Three-Phased Approach to West African Currency

Three-Phased Approach to West African Currency
May 10, 2000 


DAKAR, Senegal (PANA)- A single West African currency could become a reality by 2004 if the 15 countries involved are able to achieve a convergence on three key issues by that date, the governor of the Central Bank of West African States, Charles Konan Banny, has said.

Speaking during a teleconference linking reporters in the eight member countries West African Economic and Monetary Union (UEMOA), Banny said the key actors in the states concerned a working hard to see this happen.

"We would be talking of a vast economic space of some 200 million people," he said, adding that this would be good for everyone in the sub-region. 

Central bank governors of the 15 countries met in Dakar last week and agreed they would create a common currency for the sub-region in 2004.

Banny, who chairs the Committee of ECOWAS Central Bank Governors, said the first phase would be the harmonisation of economic and financial policy reforms, the review of compensation mechanisms and the criteria for tradable goods and services.

Phase two would involve review of structural adjustment programmes and internal fiscal regimes.

The third and final phase will be the irrevocable establishment of currency parities and the creation of a single West African Central Bank.

"The most interesting thing about this procedure is that the leaders themselves have stepped into the scene accelerate the process and remove the obvious delays associated with ratification of treaties and protocols," he said.

There are nine currencies presently circulating in the sub-region, with the CFA franc in use in the eight UEMOA states - Benin, Burkina Faso, Cote d'Ivoire, Guinea, Mali, Niger, Senegal and Togo - appearing to be more viable.

The other seven ECOWAS countries - Cape Verde, Gambia, Ghana, Guinea, Liberia, Sierra Leone, and Nigeria - have their national currencies. Mauritania decided to pull out of the organisation recently over the single currency issue.

Nigeria and Ghana decided 25 April in Accra to create a second monetary zone constituted mainly by the English-speaking countries to match and facilitated the movement to a single currency. 

Banny said decisions on the nature of the currency and other issues would be taken once the sub-region acquires 'monetary sovereignty'.

Items such as cowries, gold, iron and even salt served as legal tenders at various times in post-colonial west Africa. 





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