West Africa states are moving to establish a single currency for the region.
Nigeria’s Finance Minister Ngozi Okonjo-Iweala has said that the establishment of a single currency for West Africa would not be achievable merely by an act of law.
Ms. Okonjo-Iweala stated this on Friday in Abuja at the 31st Meeting of the convergence Council of Finance Ministers and Governors of Central Banks of West Africa.
“I wish to state that a single currency cannot be introduced only by means of an act of law; it requires action by the monetary authorities and by market participants in order to make it viable and sustainable.
“The work that has been conducted over the past decade has reflected this dual approach and I would like to commend all of us for our doggedness and our optimism towards pursuing the realisation of this goal,” she said.
The Finance Minister told participants not be under any illusion on how difficult it will be to establish a credible, viable and sustainable West African monetary union.
“The journey has not been smooth, will not always be smooth and there will periods when our collective will be tested,” she said.
She said the political will which is critical for the achievement of the goal is there but noted that the will to implement the necessary reform is needed from member states.
She advised that WAMZ should also learn from the lessons of the euro zone to create the enabling environment for the monetary zone to kick off.
“If the turbulence in the euro zone has taught us any lessons, it is that one, sustained convergence is the rock on which monetary union is built.
“Two, tough fiscal rules are necessary to lay the ground for a relatively homogenous fiscal zone.
“Three, a permanent funding mechanism contributed to by all members is needed to have countries access finance , if they cannot source it from the market.
“And four, the limits of the central banks should be understood and accepted,” she said.
Ms. Okonjo-Iweala urged member countries to have abiding faith in the project, look at the future with optimism and never give in to haste to achieve the results.
President of the ECOWAS Commission, Kadre Ouderago, commended the effort of the WAMZ member states and assured the commission’s support towards establishing the monetary zone.
Mr. Ouderago, who was represented by Ahmed Hamid, Commissioner of Trade and Free Movement, said that ECOWAS appreciated the effort of the member countries to come together to discuss issues that would help to move the zone forward.
Also, Richard Dorley, outgoing Chairman of the WAMZ, reiterated the need for member countries to ensure prudent macroeconomic and debt management policies.
This, he said, would help countries to achieve the convergence criteria to fast-track the establishment of the single currency initiative.
The West African Monetary Zone, WAMZ, was created in April 2000 with the signature of the Accra Declaration by the leaders of Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone.
The goal of the zone was to have in place a common monetary and exchange rate policy.
In 2001, WAMZ created the West African Monetary Institute, WAMI, to undertake preparatory activities for the establishment of a common Central Bank, to be known as the West African Central Bank, WACB, which will issue a single currency for the five countries.
The institute also works for the adoption of a common currency for its members called ECO.
WAMZ has set January 1, 2015 as the effective date for the inauguration of the monetary union in the zone.