Countries within the West African sub-region will from 2020 be using a single currency called ECO.
The authority of ECOWAS Heads of States and Government met and took the decision on Saturday in Nigeria’s capital Abuja.
The new currency was endorsed by the African leaders at their 55th Ordinary Session and settled on a roadmap towards the issuance of the currency in January 2020.
The roadmap included three primary criteria set for all the member countries to meet for the adoption of the currency.
Criteria for Adoption
Member countries were expected to have 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.
It also included member countries having gross reserves that can finance at least three months of imports.
The other convergence criteria adopted by the 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%.
At the end of the meeting, Mustapha Suleiman, Nigeria’s Permanent Secretary, Ministry of Foreign Affairs, noted through a communique he read that the regional leaders instructed the ECOWAS Commission to work in partnership with the West African Monetary Agency.
The Commission, also in collaboration with the West African Monetary Institute and all central banks will work to settle on a symbol for the single currency, 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, he said that countries ready will spearhead the implementation with other countries that are not yet ready joining as they meet all the criteria.
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 program as they comply with all six convergence criteria.
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.
Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo use one currency called the CFA franc.
The current decision to adopt one currency is similar to the move by the European Union to adopt a single currency called Euro.