Again, ECOWAS Single Currency Flops
The single currency initiative of for member countries of the Economic Community of West African States (ECOWAS), has again fell flat.
Leaders of the 15-nation West African bloc took another shot at the initiative today in Niamey, Niger Republic, ahead year 2020 deadline after it had failed at three other deadlines, but again, the idea flopped.
ECOWAS leadership told regional leaders that the goal of establishing a single currency among their economies in 2020 had failed.
“The roadmap has not been implemented vigorously,” Marcel de Souza, president of the ECOWAS Commission, told a summit in Niamey, the capital of Niger.
“We cannot move to the single currency in 2020,” he said.
Four goals had been set down for introducing a single currency but “there are not the results to match,” de Souza said.
“From 2012 to 2016, none of our countries has been able to persistently uphold the prime criteria in the programme for macro-economic convergence,” he said.
The summit aims at assessing progress towards a single regional currency 30 years after the goal was first sketched.
ECOWAS — the Economic Community of West African States — was set up in 1975.
Today ECOWAS comprises Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo, which together have 300 million inhabitants.
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 ECOWAS 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.
Tuesday’s announcement came after a string of revisions and postponements to the monetary integration plan over the years.
In 2013, ECOWAS tasked Niger and Ghana with “coordinating” the single-currency campaign, and in 2014, a “task force” was set up to provide them with guidance.
But De Souza listed a number of setbacks, including failures to harmonise monetary policies between the eight currencies used by ECOWAS economies, and to set up a “monetary institute” — a forerunner of a common central bank.
Eight ECOWAS countries (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo) jointly use the CFA franc.
They are moored to the single European currency and are gathered in an organisation called the West African Monetary Union, or WAMU.
But the seven other ECOWAS countries have their own currencies, none of them freely convertible amongst themselves.
Presidents Mahamadou Isoufou of Niger, Alassane Ouattara of Ivory Coast, Nana Akufo Ado of Ghana, Muhammadu Buhari of Nigeria and Faure Gnassingbe of Togo took part in the summit.