Since 1987 when the
Those involved in this project strongly believe that a common currency for the
The proposed currency, which has been christened 'eco,' according to the plan, will be initially introduced in the member countries of WAMZ.
Just like the euro, which is the single currency shared by some
Unfortunately, the drive towards adopting the policy in
Relaxing convergence requirements
The commission said it realised the 2015 deadline for take-off of the single currency regime was no longer feasible.
According to the acting Director, Multilateral Survellance,
He said the new primary criteria demand that every member-country's budget deficit including grants and on commitment basis should not be more than three percent of gross domestic product (GDP) while the average annual inflation should be single-digit with a long term goal of not more than five per cent by 2019 as well as gross reserves of not less than three months of imports.
He said the body also resolved that for the secondary criteria, the public debt to GDP ratio should not be more than 70 per cent while central bank financing of budget deficit should also not be more than 10 per cent of previous year's tax revenue and that nominal exchange rate variation should be within +/- 10 percent.
It was also gathered that the African Heads of States and government had approved the abolition of the residence permit which is to be replaced by the biometric identity card for the community citizens.
To this effect, ministers in charge of security have been advised to review all security implications of the measure before the signing of the Supplementary Acts on the resolutions.
Magbagbeola also said the ECOWAS authority agreed that the
On his part, the Minister of State for Finance, Alhaji Bashir Yuguda admitted that meeting the set criteria had often posed a challenge given that member countries have peculiar economies with varying challenges.
He noted that the recent rebasing of the Nigerian economy particularly posed a challenge of sustainability of parameters.
But he said efforts must be made to surmount all barriers and meet the parameters if the single currency project must be achieved within the specified timeframe.
He said the federal government on its part attaches great importance to the proposed monetary union which he described as the last stage of any union in the region.
He however expressed optimism that with the reality that the region needed to emerge as an economic block coupled with the commitment from political leaders, the single currency drive could become a reality.
"We need to look at the realities on ground; we are talking about monetary union and we are talking about six different countries- their economies are different and the challenges are different or maybe similar," he added.
How beneficial is the policy? The Regional Head of Research,
She added: "A monetary union alone may not be enough to credibly achieve a single currency. Increasingly, it is now recognised that a fiscal union will also be needed.
"It is worth aspiring to, even if it doesn't happen just yet. The convergence criteria are still worthwhile economic aims, and if it ever did happen, it would lessen transaction costs and boost trade.
"ECOWAS should keep trying, but they should not put it into practice unless everything is in place. They don't need to fudge the convergence criteria as that will only cause problems later. Look at
However, a Senior Analyst at
According to him, if ECOWAS members can be honest to say the situation in their countries, the common currency idea will work.
He said: "It is very difficult, but it is not impossible. But countries must have accurate data on their economies and there is also need for fiscal union."
On his part, an international analyst,
He added: "The major benefit of a common currency that has been emphasised is that it facilitates trade (in both goods and services) and investment among the countries of the union (and hence increases income growth within the region) by reducing transaction costs in cross-border business, and removing volatility in exchange rates across the union.
"A currency is like language. As a common language facilitates effective communication among people, a common currency could promote trade and investment among countries. In an environment of different currencies, transaction costs, including the costs of obtaining information about prices, would be higher."
Gadio however noted that the structural differences among ECOWAS countries may hamper the dream of a single currency.
"First, the size of
But a financial market analyst, Mr.
He urged policy makers in the region to develop the volume of trade among member states.
On her part,
She explained:"We all have challenges and you know that it hasn't been easy. Countries have been going through difficult times and that's why it hasn't been possible to meet the convergence criteria from year to year.
"This year you have a country meeting all the four convergence criteria and another year, that same country meets only three. We had insisted that we needed it met from year to year."
Therefore, in order to avoid shifting the target year again, there is need for seriousness and more collective efforts towards the actualisation of the policy by countries in the sub-region.
In addition, member states would have to double their efforts in strengthening fiscal performance through enhanced domestic revenue mobilisation and rationalising public expenditure.
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