By Omodele Adigun
Two years after the Chairman of the ECOWAS Council of Ministers, Geoffrey Onyeama, lamented that the convergence criteria for single currency adoption in the sub-Saharan Africa were yet to be met by the ECOWAS countries, the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has offered roadmap to his colleagues in the West African Monetary Zone (WAMZ) on how to find a way around the convergence debacle.
Onyeama, at the end of the 54th Ordinary Session of the ECOWAS Heads of State and Government in Abuja on Saturday, December 22, 2018, had explained that there were certain criteria that needed to be fulfilled for a region to achieve the single currency adoption, which were not yet fully addressed by the various ECOWAS countries.
“There is a roadmap, the convergence criteria that have to be satisfied before we can really get to the stage of a single currency. In ECOWAS, we have a group of countries that, in essence, almost have a single currency mechanism in place and we have other countries that have their own currencies and being able to align all these is going to take some time,” he stated..
Shedding more light on the convergence criteria, an analyst, Marcel Okeke, a former Chief Economist/ Group Head, Research & Economic Intelligence Group at Zenith Bank Plc, but now the Lead Consultant, Mascot Consult Limited, said a “single currency for the region comes with some challenges and criteria that many of the members countries will not be able to meet.”
According to him, “a country like Nigeria and other countries must not have inflation rates that are double digits. They must not have exchange rates that move up and down. So, there must be stability in all those indicators across board. Many member countries, as at now, have not attained this feat”.
But last week in Lagos, Emefiele, while deliver- ing his keynote address at WAMZ Policy Dialogue on “Monetary Policy Responses of the Member States of the West African Monetary Zone: Emerging Lessons from Covid-19 Pandemic”, had advised that WAMZ members should create a forum to facilitate sharing of country experiences on monetary policy responses in the management of the adverse socio and macro- economic effects of the pandemic, which will go a long way to improve respective countries’ performance in meeting the WAMZ convergence criteria.
His words: “There is no denying the fact that the gamut of measures had been very helpful in navigating our respective economies through this difficult time. The need, however, remains imperative for monetary pol- icy responses to the pandemic in the WAMZ to be synergized and coordinated in order to preserve the gains already achieved towards regional integration, particularly given evidences of interdependencies and likely spillover of the respective macroeconomic responses across the economies of the zone. To achieve this, it be- comes imperative to create a forum like this to facilitate sharing of country experiences on monetary policy responses in the management of the adverse socio and macroeconomic effects of the pandemic. This will go a long way to improve respective country performance in meeting the WAMZ convergence criteria.”
He stated the measures taken by central banks, not only in WAMZ but, around the world:
“As it were, central banks across the advanced, emerging and developing economies had assumed a lead- ing role in fashioning sets of policy responses to both the demand and supply-side shocks that the pandemic had exerted on their economies. In most cases, the responses stretched monetary policy beyond its conventional boundaries, in order to prop up the many activities affected by lockdowns and the associated curtailment measures. Responses of central banks across the WAMZ had been timely, proactive and very commendable, with a focus at ensuring price and financial system stability, while also mitigating financial fallout on both corporates and households. Broadly, responses of monetary policy across the zone were diverse and tailored to meet the peculiar shocks the pandemic had exposed our individual economies.
“Broadly, monetary pol- icy responses within the zone can be characterised, among others, to include reductions in policy rates, ostensibly aimed at reinvigorating growth in response to the sudden economic contraction caused by CO- VID-19. Central banks have also implemented various forms of liquidity measures to support the government’s short-term budgetary needs as well as other liquidity assistance frameworks to en- sure market liquidity. There were in addition measures aimed at stabilizing the foreign exchange market in the face of supply shocks precipitated by the pandemic. Also, spates of interventions to support and strengthen health institutions and med- ical support services to mitigate the impact of the pandemic were undertaken.”
In his remark, the Commissioner, Macroeconomic Policy and Economic Re- search of the Ecowas Commission, Dr, Kofi Konadu Apraku stated that the global concern of the pandemic which has generated demand and supply shocks have revolved around its overall impact on the economy, health and humanitarian impacts, with particular emphasis on the sectors of the economies that are most vulnerable. He however added that the extent of the damage would ultimately depend on how quickly the virus is curtailed by governments of the monetary zone.
According to him, “ECOWAS, like other Regional Economic Communities is very concerned about the unprecedented negative public health, economic and humanitarian impacts of the pandemic. To activate a regional response to the pandemic based on thee assessment of its effects, he in- formed the meeting that the ECOWAS Head of States and Government at it Extraordinary Summit held on April 23, 2020 expressed deep concern about the spread of COVID-19 and its negative social, economic, financial and human security impact on all ECOWAS. He added that the Summit further acknowledged response measures put in place to mitigate the negative impacts of the pandemic to regenerate economic growth and to reduce negative social, humanitarian and public health impacts of the pandemic”.
Six member countries of Gambia, Ghana, Guinea, Sierra Leone, Nigeria and Liberia gave presentations.
The policy dialogue was attended by Central Bank Governors/representatives of member states, Director Generals of West African Monetary Institute (WAMI), West African Monetary Agency (WAMA),West African Institute for Economic and Financial Management, (WAIFEM), Nigeria’s Minister of Finance and Director, Country Department and IMF.