West African Leaders Reaffirm Will to Create Single Currency by 2020
A group of West African leaders, ministers, and public officials gathered last week for the Fifth Meeting of the Presidential Task Force on the ECOWAS Single Currency Programme, reaffirming their political will to create a regional single currency, the Eco, by 2020.
The meeting, which took place on 21 February in Accra, Ghana, was chaired by Ghana’s President Nana Addo Dankwa Akufo-Addo. It was also attended by other West African heads of state, namely Niger’s President Issoufou Mahamadou, Côte d’Ivoire’s President Alassane Ouattara, and Togo’s President Faure Essozimna Gnassingbe, as well as by central bank governors from Nigeria and Guinea.
“We remain determined to have a single currency which will help remove trade and monetary barriers, reduce transaction cost, boost economic activity and raise the living standard of our people. It is a goal, we must achieve,” said Akufo-Addo in his address to the meeting.
The task force also adopted a revised roadmap for accelerating the creation of the ECOWAS single currency by 2020, and urged all the stakeholders involved to implement it. It also reaffirmed the commitment of member states towards the implementation of all relevant ECOWAS legal instruments.
The single currency is to be introduced through a “gradual approach,” meaning that member states who fulfil the required convergence criteria “can start the monetary union while the other countries can join later,” reads the task force’s communique.
To accelerate the process of macroeconomic convergence that will be necessary for establishing the single currency, the ECOWAS Commission has set four primary convergence criteria and six secondary convergence criteria. The four primary criteria are: (1) a single-digit inflation rate at the end of each year, (2) a fiscal deficit of no more than 4 percent of GDP, (3) a central bank deficit financing ceiling of 10 percent of the previous year’s tax revenues, and (3) gross external reserves that can give import cover for a minimum of three months.
So far, however, fulfilment of these four primary convergence criteria by member states has proven elusive, leading some observers wondering if they should be revised. The task force communique encouraged West African countries to “continue the efforts toward meeting the convergence criteria and strengthening the multilateral surveillance mechanism.”
Speaking at the meeting, Niger’s President Mahamadou Issoufou, who is also co-chairing the Presidential Task Force, insisted on the pivotal role that a single currency could play in supporting the aspiration of ECOWAS’ members states to strengthen regional economic ties and build a more integrated, stronger economic community.
“Our single currency will thereby give us the opportunity to build a strong economic space, capable of competing with other economic spaces under construction around the world,” emphasised Issoufou.
“Our quest for a single currency is not intended to boost trading of goods produced in third-party countries. It is meant to encourage the production of goods and services within the region,” added Akufo-Addo.
Despite the apparent unity reflected in the task force’s communique, however, media reports have indicated that Ghana and Nigeria have different, although not diametrically opposed, positions on the single currency.
While the former is pushing for the introduction of the single currency, the latter has shown a more cautious stance on this issue. Godwin Emefiele, who represented Nigeria’s President Muhammadu Buhari at the task force meeting, reportedly warned against rushing towards the introduction of the Eco, underlining the importance of properly analysing the state of preparedness of member states.
Some observers have also expressed doubts about the feasibility of introducing the single currency by 2020, emphasising that much work remains to be done to ensure that a solid foundation is in place.
The next meeting of the Presidential Task Force will take place in May 2018 in Niamey, Niger.
ICTSD reporting; “Niger’s President commends ECA’s quality contribution in ECOWAS march towards single currency,” UNECA, 22 February 2018.