ECOWAS sin­gle cur­rency not fea­si­ble in 2020 – Min­is­ter

The Punch - - BUSINESS - Ifeanyi Onuba, Abuja

The 2020 pro­posed date for the com­mence­ment of a sin­gle-cur­rency regime for West Africa may not be re­alised as many coun­tries within the re­gion have yet to meet the cri­te­ria for the mon­e­tary union.

The Min­is­ter of Fi­nance, Bud­get and Na­tional Plan­ning, Mrs Zainab Ahmed, who con­firmed the de­vel­op­ment in Abuja, said only Togo had met all the con­ver­gence cri­te­ria.

She spoke on Fri­day at the open­ing ses­sion of a meet­ing of ECOWAS com­mit­tee of min­is­ters of fi­nances and gov­er­nors of cen­tral banks on the cur­rency pro­gramme.

The idea of the sin­gle cur­rency for the West African re­gion was first mooted al­most 30 years ago in the hope of boost­ing cross-bor­der trade and eco­nomic de­vel­op­ment.

Lead­ers of the 15 mem­ber states of the ECOWAS had for­mally agreed to name the com­mon cur­rency “Eco”.

The mem­ber coun­tries that made up ECOWAS are Benin,

Burk­ina Faso, Cape Verde, Gam­bia, Ghana, Guinea, Guinea-bis­sau, Ivory Coast, Liberia, Mali, Niger, Nige­ria, Sene­gal, Sierra Leone and Togo.

There are three pri­mary and three sec­ondary cri­te­ria that a coun­try must achieve to be in­cluded in the mon­e­tary union.

The pri­mary cri­te­ria are a bud­get deficit of not more than three per cent; av­er­age an­nual in­fla­tion of less than 10 per cent with a long-term goal of not more than five per cent; and gross re­serves that could fi­nance at least three months of im­ports.

The sec­ondary con­ver­gence cri­te­ria adopted by ECOWAS are pub­lic debt/gross Do­mes­tic Prod­uct of not more than 70 per cent; cen­tral bank fi­nanc­ing of bud­get deficit should not be more than 10 per cent of pre­vi­ous year’s tax rev­enue; and nom­i­nal ex­change rate vari­a­tion of plus or mi­nus 10 per cent.

Ahmed said the sin­gle cur­rency would be based on a flex­i­ble ex­change rate regime, with a mon­e­tary pol­icy frame­work that would be fo­cused on in­fla­tion.

She said with only Togo meet­ing the cri­te­ria in the last two years, it would be dif­fi­cult to op­er­a­tionalise the sin­gle­cur­rency regime by next year.

The min­is­ter said the in­abil­ity of other coun­tries in the sub-re­gion to achieve the cri­te­ria would make the op­er­a­tional­i­sa­tion of the “Eco” cur­rency in 2020 prob­lem­atic.

She said there was a need for mem­ber states to pur­sue ap­pro­pri­ate poli­cies and struc­tural re­forms that would en­able them to meet the con­ver­gence cri­te­ria.

Zainab said, “We need to ad­dress in an op­ti­mal way the chal­lenges ahead of us. This meet­ing is im­por­tant be­cause we are at a cross­roads. The rec­om­men­da­tions we make will have sig­nif­i­cant im­pli­ca­tions on the mon­e­tary poli­cies we un­der­take.”

She said de­spite the vul­ner­a­bil­ity of the global econ­omy, the ECOWAS sub­re­gion was mak­ing progress in its growth tra­jec­tory.

The fi­nance min­is­ter said that in the first half of this year, the econ­omy of the ECOWAS sub-re­gion recorded a growth rate of 3.1 per cent, adding that this was ex­pected to hit 3.3 per cent by end of this year based on pro­jec­tions.

She said the in­creased eco­nomic per­for­mance was driven mainly by rel­a­tive sta­bil­ity in com­modi­ties’ prices and in­creased in­vest­ment in agri­cul­ture and ser­vices sec­tor.

At the do­mes­tic front, she said that the Nige­rian econ­omy was record­ing im­prove­ment, adding that the Fed­eral Gov­ern­ment was im­ple­ment­ing var­i­ous re­forms to en­able the coun­try to achieve its tar­gets for the mon­e­tary union.

On the is­sue of bor­der clo­sure, she said Nige­ria shut its land bor­ders to neigh­bour­ing coun­tries be­cause of their fail­ure to obey trade agree­ments.

She said while Nige­ria at­tached great im­por­tance to trade lib­er­al­i­sa­tion, coun­tries must be able to re­spect global trade com­mit­ments.

She told mem­bers of the com­mit­tee that the Fed­eral Gov­ern­ment de­cided to take the painful but proac­tive steps to check the smug­gling threats, adding that if left unat­tended to, it would af­fect Nige­ria’s com­pet­i­tive­ness and that of the en­tire West African sub-re­gion.

In his ad­dress of wel­come, the Pres­i­dent of the ECOWAS Com­mis­sion, Jean-claude Kasi, said that mem­ber coun­tries had made sig­nif­i­cant progress in sev­eral ar­eas to achieve the mon­e­tary con­ver­gence.

How­ever, he said de­spite the progress made, there was still much work to be done.

He de­scribed the meet­ing of the min­is­ters of fi­nances and gov­er­nors of cen­tral banks as crit­i­cal con­sid­er­ing that the re­gion had just a few weeks to the pro­posed 2020 com­mence­ment date.

The Elec­tri­fi­ca­tion Agency has part­nered with the World Bank to pro­vide a so­lar hy­brid mini-grid power plant to the res­i­dents of Rokota com­mu­nity in Edati Lo­cal Gov­ern­ment Area of Niger State.

The project, which is ex­pected to pro­vide re­li­able elec­tric­ity to 3,000 peo­ple in the com­mu­nity will be com­mis­sioned on Satur­day (to­day) as the first of its kind to be im­ple­mented un­der the World Bank sup­ported Nige­ria Elec­tri­fi­ca­tion Project.

Em­pha­sis­ing the im­por­tance of us­ing off-grid elec­tri­fi­ca­tion tech­nolo­gies to in­crease elec­tric­ity ac­cess in Nige­ria, the Manag­ing Direc­tor,


REA, Mrs Damilola Ogunbiyi, said, “There are count­less in­vest­ment op­por­tu­ni­ties in the off-grid mar­ket. This is why the REA is col­lab­o­rat­ing with pri­vate sec­tor so­lar de­vel­op­ers. We are also com­mit­ted to us­ing re­new­able en­ergy in the re­duc­tion of an­nual green­house car­bon emis­sions by 25,000 met­ric tons. This is in ad­her­ence to Nige­ria’s com­mit­ment to the Paris Agree­ment on Cli­mate Change.”

Cor­rob­o­rat­ing Ogunbiyi, World Bank Nige­ria Coun­try

Direc­tor, Mr Shub­ham Chaudhuri, re­it­er­ated the bank’s com­mit­ment to pro­mot­ing uni­ver­sal ac­cess to elec­tric­ity.

He stated, “The World Bank is com­mit­ted to re­duc­ing the con­sump­tion and use of fos­sil fu­els in en­ergy pro­duc­tion through re­new­able en­ergy in­vest­ments. Through var­i­ous re­new­able en­ergy projects across the world, the bank en­sures that there is an in­crease in uni­ver­sal ac­cess to elec­tric­ity es­pe­cially in un­der­served and un­served com­mu­ni­ties.”

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