West Africa Monetary Zone Members Fail Test Again Ahead of 2015 Deadline

None of the six-member countries of the West Africa Monetary Zone (WAMZ) has, as of the end of 2012, met all the four primary convergence criteria necessary for the adoption and implementation of a common currency in the region. The Gambia, Ghana, Guinea, Nigeria, Sierra Leone and Liberia are the members of the WAMZ and have committed themselves to attaining a convergence criteria for a single-digit inflation rate, budget deficit of not more than four per cent of their economy’s GDP and a central bank deficit-financing of not more than 10 per cent of the previous year’s tax revenues. They are also to keep a minimum reserve of up to three months of import cover. These criteria are to be met by all the six member countries before the West African Monetary Institute (WAMI) can recommend for the adoption of the common currency in the WAMZ zone, come 2015. However, a report by WAMI, the body mandated to shepherd the convergence, indicates that although some of the countries met some of the convergence criteria, none of them met all. Their performance on the secondary criteria also deteriorated relative to the primary criteria, the report which also looked at the macroeconomic status of member countries for 2012, indicated. While their overall performance on the primary convergence criteria remained unchanged, at 66.7 per cent for 2012, as was the case in 2011, the report indicated that their performance on the secondary criteria improved to 25 per cent from the 22.9 per cent recorded in 2011. The report was presented to Members of the Convergence Council of the WAMZ on July 26. The member countries have set a deadline of 2015 for the launch of Eco, a common currency to replace the individual national currencies of member countries. The idea of a common currency for the sub-region was mooted and adopted in 2000 and member countries committed themselves to attaining the primary and secondary convergence criteria before the Eco could be launched. However, fiscal slippages continue to make it impossible for member-countries to achieve all targets at a time and/or maintain them. The situation is that a country or two, including Ghana and Nigeria, had in different years met all criteria but could not have partners to make it possible for a launch of a single currency. Majority had often failed to meet the criteria. Its launch has been rescheduled from 2003 to 2005, 2009, and now to 2015. Although WAMI and members of the Convergence Criteria Committee are confident of launching the common currency by 2015, the findings of the report put the current launch date in danger. That notwithstanding, the immediate past Chairman of the Convergence Council of the WAMZ, Dr Yerima Lawal Ngama, said the strides towards 2015 were impressive and commendable. He, however, admitted that they were “not sufficient enough for the launch of a monetary union” but called on the member countries to look at the future “not with trepidation but with optimism.” “If we resolve to turn the challenges into an opportunity, work harder together and adhere to the precepts of sound economic management, we can and must establish an enduring monetary union,” Dr Ngama, who is also the Finance Minister of Nigeria, said at the WAMZ biennial meetings which ended in Accra on July 26. Meanwhile, the Governor of the Bank of Ghana, Dr Henry Kofi Wampah, has been elected Chairman of the WAMZ Governing Council. He replaced the Governor of the Bank of Nigeria, Mallam Sanusi Lamido Sanusi. Dr Wampah will head the council for the next six months.