From January 2020, countries in the West African subregion can use a single currency called ECO. The currency was introduced on Saturday by the government and Heads of State of the ECOWAS in the Nigerian capital, Abuja.
The Heads of State and Government of West Africa approved the currency at the 55th regular session and adopted it in the January 2020 schedule for currency issuance.
There is a road map to ensure that all Member States meet three basic criteria for introducing the currency.
This includes the Member States with a budget deficit of 3% or less; Annual inflation averages below 10% with a long-term target of no more than 5% in 2019.
Countries are also expected to have gross reserves that can finance imports for at least three months.
ECOWAS leaders decided to meet in Abuja, Nigeria for the decision making.
Other ECOWAS convergence criteria are national debt or gross domestic product of 70% or less.
Coupled with this is the problem that the central bank finances the budget deficit of no more than 10% of the previous year’s tax revenue and that the nominal exchange rate will vary by plus or minus 10%.
At the end of the meeting in Abuja, Mustafa Suleiman, Secretary of State at Nigeria’s Foreign Ministry, stated in a communique that the head of the regional government had instructed the ECOWAS Commission to work with the West African Currency Agency.
The Commission is also expected to work with the West African Monetary Institute and all central banks to agree on symbols for the single currency.
Chairman of the ECOWAS President Issoufou Mahamadou said the revised road map had no impact on the issuance date of the single currency in January 2020.
Mahamadu spoke of the adoption deadline and said, “We have not changed it, but we will continue with the evaluation at that time.
“We believe that countries that are ready to adopt a single currency and countries that are not ready to join will join the program once they meet all six convergence criteria.”
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The fourth meeting of the working group Presidency of the ECOWAS Currency Program
ECOWAS has a total of 385 million inhabitants and was founded in 1975.
It consists of Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.
CFA franc is used as a single currency by Eight of these countries. They are namely Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo.
The decision to adopt a single currency is similar to the European Union’s move to adopt a single currency called the Euro.