Sierra Leone, Others’ Fail to Meet Convergence Indicators For ECOWAS Single Currency

The expectation for an ECOWAS Single Currency by 2027 is no longer realistic, the Director-General, West African Monetary Zone (WAMZ), Dr Olorunsola Olowofeso has said. 

This follows the failure of member states, including Sierra Leone to consistently meet the four crucial economic convergence criteria set forth by the West African Monetary Institute (WAMI).

It would be recalled that ECOWAS in its 55th ordinary session in July 2019 had agreed to launch Eco as its single currency, similar to the Euro used by the European Union.

For the Eco to be implemented, ten convergence criteria, set out by the West African Monetary Institute (WAMI), must be met. These criteria are divided into four primary and six secondary criteria. The four primary criteria to be achieved by each member country are a single-digit inflation rate at the end of each year, a fiscal deficit of no more than 4% of the GDP, a central bank deficit-financing of no more than 10% of the previous year’s tax revenues and Gross external reserves that can give import cover for a minimum of three months.

Speaking against the backdrop of the recently held 48th meeting of the Committee of Governors of the Central Banks of the member-states of the WAMZ in Abuja, Olowofeso said it is unlikely that any of the member-states will satisfy all four primary convergence criteria on a sustainable basis between 2024 and 2026.

“The quest for a single currency by WAMZ will take much longer to achieve as the convergence indicators have declined significantly.

“The assessment of member states’ performance reveals that, as of the end of June 2023, all member states failed to meet all the four primary convergence criteria.

“The zone’s performance score declined to 29.2 per cent, compared to 41.7 per cent during the same period in 2022,” he said.

He said that the medium-term projections on macroeconomic convergence suggested that none of the WAMZ member-states would meet all the primary convergence criteria sustainably between now and 2027 for the convergence phase of the ECOWAS Single Currency Roadmap.