An extraordinary meeting of regional Ministers of Finance and Governors of Central Banks of ECOWAS Member States has agreed to commission a study that will help it propose the most feasible option and timetable for introducing a single currency for West Africa, an ECOWAS statement said.
The one-day meeting of the Convergence Council, held in Ouagadougou, Burkina Faso, was one of the three meetings called by the ECOWAS Commission in response to the directive of West African leaders, at their 15 June 2007 Summit in Abuja, for a single approach to monetary integration instead of the present two-track approach.
The two-track approach calls for the introduction of a second currency, the ECO, in January 2009 by the five Member States of Ghana, Guinea, The Gambia, Nigeria and Sierra Leone that will run concurrently with the CFA, used by eight other Member States, during an interim period.
Under the approach, both currencies will then merge later to create a single currency.
The Convergence Council directed the ECOWAS Commission to collaborate with appropriate regional institutions in formulating the terms of reference and proposing a list of consultants from where a team will be selected for the study.
The study, it added, should “take into account” various options for introducing the single currency, including the three proposed by the meeting of an inter-institutional technical group held in Accra 25-27 Sept. 2007.
The technical group had recommended the “critical mass” option, under which monetary union will commence in the region by December 2009 subject to the satisfaction of the convergence criteria by a group of countries that constitute at least 75 per cent of the regional GDP.
The other options are the ‘big-bang’ and the ‘gradualist’ approaches.
Several other measures were also proposed, including the establishment of credible and strong institutions prior to the launch of the monetary union, an agreement for a growth and stability pact, continuous implementation of the various convergence criteria and their harmonization after the commencement of the union.
Other proposals that emanated from the meeting included the establishment of a solidarity fund to help weaker countries and the institutionalization of a joint surveillance mechanism among regional institutions statutorily empowered to implement the monetary cooperation programme.
The recommendations were adopted by the preceding meeting of the technical committee of the ECOWAS monetary cooperation programme, which met in Ouagadougou 8 Oct.
The meeting also agreed the eight member states of the Economic and Monetary Union of West Africa (UEMOA) be treated as a bloc for the purpose of determining the critical mass.
The convergence council stressed the necessity of a growth and stability pact and said the measures being taken were intended to ensure that the proposed currency was “established on the basis of sound macro-economic management fundamentals.”