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Report suggests ECOWAS region may never achieve a single currency

The latest report on Africa by SB Morgan 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.

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How Nigeria can benefit from ECOWAS' intended single currency, ecowas new currency

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.

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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.

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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.

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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ENDSARS

#EndSARS: Sanwo-Olu gifts families of slain police officers N10 million each

Governor Sanwo-Olu has compensated the families of slain police officers with the sum of N10 million each.

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Sanwo-Olu to stop pension for former governors, deputies, #EndSARS: Judicial Panel of Inquiry and Restitution to include Lekki toll gate incident – Sanwo-Olu, Lagos approves resumption of all classes in public, private schools, Lagos takes major step towards delivery of Fourth Mainland Bridge, Lagos to construct rail line to airport terminal for international passengers, COVID-19: Lagos State to begin curfew on Sunday to disinfect metropolis, Lagos state government discharges 7 more coronavirus patients, Lagos state will reverse to full lockdown, Sanwo-Olu to virtually inaugurate projects as he presents scorecard of first year in office, Lekki regional road: Sanwo-Olu revokes land titles of Elegushi Royal family, Lagos pays N1.3 billion into the RSA of 246 retirees, Lagos State to empower 2.5 million youths in Arts and Crafts

The Executive Governor of Lagos State, Babajide Sanwo-Olu has brought respite to the families of police officers killed during the violence witnessed in the aftermath of the #EndSARS protests.

According to the disclosure on the Twitter page of the Lagos State Government, the families were handed a cheque of N10 million each and the children of the slain officers awarded scholarships by the government.

What they are saying: Commenting on the recent development, a tweet by the Lagos State Government read thus: “Governor @jidesanwoolu handing over a cheque of 10 million naira each to the families of police officers who lost their lives during the unrest that followed the EndSARS protest and awarding scholarship to their children.’’

Why this matters: The recent effort by the Governor is in fulfillment of the promise he had earlier made to compensate affected victims of the post-EndSARS protest which led to the loss of lives and valuable properties both in the state and the country at large.

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The compensation will be viewed by serving officers as a motivation, aimed at promoting patriotism, loyalty, commitment and dedication to national service.

What you should know

  • Lagos State Government had earlier set up a N200 million fund for victims of police brutality
  • As a follow-up, Nairametrics had earlier reported that Lagos State Government offered scholarships to children of slain police officers.

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Corporate Press Releases

How digital transformation will impact Nigeria’s projected $8.79 billion economic expansion

Businesses will need to invest in appropriately reskilling and upskilling the national workforce to create a better digital Nigeria.

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The Nigerian economy is projected to grow by $8.79 billion in the next three years to 2023, driven largely by the ICT, agriculture, health, finance and insurance sectors, according to a new study by global training providers elev8 and the BusinessDay Research and Intelligence Unit (BRIU).

More than half of the projected growth will come from the ICT sector, as companies continue to create innovative products and services leveraging ICT and telecoms. To take advantage of this growth, however, businesses will need to invest in appropriately reskilling and upskilling the national workforce to create a better digital Nigeria.

The research comes off the back of the Covid-19 pandemic, which has laid bare the digital divide, with those businesses having invested sufficiently in their digital capabilities overtaking those firms who failed to do so.

However, this trend of digitally forward businesses outperforming their technology-inferior counterparts isn’t new, the study reveals. Analysis of the data, which went back as far as 1992, showed that the major companies outperforming others in Nigeria are those that spend more on upskilling, research and development, and technology acquisition.

Economic rewards await

In recognition of its benefits, Nigeria has made efforts in the past, and continues to make more efforts at digitalizing its economy. The progress made in Nigeria’s ICT sub sector has had a positive effect on its gross domestic product (GDP). Research shows that the sector’s contribution to GDP has risen from 7.70 percent in 2012 to 14.30 percent by Q2 2020.

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Meanwhile, the Nigerian government’s National Digital Economy Policy and Strategy, launched in 2019, aims to improve digital literacy and skills to build out the country’s digital capabilities.

However, the digital infrastructure readiness in Nigeria is still far below the global average. For this to be upgraded, the current skill set of government employees working in this area will need to be updated. This should warrant the designing of training programs that will help the government raise the level of digital infrastructure in Nigeria in the shortest possible time and at affordable costs.

The high economic rewards from closing the digital skills gap should see this become an even greater priority. If the entire Nigerian economy is digitalized, the country could take a bigger bite of the global digital economy, which is estimated at $11.5 trillion.

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Where digital leaders are made

Global training provider elev8 offers training programs focused on the latest technologies, and is uniquely placed to help businesses and the Nigerian government connect to opportunities as highlighted in the report.

Bringing together renowned industry experts, elev8 offers the flexibility of virtual classrooms or face-to-face programs, depending on what’s best for the organization and its learners.

Taking a holistic approach, power skills like communication, collaboration and analytical thinking are embedded into elev8’s technical training in order to develop well-rounded digital experts who can bring the most value to their employers.

Training methods are practical and action-based – built around projects, tackling real business challenges – enabling learners to put theory into practice from the day one.

No matter the technical need, elev8 can design and implement bespoke solutions tailored to a company’s individual requirements.

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elev8’s global academy equips business leaders, teams and organizations with the skills they need to leverage the technologies of the future and transform Nigeria into a knowledge-based economy.

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To read the report in full, or to discover more about the elev8 training academy, go to www.elev8me.com/en-us/africa.

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Coronavirus

Covid-19: WHO says the promise of vaccine is a game changer

The WHO has stated that the promise of Covid-19 vaccines is phenomenal and potentially game-changing.

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The World Health Organization has said that the promise of Covid-19 vaccines is phenomenal and potentially game-changing.

This disclosure was made by the WHO’s Regional Director for Europe, Hans Kluge, during a press briefing at Copenhagen on Thursday, December 2, 2020, according to a report from Reuters.

Kluge said there are expectations that there would be limited supplies of Covid-19 vaccine supplies at the early stages and as such countries must decide who gets priority.

However, the WHO emphasized that there is a growing consensus among stakeholders that older people, medical workers, and people that share the virus with some other health conditions will be among the first recipients of the vaccine.

What you should know

It can be recalled that yesterday, UK regulator gave its approval to the Covid-19 vaccine, which was developed by Pfizer Inc in collaboration with BioNTech, moving ahead of the rest of the world, including the United States in the race to begin the most crucial mass inoculation programme in history.

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  • This follows the announcement by Pfizer that the vaccine proved 95% effective in a final analysis of clinical-trial data for its phase 3 study.
  • In addition, Biotech firm, Moderna Inc, also announced that its Covid-19 experimental vaccine was 94.5% effective in a preliminary study.
  • The United States and European Union regulators are sifting through the same Pfizer vaccine trial data, but are yet to give their approval.
  • The WHO revealed on Wednesday it had received data from Pfizer and BioNTech on the vaccine and was reviewing it for possible listing for emergency use, a minimum condition for countries to authorize national use.

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