Common currency in West Africa stalled

The road to a Euro style common West African or ECOWAS currency is littered with uncertainty and lack of mutual understanding, among other economic factors. Even more pressing is the continuous domination of France that continues to drive the political and economic realities of its former West African colonies.

The establishment of a common currency in West Africa is not new. If anything, it is one of the few commonalities in West Africa: British West Africa, comprising the Gold Coast, Nigeria, Sierra Leone and the Gambia shared a common currency mimicking the British Sterling. The CFA was and still continues to be the common currency among West African Francophones.

Colonial interests die hard in as much as the Francophones continue to cling to the economic coat strings of their former masters, a fact of life that has described the post-colonial relationships between former colony and former master. Currently two currency sectors exist in West Africa. Ghana, Nigeria, Sierra Leone, the Gambia and Guinea Conakry belong to the West African Monetary Zone (WAMZ), while Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo belong to the West African Economic Monetary Union (WAEMU).

    WAEMU and Côte d’Ivoire President Alassane Ouattara and French President Emmanuel Macron announced early this year that the CFA franc, which has been in place since 1945, would be renamed Eco and subjected to reforms.  They concluded that the new currency for the eight Francophone countries that form the West African Economic and Monetary Union (UEMOA) will be pegged to the Euro and will be backed by the French Treasury. The Euro will guarantee the Eco’s convertibility and stability, with the French Treasury remaining as guarantor for all eight UEMOA states. The Eco will have a fixed exchange rate of 655.957 to the Euro. The new Eco was supposed to come into circulation by July 1, 2020.

Sanyade Okoli, CEO of Lagos-based Alpha African Advisory, told CNBC that the decision was “unsurprising” as the Eco was agreed last summer by the ECOWAS member states as the name of their collective regional currency. “It is therefore difficult to understand why one sub-group would unilaterally adopt the name for their existing currency. The move seems much more political than economic. From an economic standpoint it is more symbolic than anything but may end up having significant implications,” Okoli said.

“The question now is whether the two groups will be able to repair the breach and work together to drive forward the single currency project.”

So where lies the road to unity among the members of the regional grouping?

The five Anglophone ECOWAS nations of Ghana, Nigeria, Sierra Leone, Liberia and Guinea Conakry, comprising the West African Monetary Zone (WAMZ), met in Abuja for crunch talks over the adoption of the Eco to establish a common position.

Concerns over the peg to the Euro and the Banque de France’s guaranteed convertibility of the currency, which requires collective pooling of foreign reserves, have made larger economies such as Nigeria and Ghana reticent to support the Eco in the short term.

The joint communique issued by the WAMZ Convergence Council, minus Portuguese-speaking Cape Verde, condemned the unilateral WAEMU decision to launch the Eco as a rebrand of the CFA franc.

In a statement following the meeting, Nigerian Finance Minster Zainab Ahmed said the action was “inconsistent with the decision of the Authority of the Heads of State and Government of ECOWAS for the adoption of the Eco as the name of an independent ECOWAS single currency.” “WAMZ Convergence Council wishes to reiterate the need for all ECOWAS member countries to implement the decision of the Authority of the Heads of State and Government towards the

implementation of the revised roadmap of the ECOWAS single currency program,” the communique added.

Ghana’s President Nana Addo Dankwa Akufo-Addo is reported to be willing to join the new grouping but opposition at home resents the peg to the Euro and its implications to the country’s economy.

The prospects for a united ECOWAS for expedited economic growth have been dimmed by the action of the Francophones.

We fear that the WAEMU action would put even more restrictions on free movement of citizens and trade in the sub-region. The region’s economy would return to its pre-independence levels questioning the relevance of the ECOWAS. What little trade and commercial advantage accrued to member states within the region may not be able to withstand the impact of the blow dealt by the Francophones.

Amandla appeals to the entire ECOWAS to return to the round table for a more acceptable program for a single currency in the sub-region.

Posted by on Oct 16 2020. Filed under Editorial. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

1 Comment for “Common currency in West Africa stalled”

  1. Neocolonialism-The last stage of imperialism, a book by Osagyefo Dr. Kwame Nkrumah is a prediction becoming true. The imperial powers of Portugal, Spain, France and Britain have crumbled to the ground. France is still holding on to her colonies. As soon as she looses them France will become like Greece. So they will do anything to protect themselves. Why would Nicholas Sarkozy take $30 million from Ghadafy and spearhead the invasion of Libya? Ghadafy was financing one currency for Africa and France would have lost her stranglehold of her colonies. So Macron tells the Franc zone to join ECO but still tie it to the Euro. But Africa wants a clean break of the umbilical cord.

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