By Nduka Chiejina (Assistant Editor), Abuja
The Federal Government has said it will respond to the recent decision by some Francophone West African countries to adopt the ECO as the sub-region’s common currency.
A statement by the Special Adviser to the Minister of Finance, National Planning and Budget, Mr. Yunusa Tanko Abdullahi, said: “Nigeria had received news of the change of name of the UEMOA currency, the CFA (Communaute Financiere d’Afrique) to ECO, supposedly as the ECOWAS Single Currency. Nigeria is studying the situation and would respond in due course.”
A meeting of finance ministers and Central Bank governors on the single currency in Abuja on December 6 and 7, 2019, noted that delays had been encountered in the implementation of some activities.
These include “statistical harmonisation programme, establishment of the exchange rate mechanism, preparation of the text of the monetary union and the ECOWAS Central Bank; necessity for the establishment of the ECOWAS Monetary Union within the agreed deadlines”.
An official at the meeting told The Nation in confidence that one contentious issue that threw Francophone West African countries off balance was the foreign reserve that will anchor the currency and human resources constraints.
These were cited as the main reason that caused the delays in adopting the ECO as a common currency, and the location and name for the ECOWAS Central Bank.
At the Abuja meeting, the ministerial committee examined the five symbols proposed by the working group and selected three, in order of preference, for submission to the Authority of Heads of States and Government at their next summit for consideration and final selection.
To the commission and institutions, the meeting urged ECOWAS Commission to strengthen the human resource capacity of the Directorate of Economic Stability and Multilateral Surveillance; the West African Monetary Agency (WAMA) should strengthen its human resource capacity by making a formal request to the central banks for secondment of workers and the adoption of a symbol for ECOWAS single currency.
It is not clear if these criteria were met before the Francophone African adopted the ECO and foisted it on the region.
A high-powered meeting has been scheduled to hold in a few weeks in Abuja to address this issue.
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In a report, CNN had said: “Six-member countries, including Nigeria, Liberia and Ghana, could be swapping their currencies for a new one – the ECO. Eight ECOWAS countries (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo) currently jointly use the CFA franc.”
The lack of integration policies, particularly the convergence criteria among member-countries in the region, has delayed the take-off of the common currency. Currently, only Togo has met all the convergence criteria.
The African Development Bank Group (AfDB), in a report, warned that “the 2020 deadline for the single currency will most likely be postponed again unless the region can align its monetary and fiscal policies”.
The draft report, issued at the end of the December 7, 2019 meeting in Abuja, noted that “with respect to performance under the macroeconomic convergence, a slight improvement was recorded during the first half of 2019, with six countries meeting all the four primary criteria”. Compared to three in 2018 13 member-states met at least three primary criteria in the first half of 2019, compared to 11 in the same period of 2018. Togo was the best performing country in the first half of 2019, followed by Cape Verde and Mali.
Meeting all the four primary criteria on a sustained basis, the report said, “remained a daunting challenge to the majority of member-states.
“Togo was the only country that met all the primary Criteria over a two-year period and in the first half of 2019.”
“Regarding the secondary criteria, the performance of member-states remained unchanged, with 11 countries meeting the criteria in the first half of 2019; same as in the corresponding period of 2018.”
“Projections indicated that by the end of the year, six member-states (Benin, Burkina Faso, Côte d’Ivoire, Mali, Nigeria and Togo) are expected to meet all the convergence criteria. But no country will meet all the convergence criteria on a sustained basis (three years consecutively) by the end of 2019”.
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