Nigeria and Ghana have taken different sides of opinion on the planned introduction of a single currency (ECOI) for Economic Community of West Africa States ECOWAS. The two African countries nations failed to reach a consensus on the initiative at the just-concluded meeting of the Presidential Task Force on the ECOWAS single currency programme, which held in Accra, the capital of Ghana.
Ghanaian President, Nana Akufo-Addo, was of the opinion that member states should ensure that the single currency is introduced by 2020 noting that ECOWAS was blessed with abundant human and material resources, hence having a common currency would speed up stronger commercial ties with accompanying benefits.
However, the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele cautioned against a hasty move to introduce a single currency for West Africa.The CBN governor noted that ECOWAS heads of government have not properly analysed a comprehensive picture of the state of preparedness of individual countries for monetary integration by 2020.
It would be recalled that recently at the 4th meeting of the presidential task force on the ECOWAS currency, which held in Niger last year, President Buhari had said Nigeria would not endorse the quick implementation of the currency policy because of diverse and uncertain macroeconomic fundamentals of many countries.
Prior to this
The first step towards the economic integration of West Africa states was the establishment of the ECOWAS in 1975. Under the ECOWAS treaty, it was envisaged that the 16 member-nations would form a common market.
This led to the adoption of the ECOWAS Monetary Cooperation Program (EMCP) IN 1987. Under the initiative, it was envisaged that all the countries would come together to form a single monetary unit by the year 2000, from the eight currencies in the sub-region.
Currently, 8 Francophone countries in West African use the Franc, CFA, as their common currency. Notably, the CFA has been linked to the French Franc but switched its link to the Euro recently. With this development, it is very unlikely that the West African members of the CFA zone will be too keen to abandon their attachment to their colonial masters (France) and start using the new common currency “ECOI”.
Also, another strong currency in ECOWAS is the Nigerian Naira which is still facing the challenges of instability and inability to meet all foreign currency demands for imported goods.
Countries like Liberia and Cape Verde have also expressed their reservations about plans for a new common currency. Other (relatively smaller) ECOWAS member-states also do not foresee any significant advantage for themselves with the introduction of the ECOI.
According to an expert, Mr. Felix Madugba speaking with Nairametrics said having a single currency would be of immense benefit to Nigeria. It would give our businessmen and prospective investors the chance to navigate the West African sub-region without the usual bureaucratic bottlenecks we experience.
“This new unified market of over 210 million people spread over 16 member countries with a GDP of over $100 billion is an enormous market, when compared with the otherwise fragmented markets of individual countries.”
He, however, noted that the fears expressed by the Nigerian government are understandable, but the benefits of joining the single currency market are bigger.
The establishment of a single currency in a region usually strengthens economic stability via increased trade exchanges and new opportunities for external investment, it is quite doubtful whether the new common currency “ECOI” would be able to realise such benefits in the initial stages.