At the 4th Meeting of the Presidential Task Force on the ECOWAS Currency Programme held recently in Niamey, Niger Republic, President Muhammadu Buhari was not upbeat about the prospects of a common currency for the sub-region by 2020. Indeed, he cautioned those pushing the programme to perish the thought of a fast-track and advanced very cogent reasons for his pessimism.
He reminded the ECOWAS Commission, which appears to be pushing the programme, to be a little more circumspect because “a comprehensive picture of the state of preparedness of individual countries for monetary integration in ECOWAS by 2020” has not been properly analysed. He spoke of the continuing disparities in the macroeconomic conditions of member countries, and the unrealistic inflation targets based on flexible exchange rate regimes. He also noted the inability of the task force to address Nigeria’s fears, which forced its withdrawal from the process.
President Buhari then suggested a thorough review of the “convergence” roadmap and the constitution of an expert committee on each subject area so as to come up with an acceptable time frame. He drew the commission’s attention to the recommendation of the African Union (AU) that 2034 should be the year for the establishment of Regional Central Banks in all the sub-regions. Buhari also counseled that the West African Economic and Monetary Union countries should make a presentation on a clear roadmap towards delinking from the French Treasury, while ECOWAS must push for the ratification and domestication of legal instruments and related protocols on trade, fiscal and monetary policies and statistical systems.
We think the president’s advice is well meant and his fears well-founded. Even the Europeans have not found the adoption of a single currency easy, in spite of their centuries of experience in economic management. While we agree that 2020 may be unrealistic, experience tells us that even in 2034, good reasons would still be found for a postponement of the take-off date, as the sub-regional central banks may not be ready. We recall that in 1999, the ECOWAS summit held in Lome, Togo, had agreed that a single harmonised monetary union for all of West Africa should be created by 2004. It looked realistic then, as now, since the majority of ECOWAS member states, the French-speaking states (Francophones), were already using a single currency, the Communaute Financiere Africaine (CFA) Franc. All that was left to do was to create a second monetary zone for the English-speaking (Anglophone) countries, with the aim of merging both zones into a single currency. In 1999, the idea looked like a piece of cake, practicable and achievable in five years.
Adopting an Anglophone currency has, however, turned out to be intractable. Its implementation was postponed four times before the idea was put in the cooler. Then, there was the issue of the so-called convergence criteria. All countries must achieve single digit inflation of five per cent or less. Nigeria’s current inflation rate is hovering around 16 per cent. Ghana’s is not much better. Nor are the rest. All member countries must achieve budget deficit to GDP ratio of four per cent or lower. Nigeria’s current budget deficit hovers around 33 per cent. Ghana’s total debt to GDP ratio was put at 73.3 per cent last year, Gambia’s was 108 per cent of GDP. There are several dispiriting statistics like the above. These are hurdles which governments cannot legislate away or decree out of existence or print money to cover up. They must be addressed. If they are not, come 100 years, there still would be no common currency in West Africa.
Nigeria must show leadership on this issue. The numerous benefits of a single currency for West Africa far outweigh the pains of actualising it. The currency will definitely boost commerce in the sub-region and improve the economic condition of the people. The idea of abandoning the project or freezing it is defeatist, to say the least. There will never be a perfect time. The Association of African Central Banks and the West African Monetary Agency seem dormant at best, if not comatose. Yet, these are the institutions that must pull the various economies toward a common macro-economic destination. President Buhari made the astonishing confession that, at one point, Nigeria withdrew from the process. If Nigeria cannot show leadership in West Africa, if Nigeria cannot persuade other ECOWAS member states to do what will be beneficial to the sub-region where it constitutes 70 per cent of the market, then, where is its place in the world?