ECOWAS Aims for 2027 Launch of New Currency Amid Challenges

The Economic Community of West African States (ECOWAS) is determined to launch its new regional currency, known as the eco, by July 2027, despite facing numerous hurdles. This commitment was reiterated during the recent Sahel Governance Forum held in The Gambia.

The initiative for the eco was first adopted in June 2019, with the goal of enhancing trade and economic integration across West Africa. However, the rollout has faced significant delays due to various factors, including economic disparities among member states, fiscal challenges, political unrest, military coups, and the impact of the COVID-19 pandemic.

A major concern affecting the feasibility of the eco is the integrity and cohesion of ECOWAS itself. Notably, Burkina Faso, Mali, and Niger withdrew from the bloc in January 2024, primarily in response to sanctions imposed by ECOWAS following military coups in those countries.

Experts point out that the differences in economic stability and governance among member nations have hindered progress toward a unified currency. An economist has emphasized the necessity of political alignment and mutual understanding among member states to create a common monetary policy and central bank.

Countries such as Nigeria and Ghana, despite experiencing economic downturns and high inflation rates, are seen as potential leaders for the initial implementation of the eco. Nigeria's economic size and Ghana's relative stability position them as key players in this initiative. Additionally, The Gambia and Ivory Coast are also identified as candidates for early adoption due to their adherence to the necessary convergence criteria.

Analysts note that for the eco to succeed, member states must agree on fundamental rules governing monetary policy, including interest rates and fees, which should be managed by a central authority to ensure economic coordination.

Learning from the European Union's experience with the euro could provide valuable insights for ECOWAS. In the EU, stronger economies have often had to support weaker ones to maintain stability within the monetary union. Observers expect that larger economies like Nigeria and Ghana will need to assume a similar role in the ECOWAS framework.

Concerns have been raised regarding the potential dominance of larger economies within the bloc and how this might create inequalities in the implementation of the eco. However, proponents argue that a successful rollout could bolster the region's geopolitical influence and enhance its participation in global economic discussions.

ECOWAS President Omar Alieu Touray has expressed confidence that the eco will be introduced within the projected timeline, highlighting the political will among member states to realize this goal. Nevertheless, he acknowledged that certain convergence criteria may be challenging to achieve, given the economic disparities among member nations.

The planned launch of the eco will occur in phases. Initially, the West African Monetary Zone (WAMZ), which includes Gambia, Ghana, Guinea, Liberia, Nigeria, and Sierra Leone, will adopt the new currency. Subsequently, the eco will merge with the CFA franc, currently utilized by eight French-speaking West African nations in the West African Economic and Monetary Union (UEMOA), including Benin, Ivory Coast, Guinea-Bissau, Senegal, and Togo, along with the three nations that have recently exited ECOWAS.

The willingness of the military governments in Burkina Faso, Mali, and Niger to adopt the eco remains uncertain, as their cooperation with ECOWAS has been inconsistent.