The leaders made this commitment this week at the fifth meeting of the Presidential Task Force on the ECOWAS single currency programme in Accra, Ghana.
Speaking at the meeting, Ghana’s president, Nana Akufo-Addo said the single currency, the ECO, will remove trade and monetary barriers and ultimately improve the economies of West African states.
“It is meant to encourage production of goods and services within the region. It is, thus, incumbent on us to strengthen the productive base of our economies, and to improve agricultural productivity and industrial production,” he said.
“With a population of some 350 million, which is expected to increase to 500 million in the next 20 years, and with a total GDP of some US$600 billion, there is a viable market ready to absorb the goods, which will be produced by our industries.”
The president urged the leaders to work towards achieving the convergence criteria needed for the implementation of the single currency.
The four primary criteria to be achieved by each member country are: A single-digit inflation rate at the end of each year, a fiscal deficit of no more than 4% of the GDP, a central bank deficit-financing of no more than 10% of the previous year’s tax revenues and gross external reserves that can give import cover for a minimum of three months.
The idea to have a single legal tender for West Africa was mooted about two decades ago, with many saying that it has been long overdue.
ECO is the proposed name for the common currency that the West African Monetary Zone (WAMZ) plans to introduce. The aim is to merge ECO with West African CFA France, which is used by French-speaking members of ECOWAS, and then ultimately create a common currency for West Africa.
But to implement the single currency, ECOWAS set some conditions (the convergence criteria). These conditions are, however, believed to be the main obstacle of the single currency programme. For instance, the first convergence criteria require all countries to achieve a single digit inflation of 5% or less. This is a difficult task for many of the countries involved.
Experts have, therefore, asked for a revision of the convergence criteria to enable them to be a reflection of the real macroeconomic situation in the sub-region. There are also concerns that a single currency programme will lead to loss of monetary sovereignty, and this is a move many politicians involved might not allow.