The Economic Community of West African States (ECOWAS) commission announced on June 19 that the nations of the group will be converting to a single currency for their region by 2027.
The decision was announced by Jean-Claude Kassi Brou, president of the ECOWAS Commission, during a live news conference held as the group’s summit in Ghana completed on Saturday.
ECOWAS is comprised of the following nations: Benin, Burkina Faso, Cabo Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.
The creation of the single currency for ECOWAS is intended to ease trade barriers between the member states, strengthen their economies through the creation of a currency all the countries support, and to foster overall economic growth.
The plan for the unified currency was created several years ago but its implementation was put on hold after the coronavirus turned the world upside down from 2020 to the present.
“Due to the shock of the pandemic, the heads of state had decided to suspend the implementation of the convergence pact in 2020-2021” Brou said.
With the pressures of the pandemic expected to ease later this year or into 2022, Brou said the group now has “a new road map and a new convergence pact” which will conclude with the launch of the new currency in 2027.
The name of the new currency will be the Eco.
The transition to the new currency could be complicated.
The dominant economy in West Africa by far is that of Nigeria. It uses a balanced float methodology to keep its existing currency, the Naira, at a stable exchange rate.
Eight others in the group, headed by Côte d’Ivoire, a major cocoa producer and headquarters for the powerful multilateral African Development Bank, have tied their currency for some time to the France-supported CFA franc. The CFA, known in this part of the region as the West African Central African currency, is guaranteed by the French treasury and has a constant exchange rate with the Euro.
The remaining other 6 nations in ECOWAS manage their currencies separately.
Pulling this together in a unified whole will take some time, which is why the launch of the ECO is still six years away.
