By Gbenga Adedayo
Plans for member countries of Economic Community of West African States (ECOWAS) to have a single currency, Eco, in the near future have hit brick wall, following sharp division on its timing and appropriateness for the region.
At the end of the 57th Summit of the Head of States and Government in Niamey, Niger, the regional bloc’s leaders admitted the decision to launch the Eco may have been rushed.
For now, the Ecowas which comprises of 15 states, said it will take a gradual step towards launching one currency. Incoming chair of the bloc, Nigerian President Muhammadu Buhari had argued at the start of the Summit that the French-speaking countries in the bloc had made unilateral adoption of Eco, leaving out the rest.
A communique issued on September 8, said the postponement was done in order to consolidate the achievements and chart a new roadmap for the single currency programme.
“Member states are to be exempted from compliance with the convergence criteria in 2020, while also developing a new macroeconomic convergence and stability pact among the Ecowas member states.”
President Buhari had cautioned that the for the regional currency could be in serious jeopardy unless member states complied with agreed processes. He also expressed concern over the decision of francophone countries that form the West African Economic and Monetary Union to replace the CFA Franc with Eco ahead of the rest of member states.
“The premature adoption of the Eco by French speaking countries has unnecessarily heightened disaffection and mistrust among members of the emerging monetary union.”
President Buhari encouraged “UEMOA (French acronym for the West African Economic and Monetary Union)’’ to return to the roadmap on the common currency in the sub-region.”
The CFA Franc has been used by French-speaking countries since their independence years from France. But it was based on policy criticised as neo-colonial as they were required to deposit their national reserves with the French Central Bank.
Last year, the countries pushed for an end to that policy and launched local currency. English-speaking members, who have had their own currency, feel there have been insufficient controls to guide convertibility of their currencies to the new one.
President Buhari said stakeholders should “bear in mind that those economic convergence criteria must be based on sound and sustainable macroeconomic fundamentals.”
The gradual steps are now expected to address exchange rate mechanism; Stabilisation Fund to cushion the changeover; policy harmonisation to control reserves and exit strategy for those who had been using a different currency.
-theeastafrican