As part of its plans to make Africa a more integrated continent, leaders of the Economic Community of West African States have adopted the name “ECO” for a planned single currency to be used in the region.
The 15-member group announced the decision at an ECOWAS summit in Abuja, Nigeria’s capital, last month.
Eight ECOWAS countries — Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo — currently use the CFA franc.
Other member countries would be swapping their currencies for the new ECO. The other members are Cape Verde, Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone.
ECO is intended to boost economic development in the West African region and improve cross-border trade. Originally intended to be launched in 2000, the ECO has been postponed multiple times, and the newest target date is 2020.
According to an internal document seen by CNN, ECOWAS will work with the West African Monetary Agency, the West Africa Monetary Institute and central banks to speed up implementation of a new road map for the single currency.
If implemented, countries across the region will be able to move and spend money across different countries without worrying about exchange rate costs, said economic analyst Tokunbo Afikuyomi.
“The single currency, if properly implemented, will improve trade by allowing specific countries to specialize at what they are good at, and exchange it for other goods that other countries in the bloc produce more efficiently,” he told CNN.
The single currency will also help to address the region’s monetary problems, like the difficulty in converting some currencies and the lack of independence of central banks.
But analysts remain worried about the lack of integration policies among member countries. Afikuyomi said a single currency will work only if all the countries involved are economically aligned, which is not the current case.
“The Guinean economy, for example, has a GDP of around $7 billion — that’s less than Nigeria’s 13th largest state, Abia, with $8.7 billion. This difference in economies already makes a sensible uniform policy like the trade currency very difficult,” he said.
The African Development Bank Group in a report said the 2020 deadline for the single currency will most like be postponed again unless the region can align its monetary and fiscal policies. — (CNN)