French grip muddles Ecowas single currency bid. What's next?

Zawya

13-03-2025

West African countries are pushing ahead with the creation of a single currency, despite the inherent difficulties, and have set themselves a fifth deadline of July 2027.
The push for a common monetary system has been postponed several times since the first attempt in 2003, to 2005, 2010 and 2014.
It also comes as France seeks to undermine the move, which it sees as a threat to its decades-old stranglehold on the monetary policy of former colonies in West Africa.
Last week, member states of the Economic Community of West African States (Ecowas) resolved to launch its planned single currency for the 15 countries after decades of failed attempts.
Ecowas has been struggling to keep its membership intact after Mali, Burkina Faso and Niger, all junta-led states, decided to quit the bloc in January and sever ties with France. But Ecowas leaders decided to keep the door open for cooperation with the three countries, and allowed their nationals to continue enjoying free movement between member states.
France jumped the gunThe new currency, to be established in 2027, has been dubbed the 'Eco', but France already jumped the gun and changed the name of the CFA Franc, the currency used in its former colonies in West Africa, to the eco, angering several Ecowas leaders.
For the West African bloc, the quest for a single currency is aimed at fostering economic stability, boosting trade and facilitating seamless transactions between its member states, according to a dispatch pitching the idea.
The West African Monetary Zone (WAMZ), a major stakeholder in the realisation of the single currency, however, has expressed doubts on the deadline because Ecowas states have not met all the necessary criteria.
Dr Olorunsola Olowofeso, the Director-General of WAMZ, told the Ecowas Committee of Governors of the Central Banks on March 6, that it was unlikely that any of the member states would meet all four primary convergence criteria on a sustainable basis between 2024 and 2026.'The quest for a single currency by WAMZ will take much longer to achieve as the convergence indicators have declined significantly,'' he said.
The differences in economic policies, inflation rates and budget deficits between member states pose considerable challenges to meeting these convergence criteria.
Read: Why Ecowas suspended single currency launchMoreover, France's 2019 decision to rally francophone countries like Benin, Burkina Faso, Guinea-Bissau (Portuguese-speaking), Cote d'Ivoire, Mali, Niger, Senegal and Togo to announce the renaming of CFA Franc to eco was already a sign of a divided bloc.
Nigeria, Sierra Leone, Ghana, Liberia and Gambia, all English-speaking, and Guinea (francophone) rejected the adoption of eco by the French-speaking nations. They argued the move was sabotage and designed to keep France as the currency reserve headquarters of its former colonies.
Prof Sam Smah, a sociologist at the National Open University in Nigeria, said France's opposition and its insistence on renaming the CFA franc was a decoy: Paris retained much of its current control over monetary policy.
Read: Many pitfalls in reform of Africa's CFA francFrance has maintained control over these countries' monetary policies and has had unfettered access to African markets and strategic natural resources, such as Niger's uranium or Guinea's bauxites.
Anti-French sentimentThe recent rise in anti-French sentiment in these countries has been attributed to frustration with French control. Niger, Burkina Faso and Mali have implemented a series of policy decisions meant to cut French control, including reducing the monopolies of French mining firms and charging hefty royalties on Western miners.
They also expelled French troops on their soil.
Read: France in Africa: Why Macron's policies increased distrust and angerSuleyman G Konte, an expert on African affairs, argues that the French arrangement, which Ecowas countries oppose, would mean that the eco remains pegged to the euro.
He said this deal will force African countries to keep 50 percent of their financial reserves in the French Treasury, effectively depriving African banks of billions of dollars in deposits.
Konte estimates that African countries lose as much as $400 billion a year due to this 60-year French arrangement.'Ecowas regional heavyweights - Nigeria and Ghana – as well as most of the Anglophones in the bloc have already publicly rejected potential French influence on the regional eco,'' he pointed out.
Read: Why Sahel is turning its back on FranceOther obstaclesLast week, Ecowas convened the 11th Convergence Council in Abuja, bringing together top financial leaders, including finance ministers and central bank governors, to further discuss plans for the much-anticipated eco currency launch by 2027.
Mohammed Manga, director of information and public relation at Nigeria's finance ministry, said his country emphasised the need for monetary and fiscal discipline, even as it identified security challenges, inflation, and global economic disruptions as potential hurdles.'This is our opportunity to shape the future of our region... [it will] send a powerful message about the region's commitment to global economic stability and prosperity,' he said.
But for a single currency to work, the leaders admit they must maintain the pace of recovery from Covid-19 intact.'It has become imperative for member states to continue to implement prudent fiscal, monetary and exchange rate policies and adopt measures aimed at enhancing domestic revenue mobilisation and diversification of our economies,' said Ken Ofori-Atta, Ghana's former finance minister.
According to him, the road to a single currency regime and economic integration has already been too long.
Critics say that the idea of a unified currency should not be a priority. They argue that regional leaders should instead focus more on boosting trade within the bloc.'West African countries must transform their economies, with diversification and value-add industries,' said Sanyade Okoli of Alpha African Advisory, a consulting firm.
Felix Awanbor, a financial analyst, said a single currency could result in individual countries not being able to tailor their monetary policies to their specific economic needs, and could lead to imbalances within the region due to differences in economic growth and inflation rates.
It could also create political challenges as some countries may feel that their interests are not adequately represented, he added.
Awanbor cited a lack of flexibility in economic management, the dominance of bigger economies over smaller ones, political hurdles, and blockage of fiscal policy adjustments as other obstacles.
He advised the countries to study the model of the European Union's eurozone, where a common currency has worked for two decades.
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