In June last year, ECOWAS made the headlines after announcing that beginning in January 2020, countries within the West African sub-region will be able to use a single currency called ECO.
That decision was taken by the Authority of ECOWAS Heads of State and Government at the 55th Ordinary Session in Nigeria’s capital Abuja.
The West African leaders at the time endorsed the currency and approved a road map towards its issuance in January 2020.
There was a roadmap to ensure that all member countries meet three primary criteria for the adoption of the currency.
That included 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 was adopted by ECOWAS was public debt or Gross Domestic Product of not more than 70 percent.
There was 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.
But majority of the member countries failed to meet the criteria in 2019 and are far from meeting the criteria this year.
More needed to be done
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.
The Commissioner for Economic Policy and Economic Research at the ECOWAS Commission, Dr Kofi Konadu Apraku told local media in Ghana‘s capital Accra that there is much to be done before the currency is adopted.
By the end of 2019 countries including Cote D’Ivoire, Burkina Faso, Mali, Guinea, Togo and Cape Verde were the only ones to have met the convergent criteria for a possible take off of the currency.
The eight countries that use one currency called the CFA franc last year said they would be renaming the currency Eco.
Those are Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo.
But among those countries only Cote D’Ivoire, Burkina Faso, Mali, Guinea and Togo have met the criteria to adopt the Eco.
The current decision to adopt one currency is similar to the move made by the European Union to adopt the single currency called Euro.
But ECOWAS still has a long way to go to make this policy a reality and effective.