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Single currency for the West African
sub-region proves elusive
Masahudu Ankiilu Kunateh, Ghanadot
Accra, May 31, Ghanadot - In spite of several years of preparations and debates,
conferences and consultations, West African countries are still
far from actualizing the dream of a single currency, popularly
known as the Eco, for the sub-region.
Indeed, economic indicators within the sub-region show that it
will take several more years from now before cash dispensers in
the member countries of the monetary union start to roll out
crunchy Eco bank notes instead of national currencies.
At the recent Council of Ministers and Governors of Central
Banks of the West African Monetary Zone (WAMZ) further
recommended that the start of the single currency, Eco and
monetary union scheduled for December this year should be
shifted to January 2015.
This follows the realization that the earlier date is not
feasible.
The latest recommendation was made at the end of the 24th
meeting of the Convergence Council of Ministers and Governors of
West Africa in Abuja, Nigeria. Also present were the West Africa
Bankers Association, West Africa Institute for Financial and
Economic Management, West Africa Monetary Agency, West Africa
Economic Monetary Union and Bank Central Des Etats de l'Afrique
de I'Ouest.
It came out at the end of the meeting that the member states had
failed to achieve adequate and necessary degree of macro
economic convergence and structural and institutional benchmarks
under the Banjul Action Plan (BAP).
The good dream expressed by our politicians and other
visionaries has taken long time to materialize even realizing it
is becoming extremely cumbersome. This is partly due to the over
thousand twists and turns along the way.
Latest information emanating from the West Africa Monetary
Institute (WAMI) headquarters in Accra, Ghana’s capital,
discloses that Ghana is the worst performer in the push for
economic convergence before the introduction of the single
currency.
Ghana is trailing the four other countries of the West African
Monetary Zone (WAMZ) in meeting the convergence criteria.
Because of this poor performance, pressure is mounting on the
country to relocate the WAMI headquarters from Ghana to the
Gambia which has met all the four criteria, since 2006.
However, sources within the WAMI say that the headquarters is
going to be remain in Accra forever. This is supported by the
constitution of the WAMI adopted by the West African countries
some time ago.
The four basic convergence criteria are, single digit inflation,
fiscal deficit/gross domestic product ratio of less than four
percent, central bank financing of deficit of less than 10% and
a gross external reserve that could finance not less than three
months of imports, have really created a major challenge for many
countries.
Among the four countries, so far, only The Gambia has met all
the four criteria, since 2006, while Nigeria has met three of
them, missing out on inflation target in December 2008, with
Sierra Leone and Guinea meeting two of the criteria.
Depressingly, Ghana has been adjudged the worst performer,
battling to attain even one of the criteria.
At the meeting to review the Monetary Policy Committee (MPC) of
the Bank of Ghana for the first quarter of this year, the
Governor of the Bank, Dr. Paul Acquah admitted that “it is not
possible to introduce the common currency for the five-member
West African Monetary Zone (WAMZ) this year”, given the economic
performance reported by all the countries so far.
The five West African countries were expected to replace their
national currencies with the common currency in January 2003 but
many factors combined to make the launch date unfeasible, so it
was shifted to December 2009 and further recommended to change
to January 2015.
“Dr Nelson Olalekan Magbegbeola, Principal Programme officer of
ECOWAS Multilateral Surveillance, noted that the single currency
will improve trade and facilitate economic activities in the
sub-region.
He asked WAMI to also collaborate with the ECOWAS Commission in
the implementation of the BAP, especially the trade related
aspects.
He disagreed with claims that "the entire programme was a waste
of resources and time, arguing that it will be more beneficial
to the member counties to adopt a single currency so that their
citizens would not need to change into other currencies each
time that they travelled to other parts of the sub-region.
With regard to the global economic recession, it urged member
states to protect their economies from the ongoing financial
crisis.
"Recent worldwide economic shocks have affected the member
states,” Dr Magbagbeola stated.
He disagreed with claims that "the entire programme was a waste
of resources and time, arguing that it will be more beneficial
to the member counties to adopt a single currency so that their
citizens would not need to change into other currencies each
time that they traveled to other parts of the sub-region.
The Governor of the central bank of Nigeria Charles Soludo said
the only two countries, which had attained the primary criteria
have also come under the global financial pressure and food
crises like other countries in the world.
Ghanadot
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