Nigeria’s finance minister, Zainab Ahmed, has said that the single currency regime for West Africa Countries might not kick off next year as expected because many countries are yet to meet the criteria for the monetary alliance.
Speaking at a meeting of the ECOWAS ministers of finance and governors of central banks on the currency programme, Ahmed said that only Togo had met all the convergence criteria.
The idea of the single currency for the West African region was first mooted almost 30 years ago in the hope of boosting cross-border trade and economic development.
The leaders had formally agreed to name the common currency “Eco”.
The member-countries of ECOWAS are Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.
ECOWAS had put up three primary and three secondary criteria that each country must achieve to be included in the monetary union.
The primary criteria include a budget deficit of not more than 3 percent; average annual inflation of less than 10 percent with a long-term goal of not more than 5 percent; and gross reserves that could finance at least three months of imports. While the secondary criteria include public debt/Gross Domestic Product of not more than 70 percent; central bank financing of the budget deficit should not be more than 10 percent of previous year’s tax revenue, and nominal exchange rate variation of plus or minus 10 percent.
The Nigerian minister added that the inability of other countries in the sub-region to achieve the criteria would make the operationalisation of the “Eco” currency in 2020 problematic.
The single currency regime is expected to be based on a flexible exchange rate regime, with inflation focused monetary policy framework.