WAMI studying Eurozone crisis for implementation of Eco
The West Africa Monetary Institute (WAMI), the body responsible for collaborating and managing the stages of implementation of the WAMZ had identified some teething challenges that might seriously impact the implementation of the Eco.
It said closely monitoring developments in the euro zone has revealed the possible dangers of monetary unions for which reason WAMI needed to be cautious with its approach.
The European sovereign debt crisis (often referred to as the Eurozone crisis) is an ongoing financial crisis that has made it difficult or impossible for some countries in the euro area to repay or re-finance their government debt without the assistance of third parties.
Asked what lessons WAMZ was learning from the euro crisis, Dr Mrs Eunice Ngozi Egbuna, Director of Financial Integration at WAMI said “Even as we speak some of our people are outside (Europe), we are constantly watching the Euro area and as we speak most of our member countries and WAMI staff are on a study tour”.
Dr Egbuna who was speaking to a group of journalists from West Africa, as part of a training programme organised by the Deutsche Welle Akademie in Accra on regional integration, said what was happening in Europe was a blessing in disguise for WAMZ .
Originally, the introduction of the currency was planned for December 1, 2009. However, this date was revised to 2015. Later the launch date was pushed back even further, to 2020 at the earliest.
“Maybe if we had done it the last time, we would have been badly burnt. We are very careful, cautious and very aware of the fact that all our countries are not at par in terms of development. So that has even helped us further to be extra careful”, Dr Egbuna said.
“We want to know what they have noticed from the last time we visited them and we also have questions to ask them. We are constantly looking over our shoulder while we are developing our own skills here in other to do our thing in a peculiar way that is peculiar to us”.
The original five member states are the Gambia, Ghana, Guinea, Nigeria and Sierra Leone. Liberia joined in February 2010
She said what was happening in the Euro area could happen to any regional institution and “we don’t want that to happen to us”.
By the time we started this journey, two of our countries were just coming out of war situation – Liberia and Sierra Leone, so we are extra careful and that has paid off.
Dr Egbuna said that had paid off because they were consciously ensuring that they achieved those qualitative and quantitative criteria on a sustainable basis, not just achieving them but on sustainable basis.
“We need to see it achieved on a sustainable basis, on a year-by-year basis and on a quarter-by-quarter basis before we know that yes we are getting there.
The idea to have all the 15 countries in West Africa spend, save, invest and trade in a single common currency started when ECOWAS was created in 1975.
After several failed attempts and postponements in starting dates, ECOWAS has now given member states up to 2015 to put into effect the plan for a second monetary union and a single common currency in 2015 which will run alongside the existing common currency, the CFA franc, used by the French-speaking member states of the regional body.
The ultimate goal is to eventually collapse into one the two monetary unions and create a single common currency for the entire sub-region.
running and the payment system also gets running too.
Dr Egbuna said she believed WAMZ was on track and only needed the political will from the Heads of states to get it moving on the scheduled date of January 2015.
The introduction of the eco is expected to facilitate the growth of business in the sub-region.
At present, the cost of paying for transactions within the sub-region is said to be too high, according to the business community.
For example, if one has to move from Ghana to Nigeria to buy goods, one needs to use dollars. There are no controls over the rise or fall in the value of the dollar.
This, according to the business community does not ensure price predictability.
Dr Egbuna during the interaction with the journalists said work on a common payment system infrastructure which was expected to harmonise payments electronically within the region was progressing steadily.
She said they were working on it in Sierra Leone and Guinea simultaneously and that work in Gambia has been completed and expected to start in Liberia soon.
She said Ghana and Nigeria already have sophisticated payment systems and that they were working towards having regional currency convertibility by January 2014 according to their completion date.
That was expected to be a bridge when the eco gets running and the payment system also gets running too.
The initial capital for setting up the common central bank to be located in Ghana is $200million as agred by the Heads of states in 2004 and member countries are expected to contribute $100million under a contribution programme which is already underway, she said.
Guinea is to host the secretariat of WAMZ and Nigeria has also agreed to host the bank supervisory authority, she said.
Source: Daily Graphic