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2020 Nigeria to adopt new currency from naira to ‘Eco’

By Oluwatobi O. Alabi

On June 29, 2019, the leaders of the Economic Community
of West African States (ECOWAS) formally adopted the
name of “eco” for their project of the single currency and
planned to introduce the currency from 2020.

It was note in 2011 for the Eco to be implemented, ten convergence criteria,
set out by the West African Monetary Institute (WAMI), must
be met.

These criteria are divided into four primary and six
secondary criteria. Up to the fiscal year 2011, only Ghana
has been able to meet all the primary criteria in any single
fiscal year.

The four primary criteria to be achieved by each member
country are:
A single-digit inflation rate at the end of each year
A fiscal deficit of no more than 4% of the GDP
A central bank deficit-financing of no more than 10% of
the previous year’s tax revenues
Gross external reserves that can give import cover for a
minimum of three months.

The six secondary criteria to be achieved by each member
country are:
Prohibition of new domestic default payments and
liquidation of existing ones.
Tax revenue should be equal to or greater than 20
percent of the GDP.

Wage bill to tax revenue equal to or less than 35 percent.
Public investment to tax revenue equal to or greater than
20 percent.
A stable real exchange rate.’
A positive real interest rate.

The goal of a common currency, first in West African
Monetary Institute (WAMI)/West African Monetary Zone
(WAMZ) countries – The Gambia, Ghana, Guinea-
Conakry (which is French speaking but does not use the
CFA franc), Liberia , Nigeria and Sierra Leone – and later in
the whole ECOWAS area, was officially stated in December
2000 in connection with the formal launch of WAMZ.

The Eco was first planned to be introduced in 2003, but this was
postponed several times, to 20052010 and 2014. At a meeting of the Convergence Council of Ministers and
Governors of West Africa on 25 May 2009, the start of the currency was rescheduled to 2015 due to the international
economic crisis . [6] The December 2009 meeting also established a plan to begin work to merge the Eco with the
CFA franc immediately upon the launch of the Eco; this was
planned to be achieved by 2020.

In 2001, the West African Monetary Institute (WAMI) was
set up with headquarters in Accra, Ghana . It is to be an interim organisation in preparation for the future West African Central Bank.

Its function and organisation are
inspired by the European Monetary Institute . Thus, WAMI is to provide a framework for central banks in the WAMZ to
start the integration and begin preliminary preparations for the printing and minting of the physical money, just as EMI did before in the Eurozone before the introduction of the
Euro.  The current director general is J.H. Tei Kitcher.

On December 22, 2019, the Managing Director of the
International Monetary Fund (IMF) welcomed the major
reform of the CFA franc decided by eight West African
countries and France. For Kristalina Georgieva, these
changes “constitute an essential step in the modernization
of long-standing agreements between the West African
Economic and Monetary Union and France .

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