We’ll soon decide on ECOWAS single currency — FG
The Federal Government on Monday said it was studying the decision of eight West African countries to change the name of their common currency to Eco.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said this in a statement issued by her media adviser, Tanko Abdullahi.
Eco is the name of the currency that is being adopted by ECOWAS countries under its single currency regime for the West African subregion.
The adoption of the currency by member countries of ECOWAS is expected to commence in 2020 when they meet the convergence criteria for the monetary union.
The decision of the eight countries that decided to change their currency’s name to Eco is targeted at severing the CFA franc’s link with former colonial ruler France.
The countries are Benin Republic, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo.
All of these African countries are former French colonies with the exception of Guinea-Bissau.
The Ivory Coast President, Alassane Ouattara, announced the decision during a visit by French President Emmanuel Macron to Ivory Coast.
But reacting to the development, the finance minister said in the terse statement that the Federal Government had been informed of the development and would respond in due course.
The statement read, “Nigeria has received the news of the change of name of the UEMOA (The West African Monetary and Economic Union) currency, the CFA to Eco supposedly as ECOWAS single currency.
“Nigeria is studying the situation and would respond in due course.”
The idea of the single currency for the West African region was first mooted about 30 years ago with the hope of boosting cross-border trade and economic development.
There are three primary and three secondary criteria that a country must achieve to be included in the monetary union.
The three primary criteria are a budget deficit of not more than three per cent; average annual inflation of less than 10 per cent with a long-term goal of not more than five per cent; and gross reserves that could finance at least three months of imports.
The three secondary convergence criteria that have been adopted by ECOWAS are public debt/Gross Domestic Product of not more than 70 per cent; central bank financing of budget deficit should not be more than 10 per cent of previous year’s tax revenue; and nominal exchange rate variation of plus or minus 10 per cent.
So far, only Togo had met all the convergence criteria within the last two years for the monetary union.
Ahmed had during the ECOWAS ministers of finance and the governors of central banks’ meeting in Abuja on December 6 this year said the 2020 proposed date for the commencement of a single currency regime for the West African subregion might not be realised.
She added that many countries within the region had yet to meet the convergence criteria for the monetary union.
The minister said the inability of other countries in the subregion to achieve the criteria would make the operationalisation of the Eco currency in 2020 problematic.
She said there was a need for member states to pursue appropriate policies and structural reforms that would enable them to meet the convergence criteria.
Ahmed said, “We need to address in an optimal way the challenges ahead of us.
“This meeting is important because we are at a crossroads. The recommendations we make will have significant implications on the monetary policies we undertake.”
She said despite the vulnerability in the global economy, the ECOWAS subregion is making progress in its growth trajectory.
Written by Ifeanyi Onuba, Abuja, published on Punch Newspapers