This Day (Lagos)
NEWS
January 16, 2003
Posted to the web January 16, 2003
By Mike Oduniyi With Agency Report
Lagos
Says corruption will make Nigeria an unsuitable partner
The International Mone-tary Fund (IMF) yesterday warned West African nations
against creating a single currency, expressing fears that Nigeria will be an
unsuitable partner due to corruption and uncontrolled government spending.
The West African Monetary Union created few years ago by leaders of the
Economic Community of West African States (ECOWAS) in a bid to promote trade
and commerce among the 16-member states, plans to achieve a single currency
by 2004.
The British Broadcasting Corporation (BBC), however, reported yesterday that
the IMF warned against the inclusion of Nigeria in the union for what it
described as the country's troubled history of economic management.
"The corruption in Nigeria, together with the country's tendency to engage
in uncontrolled government spending, would make it an unsuitable partner,"
the BBC reported, quoting unnamed IMF researcher.
The IMF official further warned that the monetary union would leave most
participating countries worse-off than if they had retained their own
currencies.
IMF also cited Nigeria's dependence on oil, seen as an unstable source of
revenue due to volatile crude prices, as a cause for its concern.
Oil exports account for more than 90 percent of Nigeria's foreign exchange
earnings. A cut in the country's official Organisation of Petroleum
Exporting (OPEC) quota and fall in oil prices last year, affected
government's revenue projections substantially and led to cuts in planned
programmes.
Nigeria is sub-Sahara Africa's second largest economy. But the IMF in its
concluding views on economic policies of Nigeria at the end of the Article
IV Consultation with the country, expressed concern over her macro-economic
imbalances, which it said remained large and persistent.
The Fund while noting that poverty and social indicators were declining,
insisted that Nigerian economy shrank by 0.9 percent in 2002.
Eight French-speaking cou-ntries in West Africa already use a common
currency, the CFA Franc, as members of the Communaute Financiere Afri-caine.
These countries namely, Mali, Burkina Faso, Cote d'Ivoire, Guinea-Bissau,
Sene-gal, Niger, Benin and Togo, are proposing to form by next year a single
monetary union with English speaking ECOWAS countries including Ghana,
Sierra Leone and Nigeria.
The IMF said the size of the Nigerian economy meant any monetary union would
be dominated by Nigeria.
Several areas of the world have been considering the formation of a single
currency following the successful launch of the euro across 12 European
countries.
Supporters say a single currency can boost intra-regional trade by
minimising transaction costs, and is likely to be more stable than
individual currencies.
But some others argued that it would also leave the countries' economies
ruled by one central bank vulnerable should emergency action - such as
devaluation - be required.
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Copyright © 2002 This Day. All rights reserved. Distributed by AllAfrica
Global Media (allAfrica.com).
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