Article- 19th September 2025
Mercy Obed.
In the words of the world-renowned author, Helen Keller; “Alone we can do so little; together we can do so much”. The proposed single currency of the Economic Community of West African States (ECOWAS), the Eco, represents a seismic step towards deeper regional economic integration. At its core, the Eco is envisioned as a unifying instrument that could enhance trade, reduce transaction costs, and strengthen the region’s collective bargaining power in the global economy. Yet, while the potential benefits are considerable, the adoption of a common currency also raises complex concerns for member states, particularly given their diverse economic structures, varying levels of stability, and differing fiscal policies. This article seeks to assess the boons and banes of the Eco for ECOWAS member states as a whole, providing a comprehensive analysis of the opportunities and risks that this ambitious initiative entails.
The single currency initiative was not explicitly spelt out in the ECOWAS treaty of 1975. However, paragraph H of the 1975 ECOWAS treaty which enunciates “the harmonization, required for the proper functioning of the Community, of the monetary policies of the Member States” can be said to have laid the ground work for it. It was after the creation of the Euro in the European Union in the early 2000s, that talks of a single currency began to take better form within the ECOWAS Community. In essence, each country in the ECOWAS Community, would need to surrender its currency independence to a regional apex body. The countries would then make policies that address regional concerns and encourage economic integration and stabilisation, among member states. However, due to the inability to bring this to actualization, there have been series of timeline blips.
Some progress was made at the 82nd Ordinary Session of the Council of Ministers which was held in Abuja in June 2019, where the Heads of Member States of ECOWAS agreed on naming the single currency the ‘Eco’. Since then, there have been significant hurdles in its implementation. Perhaps it was the patronizing play of the Cote d’Ivoirian President, Allesane Oattara and President Macron of France, to rename the CFA Franc, Eco without due consultation and consent from the ECOWAS governing council; the advent of the SAHEL States (Mali, Burkina Faso and Benin Republic) which are essentially countries under the military regime; or the inability of member states to meet their macro economic goals, ECOWAS Eco has not been able to fly.
In 2001, the West African Monetary Institute (WAMI), was set up by the West Africa Monetary Zone (WAMZ) States which include Nigeria, Ghana, Sierra Leone, Gambia, Liberia, and Guinea, to put structures that would aid the realization of a single currency for the WAMZ states. The goal was that the WAMZ states would be the pioneer states to precede the Eco, with the West Africa Economic and Monetary Union (WAEMU), constituting French speaking bloc under the ECOWAS, to join later. In actualisation of this goal, the WAMI established the 10 convergence criteria.
PRIMARY
- Fiscal deficit of the GDP of no more than 4%;
- The inflation rate at the end of each year must be a single digit;
- A central bank’s deficit financing of no more than 10% of the previous year’s revenue;
- Gross external reserves, giving import cover of no less than 3 months;
SECONDARY
- Prohibition of new arrears and liquidation of all outstanding ones i.e, take no more debts, and pay all outstanding ones;
- Tax revenue should be equal to, or greater than 20% of the GDP
- Wage bill to tax revenue should be equal to or lees than 35%
- Public investments to tax revenue should be equal to or greater than 20%;
- A stable real exchange rate; and
- A positive real interest rate.
As things stands, none of the member states has been able to meet all convergence criteria, despite the fact that this initiative has been in the works for over 2 decades. One wonders whether, considering the economic standing of individual member states, the single currency initiative is a viable proposition. In an attempt to answer this question, the experience of single currency economic groups such as the European Union, is worth examining, in order to forecast an answer to the question posed.
The emergence of the Euro in the year 2000, was not a one-day job. In fact, it had taken over 40 years of commitment and policy adjustment from all members of European Union. Trying out of different strategies such as the Snake in the Tunnel strategy, the establishment of the European Monetary System (EMS) and even the creation of the European Currency Unit (ECU), demonstrates the intricacy of such a goal. Even at that, significant members such as the United Kingdom, the Denmark, still did not let go of their independent national currencies. The essence of this being, that although achieving a single currency for the ECOWAS Community may seem to be taking too long, practical evidence goes to show that a merger or consolidation of economic fortunes takes time. Why are the echoes along the corridors, sounds of contrary clamour? Let us briefly look at potential benefits of having a single currency within the ECOWAS Community.
Increased Trade and Investment: Without the requirement of multiple currency units, transaction costs would reduce, and trade among ECOWAS member states would significantly increase. There would also be ease of movement of goods and services.
Improved Economic Stability: As per the agreement, the ECOWAS would be controlled by a supranational central bank called the ECOWAS Central Bank which could provide a more robust monetary policy framework than those operated by appointees of each territory. If the exchange regime is not volatile or uncertain, there would be significant increase in trade and investment.
Stronger Unified Voice for the Sub Region in the Global Market Place: By unifying the monetary policies, there would be cohesiveness in operations. This would not only increase trade and investment, unification of capital markets will follow and regional value chains will readily emerge. This ambition is in step with wider continental conversations under AfCFTA about a common African currency, aligning ECOWAS’s Eco project with other regional currency unions such as the EAC and SADC.
Against these possible gains, they may be trade in which some countries may feel disadvantaged by:
Loss of Individual Sovereignty of the Economy of Member States: For the actualization of the single currency to come to play, member states would each forego sovereign control of their currencies and monetary policy making to a supranational body. Sovereignty of nations is at the root of why countries seek independence, therefore member states may perceive a “surrender” of control which may go beyond economic parameters.
Leadership Tussle Among Member States: Dominant economies always resist incursion with their status. The Eco will become an equalising and neutralising force, which goes beyond economy into politics.
Influence of External Powers: A significant reason the Eco initiative has not taken flight is because of the incidence of some members of the UEOMA states adopting the Eco which is largely tied to the influence of France. Also, users of the CFA Franc still having the Banque du France as their guarantor and a few more aspiring to join it. The duality of exchange rates and currency will have an impact on the Eco. There is also the BRICS group which has a strong African economy as full member.
Vulnerability to Economic Challenges: Once countries become intertwined as regards their economies, it’s unavoidable, that the economic challenges of one nation would without a doubt, affect other. A single currency makes that likely with the recent example of Greece and the EU bail out.
Unpreparedness of Members: Members are yet to meet the convergence criteria, adequate transaction infrastructure is not yet in place. States are yet to achieve domestication .and amendment of local regulations.
Notwithstanding the subject matter, Omar Alieu Touray, President of the ECOWAS Commission in a recent interview, affirmed that the Eco will be launched as early as 2027. Time is ticking. So, what are the practical steps that can be taken to make the Eco a reality? What are the practicable steps that we can take to make this goal a reality?
It would not be too late to reexamine the convergence criteria. There is a suspicion that the criteria may have been lifted from a source, whose economic advancement is beyond that of ECOWAS. Hence;
It may be Necessary to Reset Inflation Targets: Instead of using a single digit inflation rate, the target or standard should be core inflation. This means that it should be based on everyday goods and not just spike in food/fuel prices.
Set Flexible Budget Rules: Economies in this region are often susceptible to hazards beyond control. Setting fixed budget deficit figures may not be the most practicable thing to do. As occasions demand, countries should be allowed to surpass budgets, so long as there are mechanisms to regularize it.
The Ongoing Role of Central banks = Malleable to accommodate economic shocks: Although government borrowing too frequently from their central banks is not encouraged, there are times when it should be allowed. This should not be based on a figure, but based on real time happenings and events.
Convert Debt Criterion into Payment discipline Metric: Economies in the region are seldom able to pay their debts on time. So, the criterion for debt payment, should be reviewed.
There is no doubt that the Eco is a bold and visionary initiative. While there is still a lot of work to do, they cannot be dismissed as mere echoes, as they are clearly leading to deeper regional integration. With stronger institutions, shared commitment, and collective responsibility, it is a hope that it won’t remain a mere goal.