The Authority of the Economic Community of West African States (ECOWAS), alongside Heads of States and Governments, has adopted a flexible single currency ‘Eco’ as its trade currency to be issued by January 2020. This comes after the bloc’s 55th Ordinary Session which took place over the weekend in Abuja. The new currency could replace the Naira.
The regional body disclosed earlier that considerable progress had been made, leading to the adoption of the name “Eco” and a flexible exchange rate regime which will be issued starting from early next year.
Why was the Eco adopted? The introduction of a unified currency into the West African region is aimed at harnessing economic trade and integration among member-nations of the regional body.
[READ FURTHER: Nigeria is not ready for ECOWAS common currency]
In a communique read by Nigeria’s Permanent Secretary at the Ministry of Foreign Affairs, Mr. Mustapha Suleiman, the regional body was instructed to collaborate with West African Monetary Agency, West African Monetary Institute, and West African Central Banks for speedy implementation of the revised road-map, which will be presented at the next meeting.
Reports from sources disclosed that the Central Bank governors and West African Finance Ministers had earlier agreed on technical issues bordering the creation of the single currency for the bloc next year.
“At a ministerial level, we’ve established a road-map for the establishment of a new currency”, Ivory Coast’s Finance Minister, Adama Kone, stated in Abidjan.
Challenges ahead for Nigeria: Nigeria, which is the continent’s largest economy and the largest contributor to the region’s gross domestic product (GDP) by 75%, may soon have to contend with a challenge following this development.
Analysts are of the opinion that the adoption of the new single currency for trade within the region might have a catastrophic effect on Nigeria’s economy and the Naira. They have termed the move a “premature ideology” considering the region’s trade agreement which Nigeria has yet to sign.
As Nairametrics earlier reported, a report by SB Morgen opined that the adoption of a unified currency system may several shortcomings. The report also highlighted some major economic issues that call for concern.
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The Eco could replace the Naira: The Nigerian Naira is a national symbol which portrays the nation’s identity in trade. The adoption of the Eco could send the Nigerian Naira into extinction. This will be reminiscent of what happened when the European Union adopted the Euro as a single currency.
Interest and Exchange rate adjustments: The adoption of the Eco could result in the monetary authority Nigeria (i.e., the CBN) losing its power to adjust the interest and exchange rates. The CBN adjusts the interest and exchange rates with the aim of encouraging investments whilst spurring economic growth.
I also concur that this move is far too early. Let the individual countries go fix their local economies first. We, Africans seem to always want to copy the western economies haphazardly when we don’t have the political will to build and grow our economies like theirs. Yet even in Europe where the poorest members of the Eurozone are better than our regional bests here, there are serious issues with the Euro; with the struggling States being a liability thru high levels of indebtedness to the bloc and dragging down the more prosperous members, for example, the sustained near zero interest rate which has led to global investors dumping Euro based assets in favor of the US dollar.
All I want to know,when nairametric will releases the full communique by the Ministry of foreign.adaption of ecowas currency is political,there is no resistance or objection against this single currency by Nigeria govt and Nigerian resident and citizen.nairametric is blowing hot and cold “WILL OR COULD ECO REPLACED NAIRA “can you makes-up your mind
You have said in some of your previous writing,that there are several attempt to implement a single currency in this monetary west Africa union.in this meeting,they improve their offer by naming this currency CALLED “ECO” and you have said Nigeria controlled 75% of economic activities in west Africa,and it is Nigerian govt that is pushing for this single union.
I cannot wait to applies for my new passport come 2020 as new member of a free west Africa and chases some new ecowas chicks
Well it is a welcome development, however there are a lot things to be fixed in ecowas member countries, rushing to adopt a single currency might pose as threat/problem to us. Look at the state of our roads, electricity, water sector etc. I would like suggest that their should be a criteria; checklist for infrastructural development to cut across all sector of member state economy, all this criteria must be met before any country can be accepted to key in and adopt the single currency. Any thing out of the may lead to an unfortunate economic brouhaha.