Wale Edun, Nigeria’s finance minister and coordinating minister of the economy has raised the hope that the proposed monetary union and single currency for the West African
Monetary Zones (WAMZ) is still achievable even though member states have again, failed to achieve the set convergence criteria.
Edun’s optimism comes after latest progress report on the project showed that member states of WAMZ, not only failed to meet the set criteria for the adoption of a single currency but performance score dipped further to 29.2 percent in 2023, compared to 41.7 percent in 2022.
The single currency agenda requires the achievement of four primary criteria by each member state, including inflation rate of 5 percent; fiscal deficit GDP ratio of 4 percent; limiting of deficit financing by the central bank to 10 percent and maintaining sufficient level of gross official foreign exchange reserves of at least 6 months of imports.
The Agreement establishing the zone stipulates that the convergence criteria be achieved and sustained within a given time frame, but for several years, there have been slippages and inconsistencies in the performances of member states regarding attainment of the stipulated targets.
Speaking at the 51st ordinary session of the WAMZ convergence council in Abuja, Edun assured of Nigeria’s continued commitment to the WAMZ project and will work towards achieving the objectives.
“Though the challenges of a monetary union appear quite daunting, the previous leaderships realized the adverse consequences of inaction and thus steered the course, not giving up, which demonstrates our resilience and determination,” Edun who is now the Chair of the WAMZ Convergence Council for the next six months stated.
“It is important to sustain this tempo and confront our worst fears with open minds, focused on the bigger picture of a truly integrated, competitive and prosperous sub-region by ensuring the necessary disciplines and implementing our commitments to convergence and achieve stability.
“What we all seek to achieve in terms of the regional economic integration may be difficult but not impossible. I am sure we have the wherewithal and resilience to realize the ambition. We just need to be very smart in our planning and prioritization, as well as decisiveness in our actions. We must, as a bloc, work together to strengthen and improve the economies of the Zone,” he added
But at the 48th meeting of the Committee of governors of the Central banks of WAMZ, Olorunsola Olofeso, the Director- General West African Monetary Institute (WAMI) has raised the concerns that the single currency project could drag a little longer as progress by the WAMZ member countries has been slow.
Presenting the Status of Macroeconomic Convergence and projection, he stated; “The assessment of Member States’ performance reveals that, as at the end of June 2023, all WAMZ Member States failed to meet all the four primary convergence criteria.
“The Zone’s performance score declined to 29.2 percent, compared to 41.7 percent during the same period in 2022.
“The medium-term projections on macroeconomic convergence, as indicated by the multi-year national macroeconomic convergence and stability programmes of the Member States, suggest that none of the WAMZ Member States will meet all the four primary convergence criteria on a sustainable basis for the remaining three consecutive years (2024-2026) of the convergence phase of the ECOWAS Single Currency Roadmap (2021-2027).”
