ECO-Currency not feasible in 2020, says Patrick Lumumba
Leaders of the Economic Community of West African States (ECOWAS) have proposed the birth of common regional currency by 2020, but Kenyan anti-corruption crusader, Patrick Lumumba has said the earliest ECOWAS could have a common currency is in 2030.
Delivering a speech at accountants’ event in Abuja Nigeria on Tuesday, Lumumba faulted the approach of the ECOWAS leaders being championed by Nigeria’s president, Muhammadu Buhari.
Given this approach, Lumumba said the “the earliest to have the eco-currency is in 2030”
Recently, Heads of governments of the Economic Community of West African States, ECOWAS, converged in Niamey, Niger Republic again and discussed the proposal to launch a single currency for the West African sub region.
They proposed that the currency will be born next year, 2020 after missing the deadline for many years and shifting the deadline.
The goal of a common currency for ECOWAS, known as Eco Currency, was officially stated in December 2000 in connection with the formal launch of West African Monetary Zone (WAMZ).
However, challenges to implementation of the proposal have lied on member-countries meeting the criteria for the launch.
The four primary criteria to be achieved by each member country are: a single-digit inflation rate at the end of each year; a fiscal deficit of no more than 4% of the GDP; a central bank deficit-financing of no more than 10% of the previous year’s tax revenues and Gross external reserves that can give import cover for a minimum of three months.
There are other six secondary criteria to be achieved by each member country—prohibition of new domestic default payments and liquidation of existing ones; tax revenue should be equal to or greater than 20 percent of the GDP; wage bill to tax revenue equal to or less than 35 percent; public investment to tax revenue equal to or greater than 20 percent; a stable real exchange rate and a positive real interest rate.
Deficient in meeting the criteria, launch of Eco Currency has been postponed three times: from 2013 to 2014 to 2015 to 2020.
It is in connection to meeting the requirements for the 2020 launch of the currency that the heads of ECOWAS government have billed to meet in Niamey on Friday, to take another shot at.
In 2001, the West African Monetary Institute (WAMI) was set up with headquarters in Accra, Ghana. It is to be an interim organisation in preparation for the future West African Central Bank. Its function and organisation are inspired by the European Monetary Institute. Thus, WAMI is to provide a framework for central banks in the WAMZ to start the integration and begin preliminary preparations for the printing and minting of the physical currency , just as EMI did before in the Eurozone before the introduction of the euro.