A single currency for the ECOWAS region is the ultimate objective of member-states. It is, however, the most difficult part of the integration process because of the various national currencies, some of which are not under the control of their respective governments. Others are weak, prone to inflation, low gross national production and minimal natural resources to back their value.
The eight Francophone countries in ECOWAS already have a common currency, the CFA, which is controlled by the French treasury, through which it is attached to the EURO zone and, as such, convertible.
The other strong currency in ECOWAS is the Nigerian naira, which for now is facing the challenges of instability and inability to meet all foreign currency demands for imported goods.
When the ECOWAS community was founded in 1975, the naira exchanged for about 70 kobo to 1 USD and the expectation was that the naira would eventually replace the CFA or both would be used freely within the region and for foreign trade transactions.
The circumstances of the naira have changed in the past 40 years, with the exchange rate now around N350 to one dollar, and the CBN is struggling to keep the naira from going down further downhill.
The way forward for ECOWAS to achieve a common currency may depend on upgrading the value of the Nigerian currency by taking measures which will cut down the current high level of importation, especially such goods as can be produced locally. This should begin with refining petroleum products in the country. Nigeria should not be importing petroleum products and food.
The constraints before the Franc CFA (Communite Financiere Africaine) translated as African Financial Community is the limited control over the currency by the Francophone ECOWAS countries. The monetary policies are set by the European Central Bank and executed by BCEAO, the Francophone West African Central Bank in Dakar. This arrangement seems to suit these countries for now, because it has stabilized their economies and encouraged the French government to build critical public utilities, such as water, electricity , roads and railway systems. But for how long would this continue?
There are other currencies in the sub region; the Ghanaian Cedi, the Gambian Dalasi, and the Guinean Franc ( GF).
Guinea Conakry was in the CFA zone until 1958 when it opted out of the CFA arrangement on gaining independence. The first President of the country, Ahmed Sekou Toure wanted both political and economic freedom and decided to float the Guinean Francs or Sylis against all the odds.
President Sekou Toure took some survival measures that were crude but effective. He unilaterally pegged the exchange rate of the GF at 2,3/ 1 USD, but did not bother about the parallel market or black market rate which was about 200 GF/1USD.
He focused more on the welfare of the people, so that they did not miss out on being part of the Francophone family.
I witnessed how Sekou Toure did it from 1982-84 on my second posting abroad. Conakry was a hardship post because of the minimal and spartan utility facilities in the country, which were often in short supply. France had removed virtually every semblance of infrastructure in the country and collapsed the rest to deter other countries, which may be tempted to follow this path of economic independence.
Toure issued ration cards to every family in the country, including international persons and diplomats with which rice, fish, meat, sugar and vegetable oil were supplied via government warehouses at affordable prices. A 50 kg rice was sold for about 8 USD. It was similar to the services rendered by the Nigerian National Supply Company (NNSC) around this same period.
Education at all levels was free, including health services. The children of the President and Ministers mingled freely with the children of ordinary people in the same class and schools.
The government funded these schemes from the foreign exchange earned from the exportation of bauxite. He did not allow free access to foreign currency at the official rate of 2,3 GF/ 1 USD except for very critical needs.
The people were not exposed to exotic tastes which could lead to desires to acquire such by force and violent crimes.
About two and half decades after leaving Conakry, I was in Paris, and I went to check, out of curiosity, if there were Guineans among the 'sans papier' the illegal immigrants from Africa who were taking refuge in churches in France to prevent their repatriation. There was no single Guinean among them. Those who went abroad, were usually trained professionals, such as engineers, doctors and scientists, who added value to the host societies. Guinea was able to fashion out a home-grown policy by thinking out of the box and it worked.
Guinea became immune to the gale of rebellions, instability and civil war that swept through several countries in West Africa in the past two decades. It remained stable, moving from one democratic transition to another. This may be a policy which other countries should emulate.
The profligacy by the elite of several African countries is responsible for the dire economic situations of ordinary citizens who inevitably are forced into rebellion. I have seen more Rolls Royces in Nigeria than in the United Kingdom.
The accessibility to foreign exchange by individuals to buy aircraft, yachts and expensive cars, either officially or through BDCs is responsible for the high pressure on the naira and its value. The efforts by the CBN to meet these insatiable demands are more like trying to fill a basket with water, which is a futile exercise.
Nigeria cannot emulate the big and developed economies that are run on heavy deficits. The largest economy in the world, USA, has a debt which is close to 18 trillion USD and the EU countries are not faring better. Nigeria does not belong to the league of nations that can open the coffers of its foreign reserves to frivolous importations. Why should a lizard pull ranks with a crocodile?
ECOWAS' common currency has quite a journey before it. The effort to revive the West African common currency by Anglophone countries in the region is invariably the short cut to a common currency and Nigeria must take the lead by revaluing the naira as suggested. The road to a common market and common currency by 2031 may not look very bright for now. There is, however, hope. And there is time to make necessary economic changes which will accelerate the process towards the economic unification of the continent.
Rasheed is a former director of Trade and Investments, Federal Ministry of Foreign Affairs.