Expectedly, President Muhammadu Buhari has cautioned the Economic Community of West African States (ECOWAS) member states that their ambition for achieving the Eco regional currency could be in “serious jeopardy,” unless they comply with agreed processes of reaching the collective goal.
A single currency for the ECOWAS region is the ultimate objective of member-states. It is, however, the most difficult part of the integration process because of the various national currencies, some of which are not under the control of their respective governments.
Others are weak, prone to inflation, low gross national production and minimal natural resources to back their value.
The eight francophone countries in ECOWAS already have a common currency, the CFA, which is controlled by the French treasury, through which it is attached to the EURO zone and, as such, convertible.
The other strong currency in ECOWAS is the Nigerian naira, which for now is facing the challenges of instability and inability to meet all foreign currency demands for imported goods.
Speaking on the need to have a unity of purpose in the region, the president, specifically, expressed concern over the decision of the francophone countries that form the West African Economic and Monetary Union (UEMOA) to replace the CFA Franc with Eco, ahead of the rest of other member-states.
The president delivered Nigeria’s position on the new regional currency at a virtual extraordinary meeting of the Authority of Heads of State and Government of the West African Monetary Zone (WAMZ).
The meeting discussed the implementation of the ECOWAS Monetary Cooperation Programme (EMCP) and the ECOWAS Single Currency Agenda.Last year, the 15 heads of states and governments of the ECOWAS agreed to launch a new currency, named as the “Eco” in January 2020.
In doing so, ostensibly, the leaders believe that business people and travelers will be freed from the difficulties associated with exchange of currencies, intra-area trade will be boosted and, eventually, an integrated and prosperous region established.
A monetary union with a single currency for the 15-member-states would mean that governments would transfer national political authority to ECOWAS institutions. Are the member states willing to subordinate national interests to regional interests?
Already, there are some fears being nursed by some member-countries that net benefits from a single regional currency will accrue to Nigeria, modest benefits will accrue to Côte d’Ivoire, and the Gambia will suffer net losses.
Of course, these fears and suspicions among the member-states reduce the relative attractiveness of the proposed Eco initiative.
In fact, the suspicion and reduction in the relative attractiveness of the Eco was highlighted by President Buhari, when he said that though the ECOWAS authorities have adopted the Exchange Rate regime, name and model of the common Central Bank and its symbol, he has an uneasy feeling that the francophone countries quickly want to replace the CFA Franc with the Eco, ahead of the rest of the member-states.
The president said that the actions of the francophone states was in addition to their deviation from the Community Act on a consistent attainment of convergence in the three years running up to the introduction of the currency.
The president said he is aware that the French speaking countries’ ministers have approved a bill to reform the CFA Franc and already passed legislations in their various parliaments to that effect.
Tellingly, the president said: ‘‘It is a matter of concern that a people with whom we wish to go into a union are taking these major steps without trusting us for discussion.’’
These suspicions and feeling of unease permeating the ranks of the ECOWAS, though they now appear to be deep and widespread, should, ideally, be eschewed in order for the region to reap from the outstanding benefits of single currency operation.
No doubt, there are several economic and socio-political reasons associated with adoption of a single currency in the ECOWAS sub-region. However, it should be noted that the ECO by itself alone cannot be a panacea in bringing about economic stability and growth.
Still, it can bring to an end currency instability in the region and foster development of a more stable economy, mitigate the issue of exchange rate uncertainty and eliminate the need to have currency exchanges for trade within the single market zone.
The ECO can also engender cost effectiveness, eliminate currency exchange costs and risks, provide protection to smaller countries, such as Sierra Leone, against financial crisis and provide for expansion of business markets and enable exporters’ new markets with certainty.
In the fiscal and monetary arena, budgetary discipline is engendered as a single currency de facto restrains and eliminates governments’ use of discretionary monetary policy to inject artificial realities in the economy.
In the end, however, what matters is for the authorities of the ECOWAS to strive to make life meaningful for the people of the region and this objective can only be achieved if the countries come together, eschew their differences, work in unison and do away with suspicions among themselves.
Going forward, Nigeria takes the lead as Buhari has affirmed Nigeria’s support for a monetary union with the right fundamentals, which guarantees credibility, sustainability and overall regional prosperity and sovereignty.
He said: “We cannot ridicule ourselves by entering a union to disintegrate, potentially no sooner than we enter into it. We need to be clear and unequivocal about our position regarding this process. We must also communicate same to the outside world effectively. We have all staked so much in this project to leave things to mere expediencies and convenience.”
Indeed, the issue of a single currency adoption is a serious and complicated one which requires to be handled with caution. Member-states should, therefore, comply with the agreed process of reaching a collective goal and treat each other with utmost respect.
Evading street fight with Ghana
In a widely anticipated diplomatic move, Nigeria said it would not retaliate or do something similar to what some Ghanaians did to part of the Nigerian Embassy in Ghana.
It would be recalled that unknown armed men recently stormed the Nigerian High Commissioner’s residence in Accra, Ghana, with bulldozers and demolished a block of uncompleted apartments on the property.
The decision taken by the President Muhammadu Buhari-led administration not to retaliate was made known by the Senior Special Assistant to the President on Media and Publicity, Mr Garba Shehu.
He said the Ghanaian President Mr Nana Akufo-Addo had apologised to President Muhammadu Buhari on the incident.
“I think he has shown leadership in the matter and what should Nigeria do; these are two leading countries in West Africa,” Shehu said. “Nigeria will not engage in a street fight with Ghana. This cannot happen. So, the two leaders, especially President Muhammadu Buhari, who is much respected in Africa, they all call him ‘Baba’ (Father), so he is bound to show restraint.”
And, yes, diplomacy should resolve this and every other matter between and among African countries. Like Shehu said, matters such as this, it is always better to, when they arise, resolve them diplomatically, especially if the matter is between Nigeria and Ghana.
As the largest economies in West Africa, Ghana and Nigeria’s diplomatic relationship is crucial to the success of the region and diplomacy, trade and commerce are key parts of the relationship.
Of course, the recent demolishing of Nigeria’s part of embassy building is a reminder that diplomatic relation has its ups and downs. In the downside of their relationship were the tensions witnessed in 1969-70 and 1983, during the civilian regime of Nigeria’s President Shehu Shagari, when both countries expelled large numbers of the other’s citizens.
Last year’s disputes over the status of foreign traders led to the temporary closure of some Nigerian-owned shops. Another recent source of contention was Nigeria’s decision to close its border with Benin, which affected traders across the region, including Ghanaians.
However, with the latest brotherly approach adopted by Nigeria in its response to a very vexatious issue, it is hoped that the two countries have come to recognise the need for strong diplomatic ties between them.
Above that, it is hoped that other countries in Africa have watched and learnt from the Nigeria and Ghana recent experience and will adopt same kind of approach in resolving issue with one another and refrain from quick resort to violence that is the norm in the continent.