ECOWAS is taking a bold step, however, in the wake of Brexit, are we ready for a common currency?
Regional currencies and indeed economic integration has become skeptics' wild card after Brexit. Many analysts believe that if the European Union (EU) could wake up to nationalistic moves, the issues relating to Greece and slower economies and migration challenges, Africa's regional integration may just be a Utopia. However, The Economic Community of West African States, (ECOWAS) is reportedly taking a bold step - a regional currency.
The long-awaited common currency will come on board by next year other things being equal. Any uncertainties regarding its actualization is largely due to the conduct of elections in Nigeria. However, the denomination may remain the Eco, as preparations are in top gear to kick-start its design, including logo and other African cultural imprints, to have a sub- regional currency in the class of the Euro.
Findings at the ECOWAS headquarters in Abuja indicate that every detail for the smooth take-off was being strengthened by the sub-regional body’s Macroeconomic Policy and Economic Research Department.
Under the current arrangement, all monetary authorities in West Africa are to be unified by an economic convergence plan. A top ECOWAS official, who craved anonymity, said: "Since the establishment of the Presidential Task Force, comprising four Heads of State, namely presidents of Niger (chair); Ghana, Côte d’Ivoire and Nigeria, significant (improvements) have been made.
“The action includes adoption of a new roadmap and establishment of a special fund to finance the roadmap – (viz) the validation of the terms of reference for the ECOWAS single currency’s name and logo – and launch of the competition. Also, significant progress has also been made on the model and the name of the central bank as well as a common monetary policy framework and exchange rate regime.”
The Commissioner in charge of Macroeconomic Policy and Economic Research Department, Dr. Kofi Apraku, had last December raised concern over the inability of member-states to meet their budget obligations as they relate to deficits.At a review meeting, he had observed: “ Achieving the budget deficit criterion on a sustainable basis has continued to pose a significant challenge for many member-states due to low revenue mobilisation and high expenditure outlays. Furthermore, agencies need to accelerate the implementation of policy harmonisation measures and institutional arrangements outlined in the roadmap.”
Apraku added:” In particular, the harmonisation of monetary and exchange rate policy frameworks continue to pose a daunting challenge. The challenge notwithstanding, I am delighted at the excellent collaboration existing between the ECOWAS Commission, central banks and regional institutions involved in the implementation of the single currency programme.”
The advantages of a regional currency is enormous, yet do the West African sub-region possess the infrastructure to drive the policy? We need certain kind of technology, especially the modern day Information and Communication Technology to drive such a policy as well and it doesn't seem that is on ground now.
Considering the level of insecurity, especially the activities militant groups and extremist groups such as the Islamic State of West Africa (ISWAS), with links to ISIS, there's the need to be strategic and perhaps, bid more time to put necessary structures in place.
Having a single currency may not necessarily stop individual countries from having their own national currencies, but in the long run, they can decide to have only one currency.
Header Image Credit: thoughtco.com
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