The monetary sea serpent that we have been talking about for thirty years, the eco was to be launched in 2020. But three months from the end of the year, the hypothetical future West African single currency is at a standstill.
The announcement in 2019 by the heads of state of the Economic Community of West African States (Cédeao) of the establishment of the new currency the following year seemed unrealistic: it was necessary in a few months to create a central bank, decide on the exchange rate regime, manufacture coins and banknotes, adapt computer systems and administrations… What Europe took fifteen years to do to launch its euro.
The Covid-19 crisis got the better of this schedule, adding to the confusion and the internal crisis created by the announced change from the CFA franc to eco by the eight countries of the West African Economic and Monetary Union (UEMOA) , members of ECOWAS, to the chagrin of Nigeria and the English-speaking countries of the area. A change still not effective, either, although it was announced for July.
As a result, during the last ECOWAS summit in Niamey in early September, Nigerien President Mahamadou Issoufou urged his counterparts “To develop a new roadmap while maintaining a gradual approach for the launch of the common currency”.
A first-class funeral? “No, it’s not a funeral, it’s a postponement”, believes Yao Prao, professor of economics at the University of Bouaké (Ivory Coast), according to which Ivorian President Alassane Ouattara mentioned a delay of five more years.
A feared monetary instability
“It’s a question of political will. Five years are enough to get there ”, he believes, despite “Discrepancies” between countries, expressed in particular by Nigeria, heavyweight of the fifteen ECOWAS countries, with 180 million inhabitants out of 300, and 60% of the area’s GDP.
Nigeria demands, in order to engage in a true monetary union, that the countries of the CFA franc zone completely sever their ties with France, and therefore go beyond the “Reform” announced. The countries of the franc zone are afraid of falling into the monetary instability experienced by their neighbors in the West African Monetary Zone (WAMZ), which each have their own currency.
“It’s a good thing for West African countries to have a single currency. However, we need to have a debate on the convergence criteria (inflation, debt, public deficit): let’s not try to mimic Europe. The establishment of a single currency must not lead to a policy of austerity to the detriment of growth and jobs “, Yao Prao analysis.
The economic crisis generated by the coronavirus epidemic, with a drop in growth in West Africa, has in any case undermined compliance with these convergence criteria.
For economist and former Ivorian minister Daniel Anikpo, the eco “Not going to happen”, because “There is no political will”. “When I was minister in 2000, there was already talk of a five-year deadline, testifies this supporter of a common West African sovereign currency. We cannot wait for a thousand years for each other’s incompatibilities to be resolved! “