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Tag: Common currency

  • ECOWAS common currency not realistic in 2020, says analyst

    Former Chief Economist/Group Head, Research & Economic Intelligence Group at Zenith Bank Plc, Marcel Okeke, has said the plan by Economic Community of West African States (ECOWAS) to achieve single currency for the region by 2020 is no longer realistic.

    He spoke at the Finance Correspondents Association of Nigeria (FICAN) 2018 Economic Review and 2019 0utlook held in Lagos at the weekend.

    Okeke, who is now the Lead Consultant, Mascot Consult Limited, said single currency for the region comes with some challenges and criteria that many of the member countries will not be able to meet.

    According to him, the ECOWAS common currency has been on for many years and needs the member-countries to attain key milestones for its successful takeoff.

    “It is not certain that it will happen in 2020. For instance, a country like Nigeria and other countries must not have inflation rates that are double digits. They must not have exchange rates that move up and down. So, there must be stability in all those indicators across board. As I stand with you, many member countries have not attained this feat,” he said.

    Continuing, he said there are pros and cons for its implementation. “You see, some member countries of the Euro zone are having serious economic problem, which is rubbing off on the rest of the members.That is the type of challenge we might have in ECOWAS and I do not believe that the common currency plan will happen by year 2020,” he added.

    Speaking on the banking system, Okeke said that banks do not operate in a vacuum but area product of the domestic economy where they do their business. “They are part and parcel of the economy. All these variables, if the economy is doing well, generally, the banks will also be doing well. On the other hand, how well a bank does is also a function of creativity. The truth is that even in an economy as bad as this, some businesses are still doing well in the system. And so, a bank that is efficient, no matter the odds in the system, will keep on doing well,” he said.

    Continuing, he said: “If you check, and if one of us have one or two accounts or three, you will notice that whatever you do with your phone, there is a service charge. Those charges were not there years back. It means those banks are becoming more creative. And you cannot on the course of that, decide to keep your money under your pillow in your house. As long as you keep banking your money, and they keep making those gains, and adding them to their performance, and balance sheet, they will keep doing well”.

    According to Okeke, banks are also careful as to who to lend money to because of interest rates on loans. “The essence is that if the rates are high, they will not be keen on lending to everyone that comes. So, that means they want to give money to borrowers with capacity to repay the loans”.

    “In a nutshell, those banks that have been doing well will keep doing well. That means there will not be undue exposures to the banks. I will say that the banks the are doing well to do well, head or tail. Some of the banks are going into forced mergers and acquisitions, but many other banks are still waxing stronger,” he stated.

    Speaking on the economy, he said foreign exchange reserves in Nigeria decreased to $41.99 billion in November from $42.13 billion in October of 2018, adding that the Nigeria’s external reserves inched up to $42.54 billion at the end of December.

    The figures, he said, showed a decline by $5.25 billion, compared with the $47.788 billion it was as at the end of June, 2018.  “It stood at $43.28 billion as at January 21, 2019. The combination of rising yields in advanced economies, particularly in the United  States coupled with growing concerns about the global economy due to the trade spat between the US and China have led to a reversal of capital flows in emerging markets. Elevated tensions in the political economy will further compound the concerns of foreign investors, leading them to migrate to safe haven high-quality assets in advanced economies,” he added.

    Speaking on inflation, he said the annual inflation rate in Nigeria fell to 11.26 per cent in October of 2018 from 11.28 percent in the previous month.  “According to the National Bureau of Statistics (NBS), the headline index rose to 11.23 per cent (year-on-year) in August 2018, up from 11.14 recorded in July 2018. It has risen to 11.28 per cent in November and ended 2018 at 11.44 per cent. The rise in the headline index is traceable to the persistent surge in food inflation index. Inflation rate stood at 15.37 per cent in January, 2018,” he stated.

     

  • Beware of adverse effects of common currency, Emefiele warns

    Countries of the West Africa Sub-region have failed to meet all the convergence criteria for a common currency and unified monetary zone.

    Governor of the Central Bank of Nigeria (CBN) Godwin Emefiele has cautioned member countries of the sub-region not to let the desire for a common currency and economic prosperity for their people blind them to the adverse and contagion factors associated with a unified monetary area and common currency.

    Speaking at the 37th Meeting of the Committee of Governors of Central Banks of the West African Monetary Zone in Abuja yesterday, Emefiele cautioned that “our desire for greater economic prosperity for our people through a common monetary union must not vitiate our awareness of the potential adverse and contagion factors associated with unified monetary area and common currency.”

    Specifically, Emefiele noted that “the unfolding trade war between the United States, China and the West portends both opportunities and challenges for our region’s economy, depending on how we approach it individually as nations. Nonetheless, while the shocks to individual economies might vary in magnitude and intensity, it might yet be an opportunity for us to look inward and strategize on how best to fill the trade gap that would ensue.”

    Going forward, Nigeria’s Central Bank Governor advocated that “now is the time to create the West African Monetary Zone (WAMZ) Commission to drive our common interests and aspirations. We must intensify our level of cooperation and collaboration through strong bonds to work as a unit within the ECOWAS monetary union programme to achieve our shared objective.”

    Emefiele stated that “it has become imperative for us to bring this collective resolve to bear as we embark on a thorough review of the economic conditions of member countries vis-a-vis their levels of preparedness for the monetary union and economic integration of the sub-region.”

    For this reason, the report of the 33rd Meeting of Joint Technical Committee that is scheduled to be submitted in course of the WAMZ meetings he said “should be meticulously and objectively studied for the purpose of gaining more clarity on the level of preparedness of member countries  for regional integration.”

  • Buhari for ECOWAS Task Force meeting on common currency ‎in Niamey

    Buhari for ECOWAS Task Force meeting on common currency ‎in Niamey

     

    President Muhammadu Buhari will Tuesday depart for Niamey, Republic of Niger, to participate in a meeting on common currency for the West African sub-region.

    Member countries of the ECOWAS Task Force on Common Currency are ‎Nigeria, Cote d’Ivoire, Ghana and Niger.

    A statement by the Special Adviser on Media and publicity, Femi Adesina, said that the President will be accompanied by the Minister of Finance, Mrs Kemi Adeosun and the Central Bank of Nigeria governor, Mr Godwin Emefiele.

    President Buhari will return to Abuja same day after the meeting.

  • Common currency will promote inclusive growth in Africa – AU

    Dr Rene N`Guettia, the Director for Economic Affairs, Commission of the African Union (AU), says there is need for Africa to adopt a common currency to ensure inclusive growth in the continent.

    N`Guettia said this at the ongoing 7th Joint Annual Conference of Ministers of Economy and Finance and Economic Community of Africa (ECA) on Wednesday in Abuja.

    He said that the aim of the summit was to ensure the establishment of African monetary fund as part of efforts to ensure a single currency to promote trade among African countries.

    “Non use of single currency is affecting intra-regional trade crucial in promoting the continents economy.

    “This is because we have about 40 currencies in Africa, for instance, Nigeria and Ghana have two different currencies, so if you have to export, you need to change currencies.

    “The Africa Monetary Fund will play a role in cleaning the house so as to facilitate the intra African trade,’’ he said.

    N`Guettia noted that the conference would also serve as a platform to discuss how industralisation could contribute to inclusive growth and fast-track the transformation of the continent.

    “From this conference, we are objectively going to discuss deeply the issues of industrialisation and to see how it can contribute to inclusive growth.

    “Through the numerous presentations, the delegates will debate and come up with some concrete recommendations that will be presented to the Heads of States,’’ he added.

    He identified financial integration as another problem affecting the continent.

    “Our financial system is not integrated, so we have numerous reasons to explain the weakness of trade among Africa.’’

    He, however, commended the achievement of ECOWAS in promoting free movement of persons, saying it was the biggest achievement of the commission.

    N`Guettia stated that the African Union had tried to motivate the countries and other regions to replicate the achievements of ECOWAS in their regions.

    “Because we know that without free movement, nothing can happen, we cannot develop or industrialise the continent if Africans cannot move freely and we cannot develop African trade if Africans do not have free movement.”

  • Common currency for West Africa not visible – Okonjo-Iweala

    Common currency for West Africa not visible – Okonjo-Iweala

    Nigeria has warned other West African countries that having common currency for the entire sub-region will be difficult to achieve.

    The Minister of finance, Dr. Ngozi Okonjo-Iweala, stated this at the 31st meeting of the convergence Council of Finance Ministers and governors of Central bank of West Africa nations, on Friday in Abuja.

    Okonjo-Iweala told the participants that they should realise how difficult it will be to establish a credible, viable and sustainable West African monetary union.”

    According to her, “the journey has not been smooth, will not always being smooth and there will be periods when our collective aspiration will be tested.”

    She also stated that the establishment of a single currency in the West African zone cannot be achieved by an act of law only.

    She said, “A single currency cannot be introduced only by means of an act of law; it requires action by the monetary authorities and by market participants in other to make it viable and sustainable.”

    The political will critical for achieving the goal, according to her, is available but the will to implement the necessary reform is needed from member states.