The governments of the countries of the Economic Community of West African States (ECOWAS), meeting in ordinary summit on Sunday 24 January, decided to postpone the entry into force of the Eco in 2025.
The introduction of the Eco, the new single currency of ECOWAS, will not be effective in 2021. It was supposed to come into effect in exactly four months. The Heads of State of the economic community have taken the decision to postpone the resumption of the application of their convergence pact in January 2022. “From January 2022, the convergence pact, which includes the various deficit and inflation criteria to be met, will be implemented. (…) It is estimated that during the three years, the States must make efforts so that in 2025 we can go to the common currency,” declared the Burkinabe Minister of Foreign Affairs, Alpha Barry.
The reasons given for this postponement are the coronavirus pandemic, which has weakened the West African economies and caused more spending than expected for States, and non-compliance with the convergence criteria. It is clear, however, that there are still many essential points which have not been clarified. The federal central bank responsible for implementing the Eco’s monetary policy has not yet been set up. It remains to clarify the exchange rate regime, to settle the issue of the manufacture of coins and notes, among other things.
The governments of the West African Economic Monetary Union decided, by mutual agreement with France, to find an alternative to the CFA franc by creating the Eco. The major reforms related to the creation of this currency are aimed at the withdrawal of French directors from the Central Bank of West African States (BCEAO), the end of the operating account and the deposit of 50% of the foreign reserves of the West-the French Treasury and the continuity of the Eco guarantee by France. Paris thus remains the official guarantor of the Eco which keeps, like the CFA franc (1 euro = 655.96 CFA francs), a fixed parity with the euro.
It should be noted, however, that there are Eco and Eco. The ECOWAS Eco is carried by the 15 member countries (Senegal, Benin, Burkina Faso, Togo, Niger, Côte d’Ivoire, Guinea-Bissau, Mali, Gambia, Guinea, Nigeria, Ghana, Sierra Leone and Cape Verde). On the other hand, the Eco announced by Macron and Ouattara in December 2019, will be the single currency of the UEMOA countries, replacing the CFA franc.
It should be noted that ECOWAS initially formulated the idea of a single currency in 1983.
