West Africa gets a new currency – it’s called the ECO

Sierra Leone Telegraph: 2 July 2019:

Starting next January 2020, countries within the West African sub-region will be able to use a single currency called the ECO. The new single currency was adopted by the ECOWAS Heads of State and Government last Saturday, in Nigeria’s capital Abuja, after decades of discussion towards achieving regional economic integration.

The West African leaders endorsed the currency at their 55th Ordinary Session, along with a road map leading to citizens across the region being able to use the single currency on 1st of January 2020.

The previous roadmap spelling out the paths to single currency outlined three primary criteria for the adoption of the currency and ensure convergence of the various economies.

The most important of these criteria include the need for each ECOWAS member country having a budget deficit of not more than 3%; an average annual inflation of less than 10% with a long-term goal of not more than 5% by 2019; and gross reserves that can finance at least three months of imports.

The other convergence criteria that have been adopted by ECOWAS is that a member country’s public debt must be less than 70% of the country’s Gross Domestic Product.

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%.

At the end of the Abuja meeting a communiqué read by Nigeria’s Permanent Secretary, Ministry of Foreign Affairs, Mustapha Suleiman noted 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 – the Eco.

The ECOWAS Chairman President Issoufou Mahamadou has said that the revised roadmap does not affect the date for the issuance of the single currency in January 2020.

Speaking about the deadline for adoption Mahamadou 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.”

Established in 1975, ECOWAS has a combined population of 385 million across the following countries: Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.

But what could make integration and a move towards a single currency difficult, is that eight of these countries – Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo, are currently using one currency – the CFA franc.

It is not yet clear how much the total cost of moving to a single currency will be for the region, nor for each of the West African countries involved, nearly all of whom are suffering from serious economic stagnation.

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