It is no longer news that a single currency among West African countries may take effect. The West African countries, which include Nigeria and fifteen others, have long been anticipating this development.
However, going by what a representative of Niger Republic, Aichatou Kane, said at the ongoing 54th Annual Meeting of the African Development Bank (AfDB) in Malabo, the wait for the single currency policy is over. This is because the Economic Community of West African States (ECOWAS), will adopt its own currency by 2020.
According to Kane, ECOWAS institutions have been more involved in the region’s single currency creation programme and harmonisation of the monetary policy framework to encourage regional integration and eliminate diverse tariff barriers.
What the single currency entails: When the single currency policy finally takes effect, all the West African countries will be able to use a common currency. This implies that contrary to what we have now whereby different countries in West Africa use different currencies, there will only be a single currency to be used across the sixteen countries in West Africa.
The perfect example is the introduction of the Euro which is the official legal tender across the European Union.
How will this benefit Nigerians? When the single currency policy is finally put in place by 2020, Nigeria will surely benefit from it. For one, it will eliminate the uncertainty that surrounds exchange rates. One of the many challenges with trading with other countries is that you never know which way the exchange rate will move. It may move in your favour or against you, thereby resulting in more costs for you. This sort of uncertainty could hinder trade – particularly for smaller firms. A single currency gets rid of the uncertainty within the single currency zone, thereby encouraging trade.
The single currency will also eliminate the cost of converting currencies for Nigerians. At least, within the region, there won’t need to convert currencies for any reason, and it will be more considerate to convert currencies outside the region as against what it is now for Nigerians.
This is a very good development among ECOWAS Countries. But the main challenge would be those French colonial countries in West Africa that are yet to be fully independent from France and control their own currency and economy. With the way all the west Africa countries colonised by France are still extremely loyal to French govt, using one regional currency might pose a lot of dangers and manipulations from western powers, particularly France.