CATCHING UP WITH WEST AFRICA’S PROPOSED NEW CURRENCYBy Toby Tunwase
It is the duty of a regional body to seek every means possible to unite its member states. This duty is what ECOWAS aims to achieve by proposing a prearranged single currency for West Africa nations with the name, ‘ECO.’ The announcement of this adoption came after a summit held in Abuja, the capital city of Nigeria where this 15 member group met.
As it stands, eight West African countries under ECOWAS use the CFA Franc. These countries are Mali, Ivory Coast, Guinea-Bissau, Burkina Faso, Benin, Togo, Senegal, and Niger. Other countries like Ghana, Nigeria, and Liberia could be substituting their currencies for the ECO.
The new currency was to come into place in 2000. But, for multiple reasons, this launch never happened. The new target date is 2020, and we will wait to see what happens in the coming months.
The introduction of the ECO is expected to improve the economic growth of West African countries and the region in general, mostly through cross-border commerce. This implementation will usher in easy movement of money and trading activities through these different countries without any problem arising from exchange rates or conversion.
To accomplish this plan, an internal document shows that the ECOWAS will work with the central banks of member states, the West Africa Monetary Institute (WAMI), and the West African Monetary Agency (WAMA). This could speed up the implementation.
On the flip side, there are concerns that the absence of integration policies and aligned economies among member states will pose a threat. The difference in economies is the major difficulty in the line of implementing this new currency.
As it stands, and with the year drawing to a close, the African Development Bank believes that the 2020 deadline will not hold unless the region aligns its fiscal and monetary policies.