Why West Africa needs single currency, by GITFiC

West Africa needs a single currency to protect itself against global shocks; achieve deeper economic integration, degree of flexibility, flexible exchange rates; and resolve conflicts to ensure stability, Gerald Ekow Woode, lead-research fellow at Ghana International Trade & Finance Conference (GITFiC), has said.

“West African member states have been attempting to integrate their currencies for a very long time. West African member states, like the majority of developing countries, are susceptible to monetary shocks brought on by global policy changes in the current international monetary environment, which is primarily defined by the lack of universally recognised standards of good monetary conduct,” he said in a report.

He said that in such a scenario, only the creation of a single currency will give West African nations the chance to mount a united and effective front against these disruptions.

Woode said: “During international monetary discourse, which presently plays a crucial part in currency value such a currency would benefit from the economic and political strength of the entire West Africa, which is significantly greater than the weight that any country of the region can draw separately.

“While addressing the issue of exorbitant exchange rates related with trade, the development of a single currency region could further assist in the process of deeper economic integration for the continent.”

He said in other ways, monetary integration is more flexible and is regarded as being more cautious.

He said: “The West African Monetary Union, which functions largely satisfactorily, is another feature of the West African continent. The macroeconomic stability and economic integration of its members have undoubtedly benefited from this monetary union, even though there is still room for improvement.

“Despite the challenges, there are advantages that should be taken into account when deciding to adopt a single currency. The creation of a common currency has the ability to eliminate any concerns that frequently arise from constantly fluctuating or flexible exchange rates, given the

ambitious scope of the AfCFTA.”

He said the US dollar and other foreign currencies have long been used in trade.

Woode added that extra expenditures on exchange rates would no longer be a barrier to intra-continental trade, which, according to him, is especially significant given how much trade in Africa depends on the US dollar.

“In order to maintain peace on the continent and to safeguard democracy in Africa in the event of a coup, the Africa Union may utilize the single currency as a mechanism to resolve disputes,” he said. “Furthermore, the continent would be given the authority to act jointly against perceived and real financial and economic aggression from outside forces.”

Speaking on how the creation of a single currency is essential to the successful implementation of the African Continental Free Trade Area-AfCFTA, he said: “With the introduction of the single currency, these nations will have the possibility to resolve their myriad monetary problems.”

“The single currency is an opportunity for West African countries and Africa as a whole to pool their monetary resources, which is a prerequisite for pursuing their individual and collective monetary goals in the current international context,” Woode added.