ECOWAS plans a common currency scheme in the region.
The Economic Community of West African States, ECOWAS, Commission on Monday expressed dismay over the low score of member countries on the convergence agenda.
The agenda stipulates four primary criteria as targets each member state is required to meet to enable the take off of the planned common currency scheme in the region.
They include inflation rate, fiscal deficit level, central bank deficit and financing of gross external reserves.
But, Acting Director General of the West African Monetary Institute, WAMI, John Kitcher, said the performance of member states on the microeconomic criteria was mixed, with none of them satisfying all four criteria in their performance for the first half of 2012.
Mr. Kitcher who spoke in Abuja at the 34th technical committee meeting of the West African Monetary Zone, WAMZ, listed Gambia, Liberia, Guinea and Nigeria as the countries that complied with three criteria, while Sierra Leone satisfied two criteria and Ghana one.
“In the previous assessment periods, the inflation and fiscal deficit criteria were the most challenging for the member states”, he said. “On the secondary convergence criteria, four countries (the Gambia, Guinea, Nigeria and Sierra Leone) complied with two out of the six criteria, while Ghana satisfied one and Liberia none.
With regard to other areas of the convergence process, Mr. Kitcher, said that notable progress was recorded in the improvements in trade relations within the WAMZ and the wider ECOWAS as all member states have adopted the ECOWAS protocols on trade and trade-related issues and are at different stages of implementation.
On the financial sector integration, he said efforts are underway to further integrate the various stock exchanges in the ECOWAS region while cooperation in cross-border banking supervision is being pursued vigorously, particularly under the auspices of the College of Supervisors of WAMZ.
The Director General said average real Gross Domestic Product, GDP, growth for the WAMZ is projected to remain strong in 2012 at 6.9 per cent, compared to 8.7 percent in 2011, while growth is expected to decelerate in Ghana and Nigeria, and pick up in the four other member states.
Sierra Leone, he said, is expected to record the highest growth rate of 21.3 per cent in 2012, supported by the commencement of iron ore mining in the country.
“Inflation remained relatively subdued at an average rate of 12.6 per cent at the end of June 2012, compared to 11.6 per cent recorded in the corresponding period of 2011.
“Fiscal operations improved during the review period as the average fiscal deficits (excluding grants) declined to 1.8 per cent, from 2.2 per cent in June 2011, owing largely to domestic revenue mobilization efforts and expenditure management,” Mr. Kitcher said.
The Director of Multilateral Surveillance ECOWAS Commission, Lassane Kabore, who spoke on behalf of the President of the Commission, said members should explore additional sources of taxation to raise more revenue for government business.
“All ECOWAS member States, including the WAMZ countries, must increase domestic revenue mobilisation through effective implementation of programmes aimed at ensuring improved tax-payer voluntary compliance, effective tax administration and broadening of the tax base as well as minimising the operational cost of governance,” Mr. Kabore said.
Noting the performance of the WAMZ member countries with regards to the secondary convergence criteria, Mr. Kabore said that slightly above 25 per cent of the members faced the problems of low tax yield and high operational costs of governance in the entire ECOWAS sub-region.
As the sub-region moves towards the launch of the second regional currency agreed for 2015, the ECOWAS commission expects WAMZ member states to satisfy the primary macroeconomic convergence criteria by sustaining their performance.
He described the performance as “a dismal”, when compared to the situation in the first half of 2011, adding that in percentage terms, the performance score of the WAMZ countries on the convergence scale during the first half of 2012 was 62.5 per cent, compared to 79.2 per cent during the corresponding period in 2011.
He, however, reassured of the commitment of the ECOWAS Commission to the establishment of a credible and sustainable monetary union in the sub-region with the ultimate goal of improving the standard of living of the entire ECOWAS citizenry.
In this regard, he said the ECOWAS Convergence Council, made up of Ministers of Finance and Governors of Central Banks in the region, has given the Commission the overall responsibility of coordinating the activities in the Roadmap on the implementation of the ECOWAS Single Currency Programme, in collaboration with all the regional institutions involved in the implementation of the monetary cooperation programme.
To ensure the effective implementation of the Roadmap activities, the ECOWAS Commission is to harmonise the statistics, domestic tax policies, public procurement, public debt, accounting and statistical frameworks of public finance and adopt the convergence criteria.
Other activities include removal of all tariff and non-tariff barriers to free movement of goods, persons and services within ECOWAS, while ensuring financial market integration (money and capital markets and non-bank financial institutions insurance, Pension/Social Security Funds industries).
The Deputy Governor, Economic Policy of the Central Bank of Nigeria, CBN, Sarah Alade, cautioned WAMZ member countries to avoid hasty decisions that would lead to the failure of the planned monetary union.
She said the West African Monetary Authority, WAMA, and the West African Monetary Institute, WAMI, must increase their collaboration in order to identify areas of improvement in addressing sound monetary, fiscal and exchange rate policies to promote macro-economic stability.
The Minister of State for Finance, Yerima Ngama, said Nigeria would always drive constructive pluralism by seeking to utilize the society’s diversity towards its greater good, adding that
Nigeria would continue to give its full political support to ensure the success of the WAMZ programme.