One of the plans of West-African governments when setting up ECOWAS in May 1975 was to create a common currency in the region. However, political and social instabilities, constant changes of governments with some times controversial priorities resulted in a discontinuous implementation of institutional economic plans in the community. The main goal behind the creation of a currency that will delete all the others currencies in West Africa is the integration of the market economies and above all the integration of the people living in the region. A currency is a powerful mark of identity, it's a language spoken and easily understood by everybody in a community. Bruce G. Carruthers, an American professor of sociology at Northwestern University and author of 'The Meanings of Money: A Sociological Perspective', made a summary statement concerning the strength of a currency. And this is what he said: "Money undergirds market exchange". The key word here is 'undergird'. When using the same currency, one big wall between countries and markets definitely falls. Europe and the Euro is a perfect illustration in that matter. The Eco, though not yet enforced in the monetary system is supposed to play a significant role in connecting the populations and their businesses in West-Africa.
What are the currencies currently in use in West-Africa?
ECOWAS, the Economic Community of West-African States comprises 15 member states which are Benin, Burkina Faso, Cabo Verde, Cote d’Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Mali, Nigeria, Niger, Liberia, Senegal, Sierra Leone and Togo.
Below is a short overview of the West-African currencies and their respective countries.
The CFA Franc: Height (8) countries in West-Africa use the CFA Franc. It is the currency created on the 26th of December 1945 by the French government for its colonies in Africa. Two versions of the currency are circulating on the continent. One for the West-African Francophone countries and the other for the Central African Francophone countries. In West-Africa, the CFA Franc ( Franc of the Financial Communities of Africa) is in use in the following countries, Benin, Burkina Faso, Cote d’Ivoire, Mali, Niger, Senegal, Togo and Guinea-Bissau. Note that Guinea-Bissau is a former Portuguese colony that joined the CFA in 1997 in replacement of their Pesos.
The Naira: The Naira is the currency of Nigeria. It was created in 1973 to replace the inherited colonial currency “The Nigerian Pound and Shillings”
The CEDI: The CEDI is the currency of Ghana. It was created by Kwame Nkrumah, in 1965 to replace the colonial inherited “Ghanian Pound and Shillings”.
The Dalasi: The Dalasi is the currency of Gambia. It was created in 1971 to replace the Gambian Pound.
The Guinea Franc: In French (Franc Guinéen), the Guinean Franc is the currency of Guinea. It was created on March 1rst 1960.
The Liberian Dollar: The Liberian Dollar is the currency of Liberia. It was introduced in 1847.
The Leone: The Leone is the currency of Sierra Leone. It was created in 1964 in replacement of the British West African Pound.
The ESCUDO: The Escudo is the currency of Cabo Verde (Cape Verde). It was created in 1914 in replacement of the Cape Verde Real.
They are in total eight currencies operated by eight different central banks in the West-African region. As exchange rate with United States Dollar up to December 2019, we can state that 1 USD equals 600 CFA, 362 Naira, 5.5 Cedi, 51 Dalasi, 9,500 Guinean Franc, 187.5 Liberian Dollar, 9,700 Leones and 99.7 ESCUDO.
Credit: Illustration designed by Eric Bamouni. Tribute to Kankan Moussa, Emperor of Mali.
Initially the Eco was to first all become the common currency of all the Anglophone member states of ECOWAS. Once established, it was to merge with the CFA franc to give West-Africa a single currency with a single central bank. That is why the West African Monetary Zone (WAMZ) was formed in 2000 and regrouped the five Anglophone member states. Mandate was then given to the West African Monetary Institute, created in 2001 and based in Accra, Ghana, to work out the launching of the Eco for these countries. Challenges such as chronic budget deficits and currency devaluation complicated the process. The currency was to be introduced in 2003, but unfortunately it underwent series of postponements up to 2019 to be championed by those in the CFA zone. On the 29th of June 2019, the fifty-fifth session of the authority of the ECOWAS heads of states and governments took place in Abuja, Nigeria. In a final communiqué presented in 59 points, from which the points from 11 to15 at page 3 and 4 of the document essentially dealt with the single West-African currency roadmap and presenting the gradual steps to reach a common currency by 2020. The name of the currency ‘ECO” was officially adopted that day by the authority. On December 21, 2019, the Ivorian President, Alassane Ouattara, declared that the Eco will replace West African CFA franc. He added that the majority of the technical links with France will be cut. France will no longer co-manage the currency as it is now with the CFA, where the foreign exchange reserves are centralized in France. The famous and controversial Account of Operations where 50% of these reserves are paid will disappear. Besides, France used to have officials in the administrative bodies of the CFA, such as the central bank, the banking commission and the monetary policy council. According to the Ivorian president, these (French owned) positions will no longer exist with the Eco. What is however not clear in Mr Ouatara’s declaration is the fact that the 'Banque de France' will be the guarantor of the convertibility between the Eco and the Euro in order to maintain a fixed parity of exchange. Questions are many on this possible future intervention that France might have in the general framework of the Eco. What does it really mean? ‘Guarantor of convertibility’. Is that really necessary? Won’t that French role be harmful to the unification plan of all the West-African countries under a common currency? Until further elements come to settle the confusion, the presence of France in the Eco project is not well perceived.
The conditions of Nigeria to join the ECO.
They are summarised into five conditions,
- No deduction and no deposit of any funds from any Eco zone to the French treasury.
- No middle entity for the convertibility of the Eco with the Euro and the Dollar.
- ECOWAS must rule Eco in total sovereignty.
- The Eco must be convertible to all the currencies of the world.
- The Eco must be printed in Africa.
Will the ECO be a true West-African currency?
When considering these conditions put forward by Nigeria, we can see two possible scenarios in the future implementation of the Eco in West-Africa. Either France is put out of the entire Eco system or Nigeria and probably the rest of the other Anglophone countries will remain out of ECO. If the Anglophones are out, then the Eco will become a photocopy of the current CFA Franc. The Ivorian president is well known as a good pupil of the French geopolitical school. France is lobbying to set up an interest collection system in the convertibility of the ECO with other currencies. What is hidden behind the so called ‘Guarantor’ status? Why such crucial announcement in a joint conference with Macron? Was is planned? If that is the case, then the common currency 'ECO' is gradually getting transformed into a tool to divide and fragment the West-African market.
Balele Eric Bamouni
Afrique Media TV