ECOWAS renews single currency promise

The Deputy Governor of the Bank of Ghana, Millison Narh, says the West Africa Monetary Agency (WAMA) must double its efforts to achieve a single currency for the sub-region, after a ban on its international conference in the wake of Ebola crippled operations of the monetary agency.

Achieving a single currency for the West African sub-region has long been on the cards for the region’s leaders but previous timelines have not been met; with the latest deadline fixed at 2020, officials are confident that this new deadline will be met.

But the outbreak of Ebola three years ago led to a temporary ban on most international conferences, a move that Mr. Narh argues prevented the technical committee from meeting to discuss issues under the new single-track ECOWAS single currency programme.

Mr. Narh speaking at the opening ceremony of the 28^th Joint Ordinary Meeting of the Economic and Monetary Affairs, and the Operations & Administration Committees of WAMA last week, said the various countries in the sub-region failed to take advantage of the break in meetings as necessitated by Ebola.

“Unfortunately, we were not able to take advantage of the lull in meetings and the ample time it afforded us to make significant improvements in our macroeconomic performance in terms of meeting the convergence criteria,” he said. 

“It is my hope that now the Ebola problem is behind us, WAMA will gird its loins and work extra hard to come up with effective working documents for adoption and implementation -- because by now we should be racing against time.”

According to the convergence reports, performance -- though slightly better this year compared to the previous year -- has not seen any significant improvement over time. “It continues to be virtually at the level we attained in the initial stages.

“We need to push ourselves so that in no time we can confidently say that we have converged and are ready for full integration. This little push has eluded us for many years. Let us use this year’s meetings to take stock and renew our resolve to attain not only our monetary union but also move quickly to becoming an economic union,” Mr. Narh added.

Speaking at the same event, Prof. Mohamed Ben Omar Ndiaye -- Director General of WAMA, said with the problems of Ebola in the sub-region now over, authorities are better placed to resume work to get ECOWAS a single currency.

Prof. Ndiaye stated that the slump in global economic growth has impacted negatively on the sub-region, especially as commodity prices have seen widespread decline. Growth in 2015 is expected to hit 4.7 percent as compared to 6 percent in 2014.

“In spite of developments on the global economic front, the convergence profile in the ECOWAS region witnessed slight improvements in the first half of 2015. These improvements relate to two primary criteria: namely inflation and central bank financing of the deficit, and one secondary criterion on nominal exchange rate stability.

Journey so far 

ECOWAS’s French-speaking countries already have a common currency, the CFA, and the plan is that the English-speaking side will first introduce the Eco, by 2020, before being joined by Francophone neighbours. 

However, none of the six countries in the largely English-speaking West Africa Monetary Zone (WAMZ) -- Ghana, Guinea, Nigeria, Sierra Leone, The Gambia and Liberia -- has since the common-currency dream was formulated in 2000 been able to meet all four primary and six secondary convergence criteria required for its introduction. 

The primary criteria are for each country to keep up a single-digit inflation rate at the end of each year; a fiscal deficit -- excluding grants -- to GDP ratio of not more than 4%; a central bank deficit-financing ceiling of 10% of the previous year’s tax revenues; and gross external reserves that can provide import cover for at least three months. 

The six secondary criteria include a stable real exchange rate, a positive real interest rate, and the prohibition of new domestic default payments and liquidation of existing ones. The countries are also to ensure tax revenue is equal to or greater than 20 percent of GDP; wage bill to tax revenue is equal to or less than 35 percent; and public investment to tax revenue equal to or greater than 20 percent.