Some fresh life was breathed into the efforts of the Economic Community of West African States (ECOWAS) for the realisation of a 10-year-old dream for a common currency.
Recently in Abuja, the Convergence Council of ECOWAS approved a revised road map for the realisation of a single currency for West Africa. But as the history of the commitment of member states to the goals of the Community show, a lot more than the revision is required to achieve the dream.
The road map, which targets the full realization of the dream of a single currency in the year 2020, has clearly defined quarterly milestones starting this year. Between 2009 and the first quarter of 2013, the road map envisages the harmonization of the regulatory and supervisory framework for banking and other financial institutions, the establishment of a payment system infrastructure for cross border transactions, the completion of the e-payment system infrastructure in Guinea, The Gambia and Sierra Leone (countries lagging behind in e-payment) and the completion of the ongoing integration of the financial markets of the region.
Then, through the creation of the West African Monetary (WAMZ) zone comprising Ghana, The Gambia, Guinea, Sierra Leone and Nigeria, a monetary union for the zone, the introduction of Eco common currency for the zone in January 2015, and the eventual merger of the Eco and the CFA currency of the French-speaking West Africa currencies, the dream of a single currency would be realised.
Considering the advantages of single regional currencies, realising the feat would be a very commendable achievement.
We are aware that introducing a common currency leads to gains in economic efficiency. These include the elimination of transaction cost and risks associated with uncertain fluctuation of the exchange rates.
One common currency also creates a simple platform for price comparison, makes price differences more noticeable and helps to equalise it across borders. Additionally, disappearance of transaction costs and price transparency will certainly deepen the common financial market that is likely to arise from the exercise.
Although there are, on the other side of the coin, such disadvantages as the cost of institutions and individuals adjustment to a new currency and the lack of national monetary policy to adjust as desired, the benefits are enormous.
Even so, there are additional benefits from the new vision, which we find equally commendable. They include the creation of a highly functional regional market and its equitable integration into the global market; effective attainment of regional food security based on enhanced production, effective storage, distribution and marketing; and the establishment of a viable regional infrastructure network.
Lofty as these goals are, we note with concern the lack of commitment of the member states of ECOWAS to the values and objectives of the Community. We also notice the mutual suspicion among members and the unending supremacy battle between the French-speaking countries and their English-speaking counterparts.
These are major reasons for the stunted growth of the regional body founded in 1975 to promote economic integration in "all fields of economic activity, particularly industry, transport, telecommunications, energy, agriculture, natural resources, commerce, monetary and financial questions, social and cultural matters ....."
We are therefore persuaded to believe that the realisation of the dream of a single currency for the region remains a function of how well these problems are addressed. For example, the fear of some member countries that with a single currency they would become an appendage of Nigeria, the region’s largest nation, is unfounded. Active trade in the region stands to benefit all member countries. Already, a lot of trading is being done informally.
As a key member of the body, Nigeria has been playing a commendable role in actualising the dreams of ECOWAS. She has already shown commitment to the new vision. Minister of Finance, Dr. Mansur Muhtar, gave the commitment at the ECOWAS council meeting in Abuja.
Muhtar told the convergence council made up of the ministers of finance and central bank governors of member states that: "Let me once reaffirm Nigeria's unflinching support for the attainment of the ECOWAS single currency project."
We support a single currency for the sub-region and urge member countries to show seriousness in the efforts to achieve it.
