CURRENCY and banking analysts have slammed the Economic Community of West African States (ECOWAS) for its frequent postponement of the deadline for the adoption of a single currency.
The new deadline for ECOWAS for the adoption of a common currency is 2020.
The Head of ECOWAS national unit of Ghana, Bonaventure Adjavor, disclosed this in Nigeria during a meeting of the commission on strategic planning framework for 2016-2020.
But some analysts say this is close to impossible to achieve.
ECOWAS has on six occasions postponed the deadline because member states have not been able to meet the set criteria.
First it was 2000, then 2005, 2010, 2014, 2015 and now 2020.
For the single currency to be achieved there are basically four primary convergence criteria, along with six secondary ones, that need to be achieved.
The primary criteria are a single digit inflation rate at the end of each year; a fiscal deficit of no more than 4 per cent of the GDP, central bank deficit financing of not more than 10 per cent of the previous year’s tax revenues, and having gross external reserves that can give a country import cover for a minimum of three months.
Until the recent economic turbulence, Ghana for example was on course having achieved a single digit inflation for a period.
Analysts argue that the dream of having a common currency may just be a mirage.
Banking analyst with Osei Tutu II Centre for Executive Education and Research, Nana Otuo Acheampong tells Citi Business News the 2020 deadline cannot be met.
“There is little that one can make of it than just to say that it is a pie in the sky. In my recommendation, it may be difficult to meet the criteria that we set.”
According to Nana Otuo Acheampong “the four primary criteria, none of the countries involved has met any of them. Then we have got the six secondary criteria which is going to be more difficult to meet. So unless there are some revolutionary of economic policies, it is going to be difficult.”
He said if history is anything to go by, the deadline may be postponed again.“It was 2000, postponed to 2005, then 2010, to 2014, 2015 and now to 2020. Where is the political will to be able to move things in such as a way that we meet the criteria?”
Meanwhile currency analyst and Head of Research at Group Ndoum, Samuel Ampah says ECOWAS is being over ambitious with its plan. According to him, member states should work at a number of fundamental issues before.
“There are so many things that we need to build up before we start thinking about the eco. One is infrastructure. If you look at the ECOWAS countries that are trying to get the single currency, infrastructure is a big problem.”
According to him, “Two is the issue to do with manpower, we really have to build our manpower systems very well. Three, we need to make sure that we don’t have political interferences. The issue that happened to Burkina Faso is a clear indication that if we should go with the eco, we might have a problem.”
Samuel Ampah also said trade among member states must be enhanced before ECOWAS gets the common currency.
“Talking about trade, we should look at removing all the trade barriers. We have a lot of trade barriers in Africa, and that is not going to help us.”
“I believe these are the key things we should look at before we will look at getting a single currency. In the European community, they were able to work at all these, before they were able to get the Euro”, he concluded.
Citi News/African Eye News.com
