The use of national currencies for intra-regional finance in
One of the recent initiatives towards regional integration was the establishment of the West African Monetary Zone (WAMZ) in December 2000, with the objective of creating a single currency called the Eco.
Having been proposed and postponed on three occasions due to the inability of member states to meet the required 'quantitative and qualitative criteria,' hope is rising again as the WAMZ common currency (Eco) is said to be on course to materialise in the year 2015.
Gambian-born Ousman Sowe, the Director of Administration and Finance at the West African Institute for Financial and Economic Management (WAIFEM), told participants at the opening of a week-long workshop on Economic and Financial Analysis in Abuja, Nigeria, that while the project is on course to materialising, intra-WAMZ trade can be promoted through the use of local currencies in intra-regional transactions.
"The informal sector in the region is already practising the free convertibility of regional currencies in their cross border activities with appreciable success," he said, adding that the bulk of intra-regional trade is still transacted on cash basis. This form of trade, Mr. Sowe noted, has little prospects of meeting the objective of a single economic space in the sub-region.
According to Mr. Sowe, "the rising trend of globalisation strongly underscores the urgent need for WAMZ member states to enter into monetary cooperation under a framework of currency convertibility and macroeconomic policy harmonisation."
"If actualized, the arrangement will pave the way to the realisation of the ultimate goal of a single currency, and a centralised monetary authority," he added.
He said, among other things, that the WAMZ currencies in intra-regional trade transactions boost opportunities to trade in a bigger market, eliminate exchange rate risks among participating countries and ensure price stability.
It would be recalled that at its 20th meeting held in
The scheme was to be purely private sector-driven. Central Banks were enjoined to provide the macroeconomic environment conducive to a regime of stable exchange rates crucial to the promotion of economic competitiveness.
However, economic analysts believe that recent reports on the implementation of the scheme are not too favourable, as the operators, especially banks, are unwilling to participate in the scheme unless the central banks act as guarantor to take up the net position of their currencies.
