West Africa has pulled the trigger. Leaders of the Economic Community of West African States (ECOWAS) have adopted the name ‘ECO’ for a planned single currency to be used in the region. Over the weekend, the 15 member group made the announcement at the conclusion of the ECOWAS Summit held in Abuja, the capital of Nigeria.
In August 2018, academician Tahiru Azaaviele Liedong wrote an op-ed for CNN’s Commentary section highlighting the challenges to having a single currency for West African countries, even though a decision had been made to do so at the ECOWAS Summit back in 1999.
The Assistant Professor of Strategy at Baths said the challenges included meeting the conditions set forth by the group. Those conditions included having single digit inflation of 5 percent or less; members had to to achieve budget deficit to GDP ratios of 4 percent or lower; and Liedong challenged the necessity of a single currency when 80 percent of West Africa’s trade occurs overseas.
Despite the challenges, member countries established a deadline of 2020 to implement the single currency in order to boost investor confidence, promote trade within the sub-region, promote independence amongst central banks and solve non-convertibility of some currencies. It appears their plans are coming to fruition with the plan to collaborate with the West African Monetary Agency (WAMA), the West Africa Monetary Institute (WAMI) and central banks to speed up the implementation of a new road map for the proposed single trade currency.
According to CNN’s Aisha Salaudeen, member countries that could be swapping their currencies for the ECO include Nigeria, Liberia, and Ghana. Eight ECOWAS countries (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo) currently jointly use the CFA franc. It will be interesting to see if they will make the ECO their sole currency as well.
Read more at CNN.