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.
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.
