The Economic Community of West African States (ECOWAS) have endorsed a single currency called ECO to be used in countries within the West African sub-region effective January 2020.
ECOWAS, set up in 1975 comprises of Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo with eight of these countries using one currency called the CFA franc.
The single currency was adopted by the Authority of ECOWAS Heads of State and Government on Saturday in Nigeria’s capital Abuja. This decision borrows from that of the European Union to adopt a single currency called the Euro. At their 55th Ordinary Session, the West African leaders approved the road map towards the currency’s issuance ensure that all member countries meet three primary criteria for the adoption which does not affect the date for the issuance of the single currency.
“We have not changed that but we will continue with assessment between now and then. 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,” said the ECOWAS Chairman President Issoufou Mahamadou.
As per the criteria, member countries must have:
- A budget deficit of not more than 3 per cent; average annual inflation of less than 10 per cent with a long-term goal of not more than 5 per cent by 2019.
- Gross reserves can finance at least three months of imports
- Public debt or Gross Domestic Product of not more than 70 per cent. Also the issue of central banks financing budget deficit not more than 10 per cent of previous year’s tax revenue, and nominal exchange rate variation of plus or minus 10 per cent.
The ECOWAS Commission will be working in collaboration with the West African Monetary AgencymInstitute and all central banks to settle on a symbol for the single currency.