It was a dream come true for the ECOWAS leaders at their 55th Ordinary Session held recently in Abuja when Eco currency was unanimously adopted for the purpose of achieving economic integration of the Africa sub-region.
All things being equal, the single currency is expected to be issued this month. The adoption was the climax of over 30 years of planning, deliberation and the ultimate resolution to bring member countries under a single unified currency.
Following the epic-making event, however, emotions have been running wild over the prevailing macroeconomic indices within the member countries which are likely to delay successful implementation of the new financial initiative. To ensure seamless take off of the integration policy, the leaders had instructed the commission to accelerate the operation of the Special Fund for financing of programmes in the revised Roadmap for the ECOWAS Single Currency Programme, urging member countries to work on the worsening of the macroeconomic convergence before the deadline so as not to constitute an impediment to the smooth implementation of the agreement.
They further stressed the need for “a real firm political will” for the region to hastily achieve the single currency.
A statement issued by the ECOWAS Chairman, President Issoufou Mahamadou, at the end of the Ordinary Session reads: “The Authority takes note of the 2018 macroeconomic convergence report. It noted the worsening of the macroeconomic convergence and urges member states to do more to improve on their performance in view of the imminent deadline.
“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.”
Some of the convergence criteria countries must meet in order to join include: single digit inflation figure, fiscal deficit not more than four per cent of the GDP, tax revenue of not less than 20 per cent of the GDP. Other than the Francophone countries-Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, Gabon, Cote d’Ivoire, Mali, Niger, Senegal and Togo, that reacted swiftly and adopted Eco currency, only one member country among the Anglophone bloc is said to have met the convergence criteria. Others are still grappling with one challenge or the other.
Nigeria is the biggest economy in the sub-region, constituting two-third of the total GDP within the union. However, its capacity to play its leading role is currently been inhibited by the inability to meet the convergence criteria. While some experts have cautioned the Federal Government against hasty adoption of the currency in the face of the present economic challenges, others say it is an opportunity to expand its trade within the member countries.
Some cynics, who expressed reservation about the adoption of the currency, based their fears on the fact that Nigeria might likely meet resistance and counter-strategy from France, arguing that 50 per cent of resources of the Francophone countries are domiciled in France. Besides, since the Board of Central Bank of West African States (BCEAO), where the currency will be printed is under the influence of France, they further opined, Nigeria’s economy would be more vulnerable to external manipulation with the adoption of Eco currency unless deliberate effort is made to stimulate industrial production to meet the market needs of the neighbouring countries.
According to Economic experts, Nigeria must position its naira as a strong currency for effective competitiveness before embracing the currency union.
A former President of the Nigerian Institute of Bankers, Prof Segun Ajibola, in an interview with Sunday Sun, urged the Federal Government to plug the loopholes before adopting the currency, lamenting the vulnerability of the country’s economy.
He said: “Nigeria is a big brother among African states and to the West African countries in particular. I think Nigeria can embrace the initiative, but on our own terms. We must take cognizance of the peculiarity and vulnerability of our economy to smuggling, trafficking and so on. If we can plug the loopholes and resist external interferences, especially from Francophone colonial master, I believe it will promote trade, as well as ease of movement of persons within the sub-region.
“We should look at whatever is on ground, look at all the terms and conditions that exist today, propose new conditions and then dictate terms that will attract us as a country into joining the initiative. With our size and the level of vulnerability, we can’t just take anything hook, line, sinker. We must be convinced that whatever the existing conditions, it will be helpful to our own cause as a nation. Nothing is cast in iron. We are not under any legal obligation to go ahead.
On Thursday, Nigeria and six other English-speaking countries, including Gambia, Ghana, Guinea, Liberia and Sierra Leone and Cape Verde met to review the controversy trailing the adoption of ECO currency by the Francophone countries. Nigeria is yet to make its official position on the issue known.
But in a quick reaction, a former Special Assistant (SA) on Political Matters to ex-President Olusegun Obasanjo, Dr Gbolade Oshinowo, while speaking with Sunday Sun, warned Nigeria against jumping into the fray with its toga of ‘Big Brother’ arguing that there was an urgent need to strengthen the value of the naira to derive the expected benefits from the currency union.
His words: “Nigeria’s economy should be the primary concern of the Federal Government. It is only when the economy is buoyant that we can think of regional alliances. It is not advisable at this stage when our naira is weak and our economy is vulnerable. I don’t think Nigeria as a leader in the group is the one driving the initiative. I suspect that certain decisions had been taken by the Francophone bloc, they only expected Nigeria to come along and I think it is very dangerous. It is something we must watch very carefully. Nigeria has to tread very carefully so that it doesn’t just rush into something that it would regret. We should first and foremost strengthen the naira.”
But a Financial expert and Managing Director of Cowries Assets Management Ltd, Mr Johnson Chukwu, dismissed the fears as unfounded, arguing that France was until the adoption of the ECO currency a guarantor of CFA and, therefore, will not be in a position to manipulate the single currency, when it comes into full operation in the sub-region.
His words: “I wouldn’t see it from that perspective because African countries are going towards economic integration. There is no way France can manipulate ECO currency before she is only a guarantor for CFA and I doubt if it can continue to play that role when all West African countries join the currency. To manipulate a currency means you supply that currency beyond the market demand and you buy that currency to stabilize it. Granted that Francophone countries had their currency guaranteed by France and had a link to Euro; I don’t see why any country should adopt conspiratorial approach to it. They’ve been in single currency for decades even before the advent of Euro. So, where is the conspiracy theory coming from?”
Instead, he attributed the easy with which the French-speaking countries shifted to ECO currency to the age-long existence of common currency among them.
He explained: “The issue of ECO as common currency has been on for almost 30 years and the Francophone countries have always been using common currency apart from Guinea Conakry. I do not see how their adoption of ECO in place of CFA will amount to short circuiting the system. It is for the English-speaking West African countries to come up swiftly and work towards economic integration of West African sub-region. The Francophone countries are far ahead of Anglophone in that respect.
“The Francophone countries too have not met the convergence, but because they had a common currency and a Central Bank, the adoption of ECO as a single currency was not as difficult as it is for the English-speaking countries that have their different currencies. Now that they have moved to a single currency, they will work together to ensure that the convergence is met.”
According to Chukwu, the timeline set for the issuance of ECO single currency may not be achievable due to the inability of the English-speaking countries to meet the convergence criteria. “For now, it will be very difficult to meet the target set for the issuance of the ECO single currency because most of West African countries are not close to meeting the convergence. So, adoption of the currency across the sub-region may be very difficult for now. In terms of tax revenue to GDP, deficit budget to tax revenue, among others, Nigeria is far from meeting the convergence criteria,” he said.
The National Chairman of the UPP, Chief Chekwas Okorie, while also allaying fears about the concern raised by cynics, said that it was high time Nigeria keyed into the currency union.
He argued: “It is a very good idea. There are regional economies that had done that and they are not regretting it at all. It has improved economic activities within the region. I have the European Union where the Euro is being used in mind here. They have seen that the bigger the better in terms of economic growth. So, using a single currency in West Africa is a good beginning. I am actually looking forward to when that will happen. African is not bigger than the United States of America where they are using the same currency. West Africa wouldn’t be the largest economy to use single currency.
“We have financial experts who are working in the Central Bank and Presidential Advisory Council who will look into all the fears being expressed by those who are skeptical about it. But personally, I have a strong support for it. I believe it will open up our economy and improve transactions, trade and other economic activities in the sub-region.
“The time has come for us to key in. We almost came late to enter into agreement with Africa Continental Free Trade Agreement because we were trying to be extremely very careful. But eventually we saw the need to do it and we have done it. And I think we can lead this initiative being the biggest economy in West Africa. The single currency is a step towards a more functional and wider market for trade and commerce in the sub-region. I don’t think it makes sense to have a single currency for Francophone and another currency for Anglophone. The people may as well go ahead and split ECOWAS along those lines.”
Okorie expressed optimism that the initiative would success, especially taking cognizance of current ease of doing business, as well as other incentives the administration of President Muhammadu Buhari has brought into the economy.
“Certain infrastructure for economic growth and expansion are now being seriously laid for the manufacturing sector to grow. Agriculture is also receiving tremendous growth. Another emerging frontier for economic growth is the gas industry, which is part of the clean energy sector the world is beginning to embrace. I can see Nigeria making giant stride in the area of gas utilization and value chain. We don’t have to wait until we have gone into full production before we begin to look for market for our output. The wider market can trigger off the productive sector that has been quite dormant over time. I think we have to be positive about it. I can assure you, the wider the market, the more the incentive to invest and grow the economy”, he posited.
He also absolved French-speaking countries of any conspiracy, noting that common currency had existed within the economic bloc before the adoption of ECO single currency.
He added: “The Francophone countries have always been on the same currency-CFA. All they are doing now is to liberate themselves from the stranglehold of France so that they can have a more flexible currency that will not be tied to the France currency. I also believe that the issue of a single currency for West Africa had been on the card for a long time. So, if they had waited for the rest members of West Africa countries in ECOWAS and they seem to be dragging their feet, there is nothing wrong in them taking the initiative and I don’t see anything wrong in other countries keying into it.
“If they key in, it doesn’t mean the Francophone countries will be the one to control the currency. The various Central Banks will come to agreement on that. If it has worked in Europe, it will definitely work in West Africa. If the economy of the Francophone countries is tied to the apron string of France, Nigeria is not tied to the British colonial government; so also Ghana and other Anglophone countries. If they have taken the initiative, we need to immediately key into it so that it becomes a sub-regional policy. The benefits will be more, if it is ECOWAS policy.
“Nigeria has everything to benefit from a single currency as the biggest economy in West Africa. It is an avenue for expansion of Nigeria’s economy. It will be to the benefit of Nigeria than any other African economy within the sub region.”
Nigerian government like its counterpart in Ghana has yet to take a definite position on this matter, as authorities concerned are trying to understudy the newly adopted single currency and its implication for the economy.