ECO-currency's take-off may be shifted again
By Jide Olatuyi in Conakry
A FURTHER shift in the take-off date for the proposed West African common currency, ECO, appears inevitable following the dismal economic performances of the participating countries.
The five member nations, namely Nigeria, Ghana, Guinea, The Gambia and Sierra-Leone, had earlier shifted the currency's launch from January 1, 2003 to July 1, 2005 for similar reasons.
A recent report by the West African Monetary Institute (WAMI) gave the participating countries low marks on the convergence criteria necessary for the introduction of the currency, citing rising inflation and increases in fuel prices.
A recent review of the status of compliance with the convergence criteria necessary for the introduction of the currency next year indicated that only one had managed to improve on its 2002 performance.
For the third time in three years, all the five countries were last week in Conakry, Guinea adjudged economically unhealthy and fiscally unprepared for the smooth take-off of the currency.
The Director-General of WAMI, Dr. Michael Ojo, told a group of journalists in Conakry, Guinea that instead of making progress, the economies of the member countries have retrogressed.
He said: "The progress in macroeconomic convergence weakened in 2003. The status of compliance with the primary convergence criteria showed that at the end of 2003, all the countries moved down on the convergence scale, except Ghana that improved on its 2002 performance."
Ghana had missed all the four primary conditions in 2002 but rebounded in 2003, satisfying only two primary convergence criteria. One of them, which is critical, is the total rejection of financing government deficit by their indigenous Central Banks.
The report said: "Overall, two countries - Ghana and Nigeria - satisfied two criteria each out of four, while The Gambia satisfied only one criterion and Guinea and Sierra-Leone satisfied none of the four primary criteria.
It continued: "While Ghana satisfied the critical criterion of Central Bank financing of fiscal deficit and reserves-import cover, Nigeria narrowly missed the critical criterion of Central bank budget and fiscal deficit financing by its Central Bank but satisfied the requirement on reserves-import cover and fiscal deficit GDP ratio."
The report continued: "Inflation remained a major problem in all the WAMZ countries, as all the member countries missed the target as one of the criteria. This includes Guinea that had hitherto had low inflationary record.
"The inflation problem was accounted for by expansionary fiscal operations and hike in the prices of petroleum products and public utilities in Nigeria and some of the countries. The inflationary impact of monetary financing of the budget showed clearly in the inflation data of The Gambia, Guinea, Nigeria and Sierra-Leone."
"The macroeconomic performance of the WAMZ is negatively influenced by fiscal dominance, which entails monetary financing of fiscal deficit," the report added.
However, the co-ordinator of the National Sensitisation Committee (NSC) in Nigeria, Mr. Idris Kuta, stated that the panel had mapped out strategies and logistics to properly sensitise the Nigerian populace in the North-Central, North-East, North-West, South-West and the South-South geo-political zones of the country.
While reinstating Nigeria's commitment to the ECOWAS Trade Liberalisation Scheme (ETLS) and the Eco-Currency project, Kuta pledged that the committee would work tirelessly to create the necessary awareness on the currency within the country.
He also indicated that as soon as it is financially mobilised, the committee would do all within its power to effectively reach out to both the public and private sectors, including the members of the National Assembly, the National Orientation Agency (NOA) and every stakeholder.
Kuta is a Director in the Ministry of Co-operation and Integration in Africa.
