As Leaders of West African countries converge for the highly anticipated Economic Community of West African States (ECOWAS) summit today, 29th June in Abuja, the recommendation for the single regional currency is expected to be approved. However, huge obstacles are in the way to halt any chance of a single currency agreement among the countries.
The latest report on the ECOWAS region by SB Morgen Intelligence has revealed that despite the merits embedded in establishing a single currency, the possibility of West African countries having a single currency is increasingly becoming bleak.
This is due to the key economic fundamentals prevailing in Nigeria and other African countries.
ECOWAS Single Currency: Basically, the intent of a single West African currency is to leverage the fairly robust terms of political cooperation that exist among the bloc’s members by promoting greater intra-bloc trade relationships that have so far been impeded, in part, by the cost of doing business across multiple currencies.
The single currency that was proposed by ECOWAS (known as Eco) was first planned to take effect in 2003 but was later postponed several times between 2005 and 2015.
However, the report has revealed that despite the efficiencies that would be gained from conducting trade using a single currency, (as opposed to the nine different currencies that the region currently trades with), several factors are poised to prevent the single currency within the region from seeing the light of the day. Some of these factors include:
- The fear of losing sovereignty
- The implications of the move on the economies of individual countries; and
- The fear of empowering an intra-bloc hegemon
Loss of economic and political powers: According to SB Morgen, Unified currency has several shortcomings. For instance, the inability of individual European nations (in case of Euro) to control an economic shock is fundamental. Some highlights of economic and political concerns raised include:
- With the utilization of a single currency, macroeconomic fluctuations will no longer be controlled by individual nations
- National governments cannot adjust interest rates and exchange rates to encourage investments. For instance, in the Eurozone, interest rates are controlled by the European Central Bank (ECB).
- The sovereign ability of individual countries to adjust their currency’s exchange rate, and notably devalue their currency in case of the economic downturn is lost.
- Loss of political power may become inevitable due to the inability to have a single voice may may trigger tension among countries.
ECOWAS’ big challenges: While trying to highlight some big challenges standing in the way of a single currency in West Africa, the report emphasized that some West African countries have not freed themselves from the binding economic agreement of the colonial masters which will further frustrate the single currency agenda.
For instance, a critical look into the role of France in underwriting the CFA franc used by most of its former colonies in West Africa reveals that all the eight countries who make up the African Economic and Monetary Union present a major challenge to the single currency agenda in the region.
- Despite the merits of the French-backed CFA franc through leveraging on multiple national economies to achieve currency stability and strength, many observers see it as a relic of the colonial era
- Countries like Benin, Burkina Faso, Niger and so on which are colonies to Portugal all signed monetary cooperation agreements preserving a dependency with Paris.
- The implication of such agreements includes a guaranty of the convertibility of the CFA franc to the French franc and a peg between CFA franc and the French franc.
- Hence, the eight ECOWAS countries moored to the single European-backed currency is regarded as a stumbling block for the realisation of the West Africa single currency.
- Also, one of the conditions set for the implementation for the single in West Africa is such that member countries must achieve single digit inflation of 5%. Unfortunately, inflation in Africa’s biggest economy, Nigeria was averaged 11.92% between 2003-2016, while Ghana was averaged 16.92%.
More critical downsides: The report further revealed that West African countries pursuing the single currency are grossly not prepared to overcome their challenges. Another instance cited is how the action of small states, say the Gambia, could affect a much larger state like Nigeria.
- Being under a sing currency agreement will make it impossible for a country like Nigeria to fully be in control of managing economic recovery. For instance, the adjustments Nigeria was able to make to its FX regime during the 2016 economic recession, for example, would have been impossible
- Another critical issue facing the West African single currency is the unwillingness of francophone West African countries to cede monetary policy to Nigeria. Also, the Nigerian Government may not be willing to cede monetary policy to a neighbouring government smaller than several of its internal governments.
Way Forward: According to SB Morgen, while it is unlikely to have a regional single currency, other compelling solutions for facilitating greater intra-block trade which has a far lower risk to sovereignty include addressing structural issues such as inadequate supply chain infrastructure, arbitrary border tariffs and non-tariff barriers, abysmal corruption, and wide-area insecurity.
Tax debt payments extended to August 31- FIRS
Tax debtors are to liquidate their outstanding tax liabilities on or before August 31.
The Federal Inland Revenue Service (FIRS) announced it on Wednesday that it has extended the waiver of penalty and interest window on tax debts owned by businesses and individuals from June 30 to August 31, 2020.
In a statement by the Director Communications and Liaison Department, Mr Abdullahi Ahmad. The Executive Chairman of FIRS, Mr Muhammad Nami said the extension is a sequel to palliative measures set up by the FIRS to help businesses and individuals deal with the effects of the Covid-19 pandemic on the economy
“The latest extension applies to tax audit, tax investigation and desk review assessments, approved installment payment plans under Voluntary Assets and Income Declaration Scheme yet to be fully liquidated,” he said.
He added that there would not be any extension after the August 31 due date.
He urged tax debtors to liquidate their outstanding tax liabilities on or before August 31 in order to partake in the waiver of accumulated interests and penalties.
Nami also advised all businesses and individuals who fall under the waivers to contact their nearest FIRS Regional Debt Management Office and tax controllers for further enquiries.
Diversion points for third mainland bridge closure revealed
There would be a diversion of traffic in 2 phases during the partial closure of the bridge.
The Federal Government has announced the different phases points of diversion of traffic during the partial closure of the Third Mainland bridge for repair works.
This was disclosed during a joint press conference by the Federal Controller of Works in Lagos, Engr Olukayode Popoola, the Lagos State Commissioner for Transportation, Dr. Frederic Oladeinde and the Special Adviser to Governor Babajide Sanwo-Olu on Works, Engr Aramide Adeyoye, on Tuesday at Alausa Ikeja.
During the press conference, the Federal and Lagos State Governments have appealed to motorists and Lagos residents to cooperate with government and appropriate agencies during the 6 months partial closure of the Third Mainland Bridge for maintenance work, which is expected to start on July 24.
They also assured Lagosians that necessary measures would be put in place to reduce gridlocks during partial closure of the bridge as they would work with appropriate authorities to direct and control traffic movement in the affected areas and alternative routes.
Engr. Popoola revealed that there would be diversion of traffic in 2 phases during the partial closure of the bridge between Friday, July 24, 2020 and January 24, 2021.
He said the First Phase of the diversion, which will last for 3 months of repairs of the Oworonsoki bound lane of the Third Mainland Bridge, would be for morning traffic from 12:00 am to 1:00 pm from Oworonshoki to Lagos Island on the Lagos Island-bound lane, while the afternoon traffic from 1:00 pm to 12:00 am would be from Lagos Island to Oworonsoki on the Lagos Island-bound lane.
Engr. Popoola said the Phase 2 of the diversion, which would last also for three months of repairs of the Lagos Island-bound lane of the Third Mainland Bridge, would be for morning traffic from 12:00 am to 1:00 pm from Oworonsoki to Lagos Island on the Oworonsoki bound lane, while the afternoon traffic from 1:00 pm to 12:00 am would be from Lagos Island to Oworonsoki on the Oworonsoki bound lane.
Popoola said, “Motorists are advised to also ply these alternative routes: First, from Carter Bridge through Iddo through Oyingbo to join Adekunle ramp inward Oworonsoki. Secondly, from Ijora Olopa through Western Avenue to Ikorodu Road.”
On his own part, the Lagos State Commissioner for Transportation, Dr. Oladeinde said priority will be given to those driving from Mainland to the Island in morning and afternoon to use the Third Mainland while those driving against traffic will use the alternative routes.
Dr. Oladeinde assured motorists that Lagos State Traffic Management Authority (LASTMA) will work with Federal Road Safety Corps (FRSC) in all the alternative routes to ensure that motorists have a smooth journey during the partial closure of the bridge.
The commissioner advised those who don’t have any genuine reason to be on the road to stay at home to reduce vehicular movement during this period while adding that the public vehicles would be available and affordable for road users.
He said: “If you don’t have to travel, I will advise that you stay at home so that we can minimise the number of vehicles on the road. If you can work at home, please do. But if you can’t, we will ensure will be on the road for you to get to your destination as quickly as possible.”
Dr. Oladeinde also advised people of Lagos State to use alternative transport such as ferries. He said there will be an increase in the number of fleets by the Lagos Ferry Services in the morning for people from Ikorodu and Mile 2 as alternative transportation.
Also speaking, Engr. Adeyoye while appreciating the Federal Government for the repair of Third Mainland Bridge, said Lagos State Government has commenced necessary preparatory works on all the alternative routes in the state to make them motorable for the commuters.
Adeyoye said the state will do its best within two weeks to work on all the roads that may likely cause gridlocks to be free of potholes.
She also warned trucks and vehicles that are not road worthy or serviceable to stay away from Lagos roads.
Federal Government and LASG have appealed to motorists and Lagos residents to cooperate with government and appropriate agencies during the six months partial closure of the Third Mainland Bridge for maintenance work, which is expected to commence on July 24#ForAGreaterLagos pic.twitter.com/yUOOQIwe62
— The Lagos State Govt (@followlasg) July 7, 2020
African Union will accelerate industrialization in order to beat COVID-19
AU is planning on improving industrial output through the establishment of the regional value chain.
The African Union says it will accelerate its industrial development drive and improve supply chains needed for Africa’s trade and logistic growth to overcome the pandemic.
In a statement by the chairman of the AU and South Africa’s President, Cyril Ramaphosa, the AU is planning on improving industrial output through the establishment of a regional value chain with the aid of private sector stakeholders. The statement commemorating Africa Integration Day was co-signed by AU Commission Chairman Moussa Faki Mahamat and Mahamadou Issoufou, the president of Niger.
President Ramaphosa added that the African free trade area is the best tool that can help the continent speed up its regional economic integration to battle the effects of the pandemic. He added that the creation of a free trade area is “defragmenting Africa to put behind us the history of small uncompetitive markets that have thwarted our efforts to achieve inclusive sustainable development for the benefit of our people.”
The African Continental Free Trade Area agreement was signed last year and was meant to commence this year in July but the COVID-19 pandemic has delayed the negotiations for tariff concessions for trade in goods; a date has not yet been announced to resume negotiations.
When fully ratified and operational by 2030, the ACFTA would be the largest free trade area by land area, servicing a potential of 1.2 billion people and with combined GDP of $2.5 trillion. Of the 54 nations that have signed the agreement, only 28 have ratified it so far. Nigeria is one of the countries yet to ratify over worries of “dumping”. Internal trade in Africa is just 15% compared to Europe’s 70% and Asia’s 58%. The ACFTA when fully ratified will reduce tariffs on goods by 90% and help promote investment and movement of goods, people and capital in the continent.