Single Currency Strategy: How ECOWAS’ Decision Impacts Nigeria
The aspirations of the West African Monetary Zones (WAMZ) to adopt a single currency across member states have encountered significant hurdles, with the timeline for realisation extending further than initially anticipated.
The Director-General of the West African Monetary Institute (WAMI), Olorunsola Olofeso, revealed this development during the 51st meeting of the Convergence Council of WAMZ held in Abuja over the weekend.
According to Dr Olofeso, the key convergence indicators, critical benchmarks that member states must meet to achieve the monetary union, have seen a notable decline.
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This setback raises concerns about the feasibility of introducing a unified currency in the near future, a goal that has been part of the region’s economic integration efforts for years.
The quest for a single currency aims to foster economic stability, enhance trade, and facilitate seamless transactions across West Africa.
However, the varying economic policies, inflation rates, and fiscal deficits among the member states have posed considerable challenges to achieving these convergence criteria.
The meeting in Abuja brought together finance ministers, central bank governors, and other stakeholders from the WAMZ member states to assess progress and strategise on overcoming the existing challenges.
He said, “The assessment of Member States’ performance reveals that as at the end of June 2023, all WAMZ Member States failed to meet all the four primary convergence criteria. The zone’s performance score declined to 29.2 per cent, compared to 41.7 per cent during the same period in 2022.”
The medium-term projections on macroeconomic convergence, as indicated by the multi-year national macroeconomic convergence and stability programmes of the Member States, suggest that none of the WAMZ Member States will meet all the four primary convergence criteria on a sustainable basis for the remaining three consecutive years (2024-2026) of the convergence phase of the ECOWAS Single Currency Roadmap (2021-2027).”
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While presenting the report of the Committee of Governors of WAMZ, Chairman of the Committee and Central Bank governor, Olayemi Cardoso, said the Committee of Governors has directed the DG to present to it a periodic comprehensive macroeconomic and status of convergence report at the WAMZ Statutory meetings, commencing at the mid-year 2024.
Speaking further, Cardoso added that the Committee of Governors has “Directed WAMI to update its database to reflect current and reliable statistics for policy analysis; and also convene periodic seminars on topical issues of relevance that seek to provide solutions to macroeconomic policy issues of the member states.”
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