Common Currency: Road Block To ECO Project As France Loses Out

By Suleiman Umaru

In spite of the decision by the Authority of the Heads of State and Government of the  member countries of the Economic Community of West African States, ECOWAS,, to establish a common currency , known as ECO, which is  patterned after the  European Union, EU,euro, expected to come into circulation , by 2020,  there appear  to be major  roadblocks to the project.

Zainab Ahmed, minister of Finance, Budget and National Planning, may have  dampened  the plan of many member countries of the economic bloc  to join the ECO project, described as a ‘’historic reform by Emmanuel Macron, President of France when she opened up.

tHe minister  had outlined the key demands for entry   which  include having a yearly  budget deficit of less than  a 3% of the country’s  Gross Domestic Product, GDP, Inflation rate of 10% of the GDP and Debts profile  worth less than 70% of the country’s GDP. This is bad news for the English –speaking of Nigeria, Ghana, Gambia,  Siera-leone  including Liberia.

, It may also affect some of  the french-speaking countries of Benin Republic, BurkinaFaso, Guinea Bissau, Coted’Ivoire, Mali, Niger, Senegal, and Togo, which  had  agreed to adopt the  ECO , as their common  Currency  in  2020. Alasana Quatara, the President of Cotd’Ivoire, a   top Cocoa producing  country  and major supplier to France, had announced the ECO single currency reform to the hearing of Emmanuel Macron, the President of France , during his recent historic visit to the country.

 Not that France,  had used its economic power  to stabilise the French-speaking countries  CFA francs,over the last two decades , by ensuring that all the countries, keep at least, 50 %  of their foreign exchange  reserves in the France treasury  as the  value of the local currency was moored to the euro  at a fixed rate of 655.96CFAfrancs to  one euro.

The  currency  agreement between France and the West African French speaking countries, may have favoured them that they were not thinking  of becoming  economically self- reliant  but to remain tied to France economy.    The agreement  was  said to have guaranteed the countries unlimited convertibility of CFA francs into euros  and facilitates inter-zone transfers.

Emmanuel Macron: France President, jolted by ECO Common Currency

Investigations by the Value News  shows  that   since France entered into the economic relationship  with the countries to keep 50 %  of their reserves with its treasury, it had never collected  intel service charge from them but pays an annual ceiling  interest rate of 0.75% to the member states , which was telling on its economy. 

France may have carried the burden  of the West  African French –speaking countries   for  too long that it  because of the c was looking for an opportunity to shield weight and it came last Saturday at Abidjan, Cote d’Ivore. The country was said to be spending heavily d on the CFAfranc notes and  coins  which are printed and minted in a Bank of France facility at the southern town of Chamalieres.

Aware that there is no going back on the decision of  the   ECO project by the  ECOWAS Authority of Heads of State and Government ,  Jean-Caude Kassi, Brou, Chairman of the Commission  was said to have  enjoined   the member countries  of the economic bloc, after the recent Abuja meeting in Nigeria, to ensure  they meet  the ‘’convergence criteria’’  to qualify to join the ECO.  

 Brou, may have known that at present  any  of the member countries may not qualify for the ECO project as they are yet to  meet the Convergence criteria. There are fears that the French-speaking  country that fails to qualify  to join  the ECO club, may no longer be allowed  by France   to use the CFA francs as a means of transaction and foreign exchange, for taking the bold initiative  to play along with the other member countries of ECOWAS to  use , ECO, as the regional’  common Currency in 2020.

Many believe that the emergence of the ECO  Currency  has finally marked the end of the West African Monetary Union, WAMU formed by the French speaking countries. Given the revolutionary step by the Authority of Heads of State and Government of member countries of the  ECOWAS to  have a common currency by 2020, the International Monetary Fund, IMF, ,  has  thrown its weight on the West African Economic and Monetary  Union, WAEMU, for successfully changing the common currency  of the French speaking countries  to ECO  from CFA francs.

Kristalina Georgieva, the IMF, Managing Director, who could not hide her feelings, was  said  to have reassured WAEMU, that there was nothing to worry as the Organisation is ready to  support the regional currency  ‘’owing to member countries   proven track record in the conduct  of monetary policy and external reserve management’’.

An elated Georgieva, said the currency reform ‘’constitute a key step  in the modernisation  of long-standing  arrangements   between  the WAEMU and France. The IMF  boss  in a Statement disclosed  that in the recent years WAEMU, has recorded  ‘’low inflation rate and high economic growth’’, noting that   the fiscal situation has improved just as the level of foreign exchange reserves  has increased.

She noted  that the ECO, when compared to other regional currencies may be standing on a strong footing  because ’’it contain  key elements  of stability  that had served the region well over the  years including  the fixed exchange rate  with the euro and the guarantee of unlimited convertibility  provided by France.

  Recall  that the name and symbol of the single currency  had delayed e its establishment over the years  because of the fear of the French –speaking countries  that Nigeria may want to use its financial muscle to dominate the regional currency.

  This may  have  been fueled by the advice of some key economic players  in France which had investments in these countries  to watch Nigeria closely as they fear losing out to Nigeria.  

But the ongoing Border Drills initiated by the  Nigerian government  which had resulted in the partial closure of the Borders with the neighbouring countries of Benin Republic, Niger and the Central African country of Cameroon across the country  may have exposed France that it has nothing to offer to  the West African french – speaking countries as it could only  dump   its manufactured goods and agricultural products at their ports which  could no longer be smuggled into the Nigerian market through unapproved routes as scores of ships carrying Contraband goods  are awaiting to be given signal to sail the the Benin port, part particular and discharge.  The warehouses  in Cotonou, the country’s Capital  and its environs are filled up with Thain parboiled rice while the cold rooms are stocked with foreign poultry products

  The Border closure may have  taught Benin and the other French-speaking countries one great lesson,  that they needed to work closely with Nigeria , which has the market to develop their economies, instead of relying  on informal trade as the only means of generating revenue  to run their  governments. It was therefore, not surprising why there was no opposition to the single  currency  issue when it was brought out for discussion at the recent Abuja meeting of the ECOWAS leaders.

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