17 July 2014

West Africa: 'Single Currency 2015 Take-Off Date Not Feasible'

The January 1, 2015 take-off date of a single currency under the West African Monetary Zone is no longer realizable because of the inability of countries to satisfy all the four primary convergence criteria, Governor Central Bank of Nigeria, Mr Godwin Emefiele has said.

Speaking at the 31st Meeting of the Committee of Governors of the West African Monetary Zone (WAMZ), Mr Emefiele said this development has compelled the WAMZ to miss several launch dates for the single currency.

Nigeria, Liberia, Sierra Leone, Gambia, Ghana and Guinea are the six countries that make up the WAMZ. The single currency-Eco was first planned to be introduced in 2003, but has suffered several postponements to 2005, 2010 and 2014.

"The results of the state of preparedness study commissioned by the 32nd meeting of the Convergence Council showed that the performance of Member States' on the convergence scale relative to that required for the establishment of a monetary union is still inadequate. Also member countries' business cycle synchronization in terms of real GDP, inflation, broad money and interest rates remained weak, and their level of institutional preparedness for the monetary union remain inadequate" he said.

Mr Emefiele noted that despite numerous challenges that have hindered the establishment of a sustainable monetary union in the sub-region it is gratifying to note that the Zone is making significant progress; especially in terms of building the necessary infrastructure and institutional capacity to support the establishment of a sound monetary union.

The lack of preparedness of member-states, he said, may have informed the decision of the Heads of State and Government to approve the Modified Gradualist Approach to monetary integration by 2020.

"In doing this, we may have to think outside the box, realistically assessing and providing innovative options as well as the costs and benefits of implementing the Modified Gradualist Approach" the CBN boss said.

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