ECOWAS : Fear Of Introduction Of ECO Single Currency For Transactions Loom

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” .

Godwin Emefiele: CBN Governor, Warns Against Rushing Towards The ECO 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 facilitating  easier transactions  between  people of the different countries by having  fewer  conversion rates between so many different currencies  which is basically what  the ECOWAS  Single currency intends to achieve if properly managed.

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