African countries, particularly ECOWAS states are bound to experience a new era of wealth and advancement if the common currency for the West African Monetary Zone; Eco, is finally materialized, President Akufo-Addo has said.
According to him, the currency programme which is in line with the vision of Economic Community of West African States (ECOWAS) to transform the sub-region into an economic and monetary union will afford West African enterprises an opportunity to compete effectively in the global space and promote a better economic outlook for the entire region.
Speaking at the 5th ECOWAS Presidential Task-force meeting on the attainment of a single currency by 2020, President Akufo-Addo indicated the program has huge prospects of removing trade and monetary barriers among other things and improving significantly the economies of West African states.
“We have a historic opportunity to create a new reality for the peoples of ECOWAS. A reality of general prosperity and progress. Let us cease this opportunity…. We remain determined to have a single currency which will help remove trade and monetary barriers, reduce transaction cost, boost economic activity and raise the living standards of our people. It is a goal we must achieve,” the President said.
He added that, “The structural transformation of our economies can no longer be postponed. If we are to meet the aspirations of our young people for jobs. The era of Africa’s industrialization has dawned so that we can also trade in the world economy not on the basis of exports of raw materials but on the basis of what we make.
Our quest for a single currency is not intended to boost trading of goods in third party countries. It is meant to encourage the production of goods and services within the region. It’s thus incumbent on us to strengthen the production base of our economies and to improve agricultural productivity and industrial production.”
President Nana Akufo-Addo also emphasized the importance of national security to enhancing trade and transforming one’s economy and the need, therefore, for all governments of member states to strive to attain regional peace and security in their various countries.
“Trade cannot thrive in an environment of insecurity. Our efforts must also be directed towards maintaining regional peace and security, democracy and good governance as well as strengthening the ties of cooperation that exists amongst us,” he stressed.
The 5th ECOWAS Presidential Task-force meeting came off Wednesday at the Accra International Conference Center. Nigerian President Muhammadu Buhari, Ivorian leader Alhassane Ouattara, President of Niger, Issoufou Mahamadou, and Togo President, Faure Gnassingbé joined President Akufo-Addo for the meeting.
Governors of Central Banks and foreign Ministers from the ECOWAS among other dignitaries were also present at the event.
Background
Eco is the proposed name for the common currency that the West African Monetary Zone (WAMZ) plans to introduce in the framework of Economic Community of West African States (ECOWAS).
ECOWAS was founded with the aim the transforming the sub-region into an economic and monetary union.
After its introduction, 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
For the Eco to be implemented, ten convergence criteria, set out by the West African Monetary Institute (WAMI), must be met.
The four primary criteria to be achieved by each member country are:
1. A single-digit inflation rate at the end of each year
2. A fiscal deficit of no more than 4% of the GDP
3. A central bank deficit-financing of no more than 10% of the previous year’s tax revenues
4. Gross external reserves that can give import cover for a minimum of three months.
The six secondary criteria to be achieved by each member country are:[3]
1. Prohibition of new domestic default payments and liquidation of existing ones.
2. Tax revenue should be equal to or greater than 20 percent of the GDP.
3. Wage bill to tax revenue equal to or less than 35 percent.
4. Public investment to tax revenue equal to or greater than 20 percent.
5. A stable real exchange rate.
6. A positive real interest rate.
The last ECOWAS single Currency Programme was held in Niamey, Niger in October 2017.
