Again, hope dims for Eco’s takeoff in 2015

Posted by admin Africa & World Politics, African Union (AU), Headlines Tuesday, January 15th, 2013

THE take off date of the common currency in the West African Region, the Eco, may again be shifted from the planned January 2015 if presentations by the Nigerian government, the West African Monitoring Institute (WAMI), the West African Monetary Authority (WAMA) and the ECOWAS Commission Monday at the 34th meeting of the Technical Committee of the West African Monetary Zone (WAMZ), were anything to go by.

The Deputy Governor, Economic Policy of the Central Bank on Nigeria (CBN), Dr. Sarah Alade, who set the ball rolling, told the committee to be cautious so as not to take hasty action and decisions on the Eco launch in 2015 in view of the crisis of confidence rocking the Euro Zone, and because of the uncertain economic environment in which the world is operating.

“I would like to urge the experts to consider their task today very important one. This meeting is taking place with only two years to the agreed time for the formal take-off of the monetary union – on or before 1st January 2015, having been postponed on three previous occasions. Also, the developments in the Euro Zone have reaffirmed the need for countries to achieve and maintain the required level of macroeconomic stability prior to and after the formation of a monetary union.

“While acknowledging the need to guard against those who may celebrate our failure to achieve the target date for the take off of our monetary union, it is important to ensure that we avoid taking hasty decisions to that effect. In this vein, I call on the experts to subject this process and the timetable to thorough scrutiny and evaluation with a view to establishing a sustainable monetary union in our sub-region. It is therefore important on the part of ECOWAS, WAMA and WAMI to escalate their collaborative efforts to identify areas of improvement in addressing the remaining challenges in our efforts to establishing a viable monetary union in ECOWAS,” Alade posited.

The Acting Director- General of WAMI, Mr. John Klitcher said the Accra-based institution needed time to monitor and draw lessons from the Euro Zone crisis to avoid costly mistakes in the WAMZ.

According to him, “the main concern today is how to promote sustained economic growth that creates jobs, while learning from past experiences to fine tune policies to deal with possible new crises or significant imbalances in the future. “The unfolding developments in the Eurozone provide useful lessons for prospective monetary unions. WAMI is closely monitoring these developments with the objective of proposing the necessary strategies to avoid costly economic mistakes in our quest to build a durable monetary union for the zone. The key issues are how to ensure sustainable fiscal policies under a single currency regime and promote sound and stable financial systems,” the WAMI boss further said.

Unveiling the convergent criteria performance of the converging countries, he said: “The macroeconomic convergence criteria during the first half of 2012 were, however, mixed. None of the countries satisfied all the four primary convergence criteria. Four countries (The Gambia, Guinea, Liberia and Nigeria) complied with three primary criteria while one country, Ghana achieved one criterion. As in the previous assessment periods, the inflation and fiscal deficit were the most challenging for the member states.”

The Nigerian Minister of State for Finance, Dr. Lawal Yerima Ngama also at the occasion said: “Information at my disposal indicate that despite the challenges that necessitated the postponement of the WAMZ monetary union, performance of member countries on the convergence scale deteriorated significantly from a score of 79.2 per cent in June 2011 to 62.5 per cent in the review period. Real GDP growth for the zone is projected at 6.9 per cent in 2012, compared to estimated growth rate for the zone is projected T 6.9 per cent in 2012, compared to estimated growth rate of 8.7 per cent as at June 2011.”

The West African Monetary Zone (WAMZ) programme, designed to usher in a second monetary union of five countries (The Gambia, Ghana, Guinea, Nigeria and Sierra Leone with Cape Verde and Liberia as observers) in West Africa, has been implemented from 2000 to date.

The objective of the WAMZ is to establish a monetary union characterised by a common central bank and a single currency to replace the existing five national currencies.
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