Towards the end of 2019, on the 21st of December, President Alasane Ouattara of Cote d’Ivoire, President of the West African Economic and Monetary Union (UEMOA) together with President Macron of France declared that eight member countries of ECOWAS would discontinue using the CFA Franc currency and would begin to use the Eco as their new currency in 2020. These eight countries include Cote d’Ivoire, Mali, Senegal, Burkina Faso, Niger, Togo, Benin and Guinea-Bissau. Ghana sent out a communique applauding the decision and stated that it was ready to engage necessary measures to join other member States of the UEMOA in adopting the Eco currency and urged that a flexible exchange rate should be adopted. Nigeria on the other hand sent a press release on the 30th of December, 2019 stating that it had received the news of the proposed adaptation of the Eco as the single currency in 2020 and “is studying the situation and would respond in due course”.
The “Eco” is the proposed name for the singular Common currency that the West African Monetary Zone (WAMZ) plans to introduce into the framework of ECOWAS. As a result of this proposed introduction of this singular currency, links between West African French Speaking countries and France would be largely severed as post colonialism, these countries have had their most of their finances and its management attached to France. Paris will no longer co-manage the currency of these countries, its foreign exchange reserves will not be centralised by France and the former obligation to pay 50% of its reserves to the French Treasury operating account ends. Also France will be leaving management bodies of the CFA. However, Banque de France will continue being the guarantor of the convertibility between the Eco and the Euro and will keep fixed parity (value of a nation’s currency in relation to another where currencies are fixed against each other). Looking at this arrangement, it seems like France has commandeered the Eco deal and intends to anchor it.
Plans for the adoption of the Eco started in 2003 and its launch date has been postponed several times in 2005, 2010 and 2014. The goal of the Eco currency is to promote regional trade and investment.
Before counties can qualify to join the currency adaptation, ten key demands put in place by the West African Monetary Institute (WAMI) must be met. They include four primary criteria to be achieved which are a single digit inflation rate at the end of the year, a budget deficit of not more than 4% of the GDP, a central Bank deficit financing of not more than 10% of the previous year’s tax revenues and gross external revenues that can give import cover for a minimum of three months. The secondary criteria include a stable real exchange rate, a positive real interest rate, public investment to tax revenue equal to or greater than 20%, wage bill to tax revenue equal to or less than 35%, tax revenue should be equal to or greater than 20% of the GDP and the prohibition of new domestic default payments and liquidation of existing ones. So far, only Togo has been able to meet the primary requirements. Given that the economies of various countries are at different levels of development, the 2020 launch date may not be achievable. Member countries of ECOWAS have varying levels of debts, interest rates and budget deficits. These differences are particularly underlined by Nigeria’s economic size in comparison to that of other member countries. There has also not been any notable progress as regards design, production and testing of these proposed currency notes.
Granted that there are advantages from conducting trade using a single currency instead of different currencies and global currencies like the US Dollar and Euro that is used for trading currently, however the loss of each country’s ability to adjust its currency exchange rate and devalue their currency in probable occurrence of an economic dip is gone. Countries will be unable to fully manage and control their economic revitalisation. There is also an imminent risk of a member country developing financial problems which would inadvertently affect the entire zone. When Greece Portugal, Ireland and Spain got too much deficits, external loans and high inflation, it affected the Eurozone. A debt default by one nation within this pact is a default by all, likewise inflation rates within a member nation affects the entire zone.
It is also important to note that France will have the sole responsibility of establishing and even printing the new currency and is pegging this currency to the Euro. Countries adapt this currency by accepting these conditions from France in a disguise of aid. These eight countries have adopted the new currency without meeting its primary economic requirements. Whether we chose to admit it or not, France would dictate how this works for us.
Nigeria’s silence in the wake of the adaptation of the Eco by these eight countries and Ghana’s communique is deafening especially as these countries are yet to meet the requirements the region set out for itself. Nigeria had the opportunity to spearhead the sub region’s single currency pact as we alone are responsible for 66% of ECOWAS GDP and 55% of its population and we ought to assert our leadership role in this current development. What is the Economic Advisory Council doing? Beyond attending conferences and seminars, has the Economic Advisory Council met with the ministry of Finance, Budget and Planning over this issue? Ghana has said that it is considering joining but would want a flexible exchange rate implying that it is not comfortable with attaching the Eco to the Euro. It is important to remember that Nigeria closed its land borders since August 2019 and this has raised concerns in Cameroon, Niger, Benin, Togo and Ghana and reports speculate that Nigerians resident in Ghana have been stopped from trading in the country in retaliation. Perhaps we refuse to join and decide to continue with our Naira because of Frances control of the currency, how do we boost our economy and how to survive being the lone soldier in our region? What happens if we refuse to join and these countries in turn refuse our products especially with the closure of our land borders? Then we need to stand strong and become the pivot of the AFCFTA. We would need to examine all economic indices and not only be self sufficient but increase our exports. The economic atmosphere must be made conducive for Nigerians so that we produce excellent products for the global market. Beyond the agricultural industry, the manufacturing industry needs to be revived and begin functioning at maximum capacity. Industries like the entertainment, fashion, tech, mining and others need to be harnessed. Our economy needs to feel the impact of the hitherto silent Economic Advisory Council and improve.
Will the Giant of Africa say yes and like other member counties allow France, a third party from another region anchor the Eco deal or chart its course and refuse any arrangement with France and assert its leadership role by soliciting for independence of the West African Eco deal? Are we prepared incase these countries refuse to disallow France from indirectly controlling the Eco deal? Hopefully our silence is not prolonged and does not turn the indices against us. We need to note that Morocco the newest member of ECOWAS is geographically and strategically well placed and if they agree to be part of the Eco deal with the present conditions, it may change the stakes for us as Morocco has an upwardly thriving economy with a higher GDP per Capita, GDP growth rate and low inflation rates in the past three years.
Will the Lion of Africa roar and establish and solidify its dominance in ECOWAS without much delay or cower away and maintain its usual prolonged silence before taking a stance on issues?