The Economic Community of West African States (ECOWAS) has long envisioned a single currency, the Eco, to foster economic integration and facilitate trade within the region. Initially planned for 2020, its launch was postponed to 2027 due to various challenges, including the Covid-19 pandemic. However, the recent withdrawal of Mali, Burkina Faso, and Niger from ECOWAS raises concerns about the feasibility of this ambitious project. Does ECOWAS still believe in the Eco’s implementation in 2027?
Historical Context and Goals of the Eco
The creation of a single currency in West Africa aims to boost intra-regional trade, reduce transaction costs, and enhance macroeconomic stability. The Eco would enable ECOWAS member states to free themselves from fluctuations in foreign currencies and promote deeper economic integration. In December 2024, during the 66th Ordinary Session of the ECOWAS Heads of State and Government in Abuja, Nigeria, the organization reaffirmed its commitment to the Eco by approving key convergence criteria required for its launch in 2027.
Convergence Criteria and Economic Challenges
To ensure the Eco’s success, ECOWAS has set specific convergence criteria that member states must meet before adopting the single currency. These include:
- Controlling inflation,
- Maintaining exchange rate stability,
- Managing budget deficits prudently, and
- Maintaining adequate foreign exchange reserves.
However, many West African nations struggle to meet these conditions due to persistent economic challenges such as dependence on raw materials, high budget deficits, and political instability.
Impact of Mali, Burkina Faso, and Niger’s Withdrawal
In January 2024, Mali, Burkina Faso, and Niger announced their withdrawal from ECOWAS, citing political disagreements and a desire to strengthen national sovereignty. This move has raised concerns about the future of regional integration and the Eco’s viability. These three nations, facing security challenges due to terrorism and political instability, opted to form the Alliance of Sahel States (AES) to better coordinate their security and development efforts.
Consequences for Free Movement and Trade
The withdrawal of these countries challenges agreements on the free movement of people and goods within the region. For instance, Burkina Faso has started issuing new biometric passports without the ECOWAS logo, symbolizing its break from the regional bloc. Such actions could complicate trade, cross-border movement, and economic cohesion within West Africa.
ECOWAS’ Stance Amidst Current Challenges
Despite these setbacks, ECOWAS remains committed to the Eco project. The organization sees the single currency as crucial for strengthening economic integration and improving resilience against external shocks. At its December 2024 summit, ECOWAS leaders reiterated their goal of launching the Eco in 2027 and adopted measures to accelerate monetary integration.
Future Scenarios for the Eco’s Implementation
Several possible outcomes could shape the future of the Eco and monetary integration in West Africa:
- Proceeding with the Current ECOWAS Members
ECOWAS may decide to launch the Eco in 2027 with its remaining member states, hoping that the departed nations will later rejoin the currency union. - Postponing the Eco’s Launch
Given current challenges, ECOWAS might delay the Eco’s introduction further to allow member countries to better prepare and meet convergence criteria. - Redefining the Project
The organization could modify the Eco initiative, considering new political and economic realities and adapting convergence criteria to the specific needs of each country.
Conclusion
The transition from the CFA franc to the Eco in 2027 remains a crucial milestone for West African economic integration. Despite the obstacles posed by Mali, Burkina Faso, and Niger’s exit from ECOWAS, the organization is determined to push forward with this ambitious plan. The Eco’s success will depend on member states’ ability to meet the required convergence criteria, overcome economic and political challenges, and strengthen regional cooperation to ensure a smooth transition to a unified currency.
