Ghana’s government has given the strongest indication ever that it would in 2020 adopt the new single currency to be used by ECOWAS member states.
Beginning in January 2020, countries within the West African sub-region will be able to use a single currency called ECO.
The currency was adopted by the Authority of ECOWAS Heads of State and Government in Nigeria’s capital Abuja in June 2019.
The West African leaders endorsed the currency at their 55th Ordinary Session and approved a road map towards the currency’s issuance in January 2020.
There was a roadmap to ensure that all member countries meet three primary criteria for the adoption of the currency.
Many have doubted if the ECO will really be adopted by member countries, but there seems to be willingness of many countries in West Africa to adopt the currency.
In December 2019 Ecowas said it was renaming the CFA franc into Eco.
Under the new deal struck between ECOWAS and France, this will also involve cutting off some of the financial links between Francophone West African countries and France.
“This is a historic day for West Africa,” Ivory Coast’s President Alassane Ouattara said during a news conference with French President Emmanuel Macron in the country’s main city Abidjan.
Ghana’s government in a statement said it was “determined to do whatsoever we can to enable us join member states of UEMOA, soon, in the use of ECO.”
“Ghana urges the other Member States of ECOWAS to work rapidly towards implementing the decisions of the Authorities of ECOWAS, including adopting a flexible exchange rate regime, instituting a federal system for the ECOWAS Central Bank, and other related agreed convergence criteria, to ensure that we achieve the single currency objectives of ECOWAS, as soon as possible, for all Member States,” the statement added.
Criteria for Eco adoption
That includes member countries having 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 by 2019.
Countries were expected to also have gross reserves that can finance at least three months of imports.
The other convergence criteria that has been adopted by ECOWAS are public debt or Gross Domestic Product of not more than 70 percent.
There is also the issue of central banks financing budget deficit not more than 10 percent of previous year’s tax revenue, and nominal exchange rate variation of plus or minus 10 percent.
ECOWAS has a combined population of 385 million and was set up in 1975.
It comprises Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.
Eight of these countries use one currency called the CFA franc. Those are Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo.
The current decision to adopt one currency is similar to the move made by the European Union to adopt the single currency called Euro.