Vice-President, Dr Mahamudu Bawumia, has appealed to Member States of the West African Monetary Zone (WAMZ) to double their efforts towards meeting the macroeconomic convergence criteria for a single currency by January 2027.
The call follows failure by the Member States of WAMZ to meet all the four convergence criteria for a monetary union as of June 2023.
Since its conception in 2003, leaders of the 15 member Economic Community of West African States (ECOWAS) have postponed the launch of a single currency at least five times: In 2005, 2014, 2014, and 2020.
Four primary convergence criteria that must be met by each member country before the eco could be implemented are a single-digit inflation rate at the end of each year, a fiscal deficit of no more than 4% of GDP, a Central-bank deficit-financing of no more than 10% of the previous year’s tax revenues and Gross external reserves that can give import cover for a minimum of three months.
Seven currencies are currently in use in West Africa’s 15 countries, with eight mostly French- speaking nations using CFA francs.
Vice-President Dr Bawumia made the call while addressing participants at the 2023 Mid-Year Statutory Meeting of West Africa Monetary Agency (WAMA), the West Africa Institute for Financial and Economic Management (WAIFEM) and the West Africa Monetary Institute (WAMI) in Accra.
The meeting aimed at reviewing the macroeconomic development and convergence reports from Member States of WAMZ and evaluate progress made towards meeting the primary and secondary criteria required for a single currency.
It brought together finance ministers and governors of the central banks of WAMZ member states, including Ghana, Nigeria, Liberia, The Gambia and Sierra Leone.
Vice-President Dr Bawumia said the recent geo-economic fragmentation globally had made it imperative for inclusive monetary integration within the sub-region.
“It is important for the Member States of the WAMZ to take ownership of the convergence programme by mainstreaming it into the national macroeconomic frameworks and undertake meaningful reforms to achieving the convergence criteria on a sustained basis, otherwise the vicious cycle of endless postponements will continue to hunt us,” Dr Bawumia stated.
“We, therefore, must double our efforts in ensuring macroeconomic convergence and stability which are the necessary conditions for the take-off of a monetary union.
“As we engage in development activities in our various countries, we should not lose sight of the fact that macroeconomic stability is vital for monetary union to thrive,” he added.
Dr Bawumia underscored the need for a balance between economic development and macroeconomic stability.
He noted that despite the daunting challenges involved in meeting the criteria, there had been significant milestones chalked towards the implementation of the activities of the ECOWAS single currency roadmap over the years.
“I understand that the name of the proposed single currency has been determined and is called the eco.
“A federal model structure has been adopted for the common central bank, the name of the common central bank has been determined as the Central Bank of West Africa, a flexible exchange rate regime adopted, and inflation targeting framework chosen,” he added.
However, he observed that, more than 50% of the activities of the roadmap are outstanding, including statistical harmonisation, macroeconomic convergence, capital account liberalisation, among others.
He lauded the African Development Bank’s financial support worth $9 million to WAMI towards the preparation of Unique Bank Identity (UBI) Project.
The project is intended to ensure bank customer identification and secured digital banking transactions.
Model legislative instruments have been drafted for adoption by the member states to meet the regulatory needs of the emerging financial technological innovations, in a globally interconnected financial ecosystem.
The Vice-President said significant strides had also been made in debt and capital market integration as well as insurance integration in the WAMZ.
Government of Ghana, he said, was committed to restoring macroeconomic stability that formed the basis of sustainable economic growth and development.
“We are leaving no stone unturned under our Post Covid-19 Programme for Economic Growth (PC-PEG) aimed at restoring macroeconomic stability and debt sustainability, building resilience through the implementation of wide-ranging and strong structural reforms programming and laying the foundation for stronger a more inclusive growth, while also protecting the poor and the vulnerable”.
Over the medium term, he underscored government’s resolve to work hard to rejuvenate the economy and improve on its performance on the convergence criteria.
Vice-President Bawumia, therefore, commended the efforts of WAMI and all the stakeholders in ensuring that the single-currency project remained a priority and on course. Ghana’s finance minister, Mr Ken Ofori-Atta was chosen as the Chair of Convergence Council of Ministers and Governors of the Central Banks of the West African Monetary Zone.