Countries within the West African sub-region will be able to use a single currency from January 2020
The
currency which is called ECO was adopted by the Authority of ECOWAS
Heads of State and Government on Saturday in Nigeria’s capital Abuja.
The
West African leaders endorsed the currency at their 55th Ordinary
Session and approved a road map towards the currency’s issuance in
January 2020.
There roadmap is to ensure that all member countries meet three primary criteria for the adoption of the currency.
The
criteria for adoption includes member countries having a budget deficit
of not more than 3%; average annual inflation of less than 10% with a
long-term goal of not more than 5% by 2019.
Member countries were also expected to have gross reserves that can finance at least three months of imports.
The other convergence criteria that have been adopted by ECOWAS are public debt or Gross Domestic Product of not more than 70%.
There
is also the issue of central banks financing budget deficit not more
than 10% of previous year’s tax revenue, and nominal exchange rate
variation of plus or minus 10%.
A communiqué by Nigeria’s
Permanent Secretary, Ministry of Foreign Affairs, Mustapha Suleiman said
that the regional leaders instructed the ECOWAS Commission to work in
collaboration with West African Monetary Agency.
The
commission is also expected to work with West African Monetary Institute
and all central banks to settle on a symbol for the single currency.
Meanwhile,
the ECOWAS Chairman President Issoufou Mahamadou said that the revised
roadmap does not affect the date for the issuance of the single currency
in January 2020.
He said “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,” he added.
ECOWAS was set up in 1975 and has a combined population of 385 million.
It
comprises Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea,
Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal,
Sierra Leone and Togo.
Eight of these countries use one currency
called the CFA franc. Those are Benin, Burkina Faso, Guinea-Bissau,
Ivory Coast, Mali, Niger, Senegal, and Togo.
The decision to adopt one currency is similar to that of the European Union to adopt a single currency called Euro.