15 July 2014

West Africa: Stringent Criteria Delays West Africa Single Currency

Stringent criteria are behind the delay for the West Africa Monetary Integration which was earlier scheduled to conclude December 31st, 2013, Daily Trust has learnt.

As at December 2013, only one country meet the convergence criteria out of six countries; two countries met three criteria; and the remaining three met only two criteria.

Speaking yesterday at the 37th meeting of the Technical Committee of the West Africa Monetary Zone (WAMZ) in Abuja, Deputy Governor Economic Policy Directorate, Central Bank of Nigeria, Dr Sarah O. Alade, said part of the reason for not meeting the criteria are the difficult times the countries experienced within the period.

"Countries have been going through difficult times and that is why it hasn't been possible to meet the convergence criteria from year to year. This year you may have a country meeting all the four criteria, in another year that same country meets less than three and we insisted that we need all the criteria met," she said.

Dr Alade said part of what the technical committee is looking into is the level of preparedness for the take-off date of January 1st, 2015.

"It is, therefore, imperative for this technical committee to thoroughly interrogate the issues and identify the key challenges that need to be addressed in order to achieve the objective of single currency in our sub-region," she said.

"This exercise is of utmost importance given the state of macroeconomic convergence in the WAMZ where Nigeria was the only member state that satisfied all four primary criteria in 2013, while Liberia and Sierra Leon satisfied three each. Besides, there has been a challenge of consistent year-to-year compliance by all member countries," she added.

Speaking at the meeting, Ag. Director of Multilateral Surveillance, ECOWAS Commission, Dr Nelson O. Magbagbeola, said the Authority of Heads of State and Government meeting held on July 10, 2014 in Ghana adopted the creation of a fiscal union to complement the monetary union and reduction of macroeconomic convergence criteria from 11 to six.

He said other aspects of the roadmap adopted by the heads of state, relating to the ECOWAS common external tariff, free movement of persons and ECOWAS trade liberalisation scheme, are being followed carefully to ensure that the community is fully integrated.

Daily Trust learnt that when the WAMZ monetary union would commence with the establishment of its Central Bank and introduction of its common currency, ECO, for the five countries in the zone.

WAMZ member countries include, Liberia, Gambia, Ghana, Guinea, Nigeria and Sierra Leone - initiated the plan to have a single currency in 2000, following the Accra Declaration and the Bamako Accord in 2000.

However, the member countries have twice postponed the take-off date for the single currency in the WAMZ.

The launching of WAMZ will complement that of the West African Economic and Monetary Union (UEMOA), which groups eight West African states that share a common currency, the CFA Franc.

UEMOA, created in 1994, has as members Benin, Burkina Faso, Cote d'Ivoire, Mali, Niger, Senegal, Togo and Guinea-Bissau.

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