ECOWAS eyes 2027 for single currency launch amid inflation challenges

In a push for regional economic integration, the Economic Community of West African States (ECOWAS) has now advanced plans to launch its single currency, the Eco by 2027.

The latest target for introducing the Eco currency follows a series of postponements as Member States have struggled to meet the agreed-upon convergence criteria.

At the 11th ECOWAS Convergence Council in Abuja, Wale Edun, Nigeria’s finance minister and coordinating minister of the economy, emphasised the need for monetary and fiscal discipline, citing security challenges, inflation, and global economic disruptions as hurdles to the region’s monetary convergence.

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Despite these challenges, ECOWAS remains committed to achieving regional economic integration through the single currency, which aims to boost stability and prosperity across West Africa.

The meeting, which was held in Abuja, brought together top financial leaders including Ministers of Finance and Central Bank Governors to further discuss plans on how the 2027 launch date would be realised.

ECOWAS is a regional economic union of 16 West African Countries, aims to promote economic integration, cooperation, and development in the region.

While chairing the session, Edun reaffirmed Nigeria’s commitment to the regional economic cooperation.

He highlighted the Country’s ongoing economic reforms, including foreign exchange and tax policy improvements, which have boosted GDP growth to 3.4% in 2024.

Edun stressed the importance of regional coordination and ECOWAS’ role in global financial decision-making, particularly through engagements with South Africa’s G20 Presidency.

“This is our opportunity to shape the future of our region. We must work together to drive economic stability, growth, and prosperity,” he stated.

According to him, the successful implementation of the Eco currency will not only enhance regional integration but also position West Africa as a major global economic player, driving growth and innovation for generations to come.

To launch the Eco currency, each ECOWAS Member State must meet specific convergence criteria (four primary and six secondary) as set by the West African Monetary Institute (WAMI), some decades ago.

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The primary criteria include, a single-digit inflation rate at the end of each year; a budget deficit of not more than 4% of GDP; Central bank deficit-financing limited to 10% of the previous year’s tax revenues; and Gross external reserves sufficient to cover at least three months of imports.

The Secondary Criteria are, prohibition of new domestic debt arrears and liquidation of existing ones; tax revenue equal to or greater than 20% of GDP; wage bill to tax revenue ratio of 35% or less; public investment financed from internal resources equal to or greater than 20% of tax revenue; a positive real interest rate; and a stable real exchange rate.

According to WAMI, meeting these criteria is essential for achieving macroeconomic stability and facilitating the successful adoption of the single currency.