West African countries to launch common currency

[eurocoin]

Nana Addo joins West African leaders for new currency by 2020

Ghana will soon be changing its currency as it joins the rest of West Africa to fast track moves to achieve a common currency by 2020.

This was after leaders of the Presidential Task Force on common currency for the West African Monetary Zone (WAMZ) converged on the capital of Niger with the agenda of quickening the process of achieving this goal.

The outcome of this crucial meeting resulted in a communique which "instructed the Ministerial committee to meet within three months to propose a new road map to accelerate the creation of the single currency by 2020.

In this framework, a gradual approach can be undertaken, where a few countries, which are ready, can start the monetary union, whilst the other countries join later."

The fight for a single currency has lingered on since 2013 but a special summit appointed presidents of Ghana and Niger to handle the coming on board of this single currency in West Africa.

West Africa is adopting a single currency in the next 3 years as part of moves to achieve a strong and singular trade facilitation regime. It also forms part of efforts to present the whole of West Africa as an economic regional force in Africa and the rest of the world.

[eurocoin]

ECOWAS single currency impossible without Nigeria, says UNECA boss

The United Nations Economic Commission for Africa (ECA) has said that the economic performance of Nigeria remains crucial in realising the dream of a single currency in the West African region.

Mr. Dimitri Sanga, Director of the Sub-Regional Office for West Africa of the United Nations Economic Commission for Africa (SRO/WA-ECA) made this disclosure on the sidelines of the meeting to establish a network of economic journalists for West Africa, in Dakar, Senegal.

Sanga noted that Nigeria constitutes about 75% of the GDP of the West African sub region, with a population of 180 million, and would play a significant role in facilitating the process of achieving a single currency for the sub-region.

According to him, "people are saying why don't we move directly to the currency of the most powerful country in the zone.  Because as you know the currency is determined by the forces between the exports and imports that you have.

He then noted that "when you look at the economy of Nigeria, Nigeria represents more than 75 per cent of the GDP of West Africa. That means that whatever the situation, if we come up with the common currency, the macroeconomic stability of Nigeria is key to the common currency goal of the ECOWAS."

He said that the ECA as the "Think Tank" of Africa has been tasked to find out what it would take to accelerate the Economic Community of West African Countries (ECOWAS) single currency dream. He said the report will be released soon.

"Our study will advise Head of States of ECOWAS on how to go about this. Our study is saying these bottlenecks can be addressed depending on the political willingness of the Heads of States.

"Some of the bottlenecks right now have to do with the fact that the CFA zones, are very comfortable with the single currency trading among themselves, pegged to the Euro making it easy to trade with Europe."

Sanga said that right now the region had agreed that some basic macroeconomic criteria would have to be met before the countries make the big leaps towards collapsing their economies.

"In our studies, we went as far as looking at what Europe went through and how they came out with the Euro together. Actually they did not start by respecting all convergence criteria before coming up with the common currency."

The UNECA Director also advised African countries to learn from Nigeria and rebase their GDPs so they could have a clearer picture of the sectors contributing to the growth of their economies.

The Eco (the proposed common currency) he said, is planned to be introduced in the framework of the ECOWAS. For the Eco to be implemented, 10 convergence criteria set out by the West African Monetary Institute must be met. 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 per cent of the GDP.

"The goal is to merge the new currency with the West African CFA franc, used by the French-speaking members of ECOWAS since 1945 at a later date. This will create a common currency for much of West Africa," Sanga stressed.

[Figleaf]

As the article points out, the model is the CFA franc. The CFA franc works because there is French pressure, knowledge and money behind it, not to mention a link to the euro. It's hard to see that extended to former British colonies.

A country that accedes to a monetary union must be prepared to agree to and maintain government budget standards. That discipline is difficult enough to maintain in the EU. Every populist, every dictator and every economic idiot will hate those restrictions and there is no experience with voluntary common decision making outside the EU. Enough reason by itself to know in advance that extension of the CFA franc area will not work.

Peter

[Big_M]

They are clearly making progress. In October/November 2018 WAMA/AMAO ran a competition on the name and logo for ECOWAS single currency:

http://amao-wama.org/events/terms-of-reference-of-the-competition-on-the-ecowas-single-currency-name-and-logo/

http://amao-wama.org/wp-content/uploads/2018/10/Terms-of-References-English.pdf

Both links saved in Wayback Machine.

[eurocoin]

The countries that are part of the Economic Community of West African States (ECOWAS) are planning to establish a single currency in 2020. Its members are Benin, Burkina Faso, Cape Verde, Ivory Coast, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo. Although at first Eco was considered as the name of the currency later a competition was launched, the results of which have yet to be announced.

Some of the countries, namely: Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal and Togo currently use the West African CFA Franc. 

[eurocoin]

Although at first Eco was considered as the name of the currency later a competition was launched, the results of which have yet to be announced.

The leaders of the countries of the ECOWAS have now officially chosen Eco as the name of the new currency.

[Bimat]

West African countries choose new 'ECO' single trade currency

By Aisha Salaudeen , CNN

Updated 1436 GMT (2236 HKT) July 1, 2019

Lagos, Nigeria (CNN):

As part of its plans to make Africa a more integrated continent, leaders of the Economic Community of West African States (ECOWAS) have adopted the name 'ECO' for a planned single currency to be used in the region.

The 15 member group announced at the end of an ECOWAS summit in Abuja, Nigeria's capital on Saturday.

Six member countries, including Nigeria, Liberia, and Ghana, could be swapping their currencies for a new one - the ECO.

Eight ECOWAS countries (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo) currently jointly use the CFA franc.

Originally intended to be launched in 2000, the ECO has been postponed multiple times, and the newest target date is 2020.

According to an internal document seen by CNN, ECOWAS will be working with the West African Monetary Agency (WAMA), the West Africa Monetary Institute (WAMI) and central banks to speed up the implementation of a new road map for the proposed single trade currency.

ECO is supposed to boost economic development in the West African region and improve cross border trade.

If implemented, countries across the region will be able to move and spend money across different countries without worrying about exchange rate costs says economic analyst, Tokunbo Afikuyomi.

"The single currency if properly implemented will improve trade by allowing specific countries to specialize at what they are good at, and exchange it for other goods that other countries in the bloc produce more efficiently," he told CNN.

The single currency will also help to address the region's monetary problems like the difficulty in converting some of its currencies and the lack of independence of central banks.

But despite these possible benefits, analysts remain worried about the lack of integration policies among member countries in the region.

According to Afikuyomi, a single currency will only work if all the countries involved are economically aligned, which is not the current case.

"The Guinean economy, for example, has a GDP of around $7 billion, that's less than Nigeria's 13th largest state, Abia with $8.7 billion. This difference in economies already makes a sensible uniform policy like the trade currency very difficult," he said.

The African Development Bank Group (Afdb) in a report says the 2020 deadline for the single currency will most like be postponed again unless the region can align with its monetary and fiscal policies.

Source: CNN

[Pabitra]

West African countries choose new 'ECO' single trade currency

The 15 member group announced at the end of an ECOWAS summit in Abuja, Nigeria's capital on Saturday.

Six member countries, including Nigeria, Liberia, and Ghana, could be swapping their currencies for a new one - the ECO.

Eight ECOWAS countries (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo) currently jointly use the CFA franc.

Source: CNN

Eight plus six makes 14 for me and not 15.😃

[chrisild]

The ECOWAS countries that do not use the CFA franc are Cape Verde, Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone. That's seven, and if according to CNN only six of them plan to introduce the Eco, one does apparently not. Since the article specifically mentions Nigeria, Liberia and Ghana as possibly first Eco countries, "the one" would be Cape Verde, Gambia, Guinea or Sierra Leone.

Christian

[Pabitra]

Some recent progress on common currency


West African nations to withdraw cash reserves from French central bank - Daily

[eurocoin]

Togo has met the convergence criteria. It is the first country to do so.

[Pabitra]

The francophone countries, using West African CFA have agreed to June 2020 as the target date despite "Eco" name not yet accepted.

West Africa: Is the Time Right for a Single Currency in West Africa? -

[eurocoin]

despite "Eco" name not yet accepted.

On 29 June 2019 the representatives of the 15 members have adopted the name ECO during a summit of the ECOWAS in Abuja, Nigeria. See also under 12 on page 3 of this ECOWAS document.

[Pabitra]

As per this report dated January 18,  2020, the English speaking nations are yet to agree to the name.


West African states mired in controversy over ′Eco′ currency | Africa | DW |

The reason for the same is not disclosed.

[eurocoin]

You are interpreting the article incorrectly. It is about 2 separate currencies that risk getting the same name. The situation is as follows:

On 29 June 2019, the ECOWAS members decided that their future common currency for West Africa will be called the Eco. Some of the ECOWAS countries currently use the CFA Franc.

On 22 December 2019, during a NATO Summit in London, there was announced by Emmanuel Macron that the CFA Franc would change. This as the African countries that currently use it link it to colonialism. Although the currency will still be pegged to the euro, the countries using the CFA Franc will no longer be required to lodge half of their reserves in the French treasury. Furthermore France will quit the currency's managerial institutions. Lastly they are planning to rename the CFA Franc the Eco.

The latter is strange and could be confusing as these same countries that currently use the CFA Franc as well as other West African countries are currently working in the ECOWAS on the introduction of a common currency in West Africa with that same name. It is therefore no more than normal that the ECOWAS is unhappy that the CFA Franc countries are now planning to change the name of the CFA Franc to Eco while they earlier agreed that that would be the name of the common currency for West Africa.

The ECOWAS is now putting pressure on the CFA Franc countries to change the name of the CFA Franc to something else.