By Stephen Ubanna
For much of last year and now, there have been rumours making the rounds that the Authority of Heads of State and Government of the Sixteen member countries of the Economic of West African States, ECOWAS, are making moves to adopt a Single common Currency for the sub-region.
They are the Head of States and Government of Nigeria, Benin, Togo, Ghana, Siera-leone, Cote’d Ivoire, Burkina Faso, Gambia, Liberia, Mali,Guinea, Guinea Bissau,Niger, Senegal , Cape Verde and Chad. The rumour became pronounced when the governors of the Central Banks of the countries in the sub -region met on Monday, June 10, 2019, in Nigeria. The fallout of the meeting was the setting up of a Working Group on the ECOWAS Single Currency . Claude Kassi BROU, the President of the Commission , who could not hide his feelings at the meeting said expectations are high for the adoption of a Single Currency in the region , advising the CBN governors in the sub-region to double their efforts to put in place all the ”key pillars that are required for the establishment of the monetary union.
Prior to the ECOWAS Central Bank Governors, meeting, a group of the ECOWAS Leaders, ministers and two Central Bank governors: Godwin Emefiele of Nigeria and his counterpart in Guinea had met on February 21, 2019, in Accra, Ghana., under the Chairmanship of President Nana Addo Dankwa Akufo-Addo. The meeting was said to have been attended by Presidents Issoufou Mahamadou of Niger, Alasane Quattara of Cote d’Ivoire, Faure Gnasingbe, Togo.
The Parliament of the ECOWAS, which had become involved in the region’s Single Currency creation project had convened a meeting in Dakar, Senegal, March 7, 2019, on the ”Challenges and outlook regarding the creation of the region’s Single Currency- mobilising Parliamentarians for the actualisation of the project” .
The believe in Ghana and other ECOWAS countries was that the Single currency project will help ”remove trade and monetary barriers, reduce transaction cost, boost economic activity and raise the living standard of people in the sub-region”.
Issoudfou, the Niger President is optimistic that the Single Currency project will go a long way to strenghten regional economic ties and build a more integrated , stronger economic community. noted that it would be a strong economic space , capable of competing with other spaces under construction around the world. He disclosed that it is not adopted to boost trading of goods produced in China, India or goods produced in other third party countries.
Akufo-Addo, the President of Ghana, may have hit the nail on the head when he said” it is meant to encourage the production of goods and services within the region”.
Note that as a prelude to the adoption of a Single Currency , the sub-regional body had earlier established a Customs Union , which Zainab Ahmed , a former minister of Finance had said will not only” facilitate free trade and industrialisation but move the region towards shared prosperity for people”.
Given the different reports that had been submitted to the sub-regional body Authority of Heads of State and Government including that of the Trade Liberalisation Task Force, under the Chairmanship of Mahamdou, the Niger President, on Saturday, June 29, 2019, finally ECO as the name of the Single Currency to be issued in January 2020.
The ECOWAS leaders had commended the ministerial Committee on the Single Currency project for the considerable progress recorded in the implementation of the revised roadmap. Perhaps, to facilitate the issuance of the ECO in the Sub-region the Leaders were said to have instructed the Commission to work closely with the West African monetary Agency, and the Central Bank governors of the respective member countries to expedite action on the implementation of the revised roadmap with regard to the symbol of the Single Currency.
They were said to have directed the ECOWAS Commission and the Central Bank governors in the region to accelerate the operation of the Special fund for financing programmes in the revised roadmap for the Single Currency project. It was said to have further directed the Commission to ensure the implementation of the recommendations of the meetings of the ministerial Committee that was held on June 17 and 18, 2019, as well as the preparation and implementation of the Communication Strategy for the Single Currency project. Note that that the revised road map had stipulated that the Single Currency would be issued in January 2020.
T but the ECOWAS leaders who had adopted the revised ministerial roadmap for the Single currency project had adopted the ministerial Committee recommendation that it would be introduced through a gradual approach, an indication that only member states who fulfill the required convergence criteria set would be allowed to start the monetary union while the other countries which are not ready can join later.
The four primary convergence criteria that was said must be fulfilled by member countries to participate in the monetary union include achievinng a single digit inflation rate annually, a fiscal deficit of not more than 4 percent of the country’s GDP, a Central Bank deficit financing ceiling of 10 percent of the previous year’s tax revenues and gross internal reserves that give import cover for a minimum of three months.
The fulfillment of these four criteria by member countries of the ECOWAS, according to sources, ”appear to be elusive” fueling speculations that the January, 2020, set for the issuing of the ECO Single currency may not be realised. Emefiele, the governor of Central Bank of Nigeria, CBN, may have known this that he was said to have warned at the recent Accra meeting against” rushing towards the introduction of the project” underlining the importance of properly analysing the state of preparedness of the member states.
Already,Economic experts have expressed doubt about the feasibility of introducing the Single currency in 2020, stating that much work still needed to be done to ensure a” solid foundation”.
According to them Austria, Belgium, Finland, Italy, France, Germany, Greece, Ireland, Luxembourg, the Netherlands, Portugal and Spain, the 12 European countries, in a monetary union, did all the necessary ground work before introduction of the Euro as their official currency in 1989. The countries had aimed to achieve greater integration and the unification of Europe as a common market with the EURO Single currency.
It was also aimed at