Single currency for West Africa postponed to 2020

Emefiele was unanimously elected WAMZ Chairman of Committee
of Governors.

The Central Bank Governors in the Economic Community of West African States, ECOWAS, have accepted a proposal to shift the full implementation of the sub-regional monetary integration project till 2020.

The proposal was made by the ECOWAS Heads of State and Government.

The confirmation of the decision is expected to be made public at the end of the West African Monetary Zone, WAMZ, meeting holding in Abuja.

The deadline for the full implementation of the common currency project was January 1, 2015.

Hints that a postponement was in the offing were reflected in the position of Nigeria’s CBN Governor, Godwin Emefiele, in his speech at the 31st Meeting of the Committee of Governors of the WAMZ in Abuja on Wednesday.

Mr. Emefiele, who reviewed the progress made so far by the 15-member group over the past few years on the sub-regional monetary union agenda, said meeting the deadline appeared impossible.

“The road to meeting the January 1, 2015 implementation target date would appear bumpy, especially when the member countries are still grappling with sundry macroeconomic convergence challenges and lacking the capacity to meet the criteria for the proposed union on a sustainable basis,” he stated.

The CBN governor, therefore, urged his colleagues to objectively examine the numerous challenges facing the various countries and critically assess the state of preparedness of member states to ensure monetary integration at short notice,

He said member countries should also realistically appraise the directive of their leaders with a view to ensuring a sustainable monetary union in the zone.

He noted the remarkable progress in putting the required institutions and systems in place to realise the monetary integration dream, including the establishment of the College of Supervisors of the West African Monetary Zone, CSWAMZ, and the ratification of the Protocols on ECOWAS Trade Liberalisation Scheme, amongst others.

The CBN governor urged the Committee members to think outside the box and come up with realistic options for achieving the sub-regional agenda.

Over the years, he said the appraisals by the committee have continued to show that the level of macroeconomic convergence in the zone remained inadequate relative to the set targets.

Since 2009, Mr. Emefiele said no two countries satisfied all the four primary convergence criteria consistently for two years.

Having missed several dates to launch the monetary union, he said the decision of the Heads of State and Government to approve the Modified
Gradualist Approach to monetary integration by 2020 may have been informed by this.

The role the WAMZ, he pointed out, was to honestly appraise the directive of the Heads of Governments and design strategies to ensure a sustainable monetary union in the zone.

He said WAMZ may have to realistically assess the situation and come up with innovative options along with the costs and benefits of implementing the Modified Gradualist Approach.

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 convergence scale relative to that required for the proposed union was still inadequate.

Equally, he stated that member countries’ business cycle, in terms of real gross domestic product, GDP, inflation, broad money and interests remained weak, just as their level of institutional preparedness for the monetary union remained inadequate.

Drawing attention to the results of the study, which showed a positive note that some level of progress was being made in the drive towards establishing a common market and the implementation of the ECOWAS Trade Integration Protocols and Convention and financial systems reforms, the CBN Governor urged member-countries to buy-in on the WAMZ project.

Mr. Emefiele asked the Central Bank Governors in the region to constantly update themselves with the level of progress made, challenges and level of cooperation required, pointing out that to realise the objectives of the project, there was the need to intensify efforts in the area of sensitisation of all stakeholders.

“Our efforts should also continue to focus on effective coordination between fiscal and monetary policies to support our price stability mandate, as well as create appropriate macroeconomic environment conducive for intra-regional trade and economic development in the zone,” he said.

The Director General, West African Monetary Institute, WAMI, Abwaku Englama, reported on the state of member-countries’ preparedness to meet the primary and secondary criteria for the implementation of the monetary integration project, saying more efforts were required to achieve the goal of full-scale integration of the sub-regional monetary system.

Mr. Englama said efforts by the various countries to address the macroeconomic challenges in their domestic economies have been hampered by developments in the global economic environment.

Despite the constraints, he said real GDP growth for the WAMZ remains robust, increasing modestly based on impressive performance in agriculture and the services sector.

During the meeting, Mr. Emefiele, was elected the new Chairman of Committee of Governors of the WAMZ by a unanimous acclamation. He has tenure of six months.

Mr. Emefiele’s election followed the motion by the Governor of the Central Bank of Ghana and Chairman of the Election Committee, and seconded by the Governor of the Central Bank of Guinea.