Nigeria is one of the countries that drive the wheel of the continent’s economic viability. Nigeria boasts of over 80% of the region’s revenue and a larger share index of the market made possible by a population that guarantees a viable Return on Investment, ROI, and a robust consumption of goods from all parts of the world. The chain reaction from these inflows from abroad keeps the Nigerian Customs operatives, Maritime and Aviation professionals as well as the capital market alive and active. Ironically, this lopsided economic condition is one of the many reasons why the nation battles with the mono-product economy syndrome.
Only recently did the Federal Government initiate plans in revitalising and diversifying the economy. The FG put in place other monetary policies that will cushion the effect of possible lacunae in the economy. By default, the decision of the ‘Giant of Africa’ ’ to protect its economy has sent strange ripples across the continent, especially its neighbours, who are beneficiaries of inter-border trade relations. When Nigeria closed its borders last year, its West African neighbours slumped into economic crisis. Nigeria, an Anglophone West African country, is in the epicenter of the West Africa’s heated political and economic life. Her French-speaking West African counterparts rely on the smooth relations with the ‘big brother’. Whenever Nigeria takes an economic stance on the future of the sub-region it usually leaves a room for deliberation and wide guesses.
History informs us of the sharing of Africa between Anglophone and Francophone Africa, which dates back to 1885, the Berlin Conference. At the conference, the entire African continent was shared amongst the most powerful countries at the time; USA, Britain, Germany, Belgium, Portugal, and others. The postscript gave rise to what is known in modern times as Colonialism. Decades after, the Anglophone African countries were constantly at loggerheads with their Francophone counterparts. The need for sub-regional collaboration and economic liberation led to the establishment of Economic State of West Africa, ECOWAS in 1967. Since its establishment, ECOWAS has managed in cohabitating differences among member states, as well as establishing common tariff and border policies that will aid ease of trading and movement within the region.
Five West African Countries, namely Nigeria, Ghana, Gambia, Liberia, Sierra Leone, and Guinea, came together in the year 2000 to agree on a West African Monetary Zone, WAMZ policy. This gave birth to an agency, the West African Monetary Institute, WAMI, in 2001. The Agency, located in Ghana, was saddled with putting together the framework for the establishment of a West African Central Bank, WACB, and the launch of a single currency that will favour all signatories of the WAMZ, and allow for ease of doing business across the sub-region. The WAMZ was dominated by Anglophone West African States. On the flipside, the West African Economic Union, UEMOA or WAEMU, was dominated by the Francophone countries, Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. The 1994 UEOMOA was a treaty focused on free movement, common market and taxation, the harmonisation of policies on human resources, agriculture, energy, transport, infrastructure, and customs, among others.
In 2019, the ECOWAS agreed to adopt a single currency (ECO) by the year 2020. This proposed currency unanimously accepted by WAMZ and UEMOA members was a ‘means to an end.’ The Nigerian government kicked against the implementation of the ECO in February 2020, claiming that the ECOWAS members had not reconciled all the necessary criteria. This was followed by the withdrawal of all the Anglophone countries from the engagement of the ECO based on the same reason. Meanwhile, the finance ministers had in mid-January denounced the members states for trying to rename the CFA as the ECO. This has sent a different implicature to the West African Market who are largely suspicious of the French’s hand behind the scene. The ECO was meant to loosen the hold of the French on the viability of the economic life of francophone West African countries. President Muhammadu Buhari he earlier warned that the ECO should be distinct and separate from the CFA, which was handed down by the French colonials. He had also expressed fears that the hurried implementation of the ECO may lead to a disintegration of cooperation amongst states similar to the European Union. Ghana has also expressed concerns on the ‘pegging’ of the ECO with the Euro and has subtlety demanded that the currency be severed from the European market.
The Nigerian President noted, ‘Nigeria advises that we proceed cautiously with the integration agenda, taking into consideration the above concerns and the lessons currently unfolding in the European Union. To that end, Nigeria will caution against any position that pushes for a fast-track approach to monetary union, while neglecting fundamentals and other pertinent issues.’
Mr. Emmanuel Macron, President of France, has however expressed positivism towards the ECO. He said that the debacle associated with the CFA, was that it banked 50% of the francophone country’s foreign exchange reserves with the Bank of France. For him, this would be curtailed by the introduction of the ECO. The French helmsman stated that France will only act as ‘’Financial Guarantors’ ’ in the new ECO currency arrangement. From all indications, it is clear that the proponents of this ECO currency plan are largely former French West African nations of the West African Monetary Union (WAMU) Signatories of UEMOA are eager to adopt the new currency.
Andrew S. Nevin, Chief Economist, Nigeria Clients and Markets Leader at Pricewaterouse Coopers told the African Report that although the ECO may be a step in the right direction, it may pose a threat to the economy of the sub-regional giant. Perhaps, the ECO as the West African currency would could pose a threat to the Naira, and Nigeria has decided to put its own people and economy first this time around. The de-facto currency puts the country at the risk of not achieving the single-digit inflation rate which poses threat to the inflationary trends of the country. It may lead to problems in asserting the independence of fiscal and monetary policies of participating countries. Nigeria’s President tweeted in June, ‘We cannot ridicule ourselves by entering a union to disintegrate, potentially no sooner than we enter it. We need to be clear and unequivocal about our position regarding the process.’
The strategic role that Nigeria plays in the scheme of things is very important to the actualisation of the ECO currency plan. With participating countries such as Ghana and other member states of ECOWAS joining the different sides, the stage is set for the ECO currency to serve as a legal lender throughout West African sub-region and a means of trading on the global scene. However, financial analysts fear that without Nigeria, the ECO will be weak in the international market. For now, it is likely that the sub-region will experience divides between its Francophone countries who may adopt the ECO, while the Anglophone countries recuse from the ECO, leading to far-reaching economic downturn. The West African Monetary Zone will also be needing the blessing of Nigeria to become a reality because of the strategic role the nation plays.
Nigeria’s leadership owes it to the Nigerian peoples who are yet to recover from the enslavement of Bretton Woods policies, to protect the Nigerian economy. All leaders in the countries in West Africa also owe it to their countries to protect her interests. A proper framework that addresses the needs of the reluctant Anglophone countries can be put in place by the monetary zone in order to achieve the laudable, Pan-African agenda that may be hijacked by Western control, if not well articulated, implemented and managed.