Former Finance Minister Ken Ofori-Atta has advised West African nations to reconsider their pursuit of introducing the single currency, known as the ECO, for the region.

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Initially slated for introduction in 2021, the outbreak of COVID-19 compelled ECOWAS to postpone the currency's launch to 2027.

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The ECO was envisioned to stimulate economic growth in West Africa and facilitate cross-border trade. Furthermore, it was anticipated to eventually merge with the Euro-pegged CFA franc, predominantly used by French-speaking West African countries within the West African Economic and Monetary Union (UEMOA).

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However, Mr. Ofori-Atta believes that many countries in the region lack the commitment necessary for the single currency initiative.

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In an interview with Joy Business’ George Wiafe at the AFREXIM Annual Meetings in Nassua, Bahamas, Mr. Ofori-Atta expressed skepticism about most ECOWAS member countries' ability to meet the convergence criteria required for the introduction of the currency.

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“ECO has been difficult and the capacity of us, the 16 countries in ECOWAS to come to a convergence point where we all will fulfill the criteria seems very lucid, he said.

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As per the requirements, ECOWAS member countries must fulfill four key criteria: maintaining a single-digit inflation rate by year-end, sustaining a fiscal deficit below 4% of the GDP, limiting central bank deficit-financing to less than 10% of the previous year's tax revenues, and ensuring gross external reserves adequate for a minimum of three months' import cover.

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Mr. Ofori-Atta believes that these criteria may pose challenges for the economies required to introduce the currency.

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He suggests that ECOWAS can glean valuable lessons from other regional blocs by enhancing payment systems and eliminating trade barriers.

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“If you look at East Asia, they didn’t really end up having one currency but they really increased trade and also got their payment systems in an effective way. That’s a model that has worked and maybe we could under the leadership of Afriexim bank facilitate all of these fintechs being sandboxed into the central banks. I think we will come out with apps that will be more efficient for us”, he suggested.

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Additionally, Mr. Ofori-Atta suggests that ECOWAS could utilize the African Continental Free Trade Area to eliminate obstacles and foster trade harmonization within the region.

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“I think the issue of payment systems and the issue of digitalization being efficient and therefore supporting AfCFTA maybe will lead to the type of results we require”.

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