Single currency: Nigeria, Ghana, others fail to meet criteria

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Godwin Emefiele, CBN Governor

…As Scores killed in fresh Boko Haram attack on army location***

The inability of some countries within the West African Monetary Zone to meet up with the macroeconomic convergence criteria is currently threatening the take-off of the single currency regime for the sub region.

The development was confirmed on Thursday during the 37th meeting of the Committee of Governors of Central Banks of the West Africa Monetary Zone, which held at the headquarters of the Central Bank of Nigeria in Abuja.

The ECOWAS authority had approved the reduction of the macroeconomic convergence criteria from 11 (four primary and seven secondary criteria) to six criteria (three primary and three secondary criteria).

The three primary criteria being used are a budget deficit of not more than three per cent; average annual inflation of less than 10 per cent with a long-term goal of not more than five per cent by 2019; and gross reserves that could finance at least three months of imports.

The three secondary convergence criteria that have been adopted by ECOWAS are public debt/Gross Domestic Product of not more than 70 per cent; central bank financing of budget deficit should not be more than 10 per cent of previous year’s tax revenue; and nominal exchange rate variation of plus or minus 10 per cent.

Presenting a progress report at the opening session of the meeting, the Director General, West Africa Monetary Institute, Dr Ngozi Egbuna, explained that as of December 2017, none of the countries met all the four criteria.

She, however, said the average performance of the member countries of the zone improved during the year under review.

For instance, Egbuna stated that The Gambia, Guinea and Nigeria attained three criteria each.

She said The Gambia missed the fiscal deficit criterion; Guinea slipped on the gross external reserves, while Nigeria missed inflation criteria.

She explained further that Ghana and Liberia achieved two criteria each.

Ghana, according to her, missed the inflation and fiscal deficit criteria, while Liberia missed the inflation and central bank financing criteria.

Sierra Leone, Egbuna added, met one criterion, which was the gross external reserves criterion.

Addressing delegates at the meeting, the Governor, CBN, Mr Godwin Emefiele, cautioned member countries not to let the desire for a common currency blind them to the adverse and contagion factors associated with a unified monetary environment.

He said, “Our desire for greater economic prosperity for our people through a common monetary union must not vitiate our awareness of the potential adverse and contagion factors associated with unified monetary area and common currency.

“The unfolding trade war between the United States, China and the West portends both opportunities and challenges for our region’s economy, depending on how we approach it individually as nations.

“Nonetheless, while the shocks to individual economies might vary in magnitude and intensity, it might yet be an opportunity for us to look inward and strategize on how best to fill the trade gap that will ensue.”

Emefiele added, “Now is the time to create the West African Monetary Zone Commission to drive our common interests and aspirations.

“We must intensify our level of cooperation and collaboration through strong bonds to work as a unit within the ECOWAS monetary union programme to achieve our shared objective.”

Emefiele called for greater collaboration among member countries as the ECOWAS region embarks on a thorough review of the economic conditions of member countries through their levels of preparedness for the monetary union and economic integration.

Meanwhile, the CBN governor has been elected as the Chairman of the West Africa Monetary Zone.

He was elected at the sub-regional meeting of the body being hosted by Nigeria.

The WAMZ was established in 2000 and comprises countries within the Economic Community of West African States that are working towards adopting their own common currency, the eco.

Speaking shortly after his unanimous election, Emefiele said that there was a greater work to be done to achieve the single currency objective of the zone by 2020.

“A lot of work needs to be done, especially in respect of the attainment of ECOWAS single currency by 2020,” he stated.

He further noted that everything that was required to be done would be actualised towards the achievements of the objectives of the regional organisation.

Emefiele restated Nigeria’s unflinching commitment to the single currency project in the sub-region and urged ECOWAS member countries to work towards achieving the convergence criteria.

In the meantime, Boko Haram terrorists, in what appears to be an unending onslaught on locations of the Nigerian Army, on Wednesday evening attacked the troops’ base in Damasak, Borno State, resulting in a heavy gunfire which lasted for several hours.

The army has confirmed the attack, saying troops of 145 Battalion in Damasak, withstood the insurgents and killed scores of them in the firefight.

The army was, however, silent on the number of casualties sustained on the side of the troops.

Damasak is a town in the Mobbar Local Government Area, some 146 Kilometres from Maiduguri, the state capital.

It will be recalled that the Boko Haram insurgents only last week attacked troops’ location in Gudumbali in the Guzamala LGA and Baga in the Kukawa LGA, resulting in an undisclosed number of casualties on both sides.

The army’s Director of Public Relations and Information, Brig. Gen. Texas Chukwu, on Thursday confirmed that “many Boko Haram terrorists” were killed in the attack on troops’ location in Damasak.

He said, “Troops of 145 Battalion in Damasak engaged the Boko Haram terrorists who came to attack their location at about 6pm on Wednesday. This resulted into a fierce battle.

“The troops engaged and subdued the terrorists in Damasak following a superior firepower. The troops’ aggressive posture, tactics and marksmanship resulted in the neutralising of many Boko Haram terrorists.

“Consequently, the army wishes to state that the fight against Boko Haram terrorists in the North-East part of the country is yielding a positive result.

“We, therefore, advise members of the public, particularly residents of the affected areas, to go about their legitimate businesses as the army will continue to protect lives and property of citizens at all times.”

Punch