Starting from January 2020, members of the ECOWAS will be able to use a single currency called the ECO.
The currency was agreed upon by the Authority of the ECOWAS and Heads of Member-States last Saturday in Nigeria’s capital, Abuja.
The leaders endorsed the currency at the 55th Ordinary Session and approved a road map toward issuance of the currency in January 2020. There was a roadmap to ensure that all member-countries meet key criteria for the adoption of the currency.
Criteria for the adoption
Before adopting the currency, member-countries must have a budget deficit of not more than 3%; and average annual inflation of less than 10%, with a long-term goal of not more than 5% by 2019.
Member-countries are expected to have gross reserves that can finance at least three months of imports. Among the other criteria that have been adopted by ECOWAS are public debt or Gross Domestic Product of not more than 70%; the central banks’ financing budget deficit must not be more than 10% of the previous year’s tax revenue; and must have a nominal exchange rate variation of plus or minus 10%.
A communiqué read by Nigeria’s Permanent Secretary-Ministry of Foreign Affairs, Mustapha Suleiman, indicated that the regional leaders instructed the ECOWAS Commission to work in collaboration with West African Monetary Agency. The Commission is also expected to work with the West African Monetary Institute and all central banks to settle on a symbol for the single currency.
The ECOWAS Chairman, President Issoufou Mahamadou, indicated that the revised roadmap does not affect the date for issuance of the single currency in January 2020.
“We have not changed that, but we will continue with assessment between now and then,” he said.
“We are of the view that countries that are ready will launch the single currency, and countries that are not yet ready will join the programme as they comply with all six convergence criteria,” he further stated.
ECOWAS currently has a population of about 385 million. It was set up in 1975 to serve as a platform to unify countries in the sub-region. It includes Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.
8 out of the 15 members use one currency called the CFA franc. Those are Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo. The current decision to adopt one currency is likened to the move made by the European Union to adopt a single currency called the euro.