Can Single Currency for the West African Sub-region be Achieved?

ECOWAS leaders

Accra, Ghana, February 21, 2018//- In spite of several years of preparations and debates, conferences and consultations, West African countries are still far from actualizing the dream of a single currency, popularly known as the Eco, for the sub-region.
Indeed, economic indicators within the sub-region show that it will take several more years from now before cash dispensers in the member countries of the monetary union start to roll out crunchy Eco bank notes instead of national currencies.
At today’s 5th meeting of the Presidential Taskforce on the single currency in Accra,  further recommended the start of the single currency, Eco in 2020.

This follows the realization that the earlier dates are not feasible.
The latest recommendation was made at the end of the meeting, which was hosted by President Nana Addo Dankwa Akufo-Addo to fast track the process of a single currency for West African Monetary Zone (WAMZ).

Also, the meeting was attended by the President of Cote d’Ivoire, Allassane Ouattara; President of Niger, Issoufou Mafiamadou, President of Togo, Faure Gnassingbé, President of Nigeria, Muhammadu Buhari and   Governor of the Central Bank of Nigeria Godwin Emefiele  among others.
It came out at the end of the meeting that the some member states had failed to achieve adequate and necessary degree of macro economic convergence and structural and institutional benchmarks under the Banjul Action Plan (BAP).

The good dream expressed by our politicians and other visionaries has taken long time to materialize even realizing it is becoming extremely cumbersome. This is partly due to the over thousand twists and turns along the way.

The WAMZ which includes Nigeria, Ghana, Guinea, Sierra Leone, The Gambia and Liberia laid down stringent parameters as a basis for the single currency to be introduced.

ECOWAS’ Francophone nations opted out of WAMZ and instead chose to stick with the CFA Franc, whose value is pegged to the Euro and guaranteed by the French Treasury.

WAMZ members, however, failed to meet the criteria of having a single digit inflation rate and a fiscal deficit of no more than four percent annually. As a result, the currency launch had to be postponed on several occasions. 

The four basic convergence criteria are, single digit inflation, fiscal deficit/gross domestic product ratio of less than four percent, central bank financing of deficit of less than 10% and a gross external reserve that could finance not less than three months of imports, have really created a major challenge for many countries.
The six West African countries were expected to replace their national currencies with the common currency in January 2003 but many factors combined to make the launch date unfeasible, so it was shifted to December 2009 and further recommended to change to January 2015 and later shifted to 2020.

However, President AkufoAddo said: “We remain determined to have a single currency which will help remove trade and monetary barriers, reduce transaction cost, boost economic activity and raise the living standard of our people. It is a goal, we must achieve”.

To this end, he called for a prompt removal of all hurdles that would impede the smooth introduction of the single currency.

“In this regard, I urge ECOWAS member states to renew their commitment in the ratification and implementation of the relevant ECOWAS protocol, such as the protocol of the free movement of persons, goods and services, the ECOWAS trade liberalization scheme, and the Common External Tariff,” Mr Akufo–Addo said at the meeting.

Ghana which is West Africa’s second largest economy now sees its future in the Eco. “The 350 million market is important to us for our industrialization drive,” the  Minister of Finance, Ken Ofori-Atta said.

“I think if Ghana positions itself well, we’ll be a great beneficiary. The economic activity in the ECOWAS region is improving and most of the large economies are experiencing economic rebound,” he added.

The single currency when implemented would go along to improve trade and facilitate economic activities in the sub-region.
The ECOWAS leaders at the Accra meeting dispelled the claims that entire programme was a waste of resources and time, arguing that it will be more beneficial to the member counties to adopt a single currency so that their citizens would not need to change into other currencies each time that they travelled to other parts of the sub-region.

By Masahudu Ankiilu Kunateh, African Eye Report
mk68008@gmail.com

 

 

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