Date: Tue, 3 Feb 2004 10:12:29 -0500
> > >
> > >Comrades:
> > >
> > >I was just checking around and noticed that hotels, taff's real estate
> >and
> > >other
> > >entities in the Gambia are denominating their respective sales prices
>in
> > >the U.S.
> > >and the British Pound Sterling. This should be stopped by the Ministry
> >of
> > >Finance
> > >because it has contributed to the devaluation of the Gambian Dalais.
> > >
> > >Since these entities are located in the Gambia, both the revenue and
> > >expenditure
> > >measurements state that the domestic currency should be the functional
> > >currency
> > >for the realization principle. I hope the Ministry of Finance takes a
> > >serious look
> > >at the lack of confidence that these entities are contributing to the
> > >economic stability of
> > >the Gambia.
> > >
> > >Naphiyo,
> > >Comrade M. Lamine J. Conteh
> > >
> > >~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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