In early 2019, leaders of the Economic Community of West African States (ECOWAS) set a goal of achieving a monetary and currency union by January 2020. While the COVID-19 pandemic and a lack of macroeconomic convergence among member countries precipitated the postponement of this goal, ECOWAS leaders have continued to move forward with the project, with the new goal of launching the new currency—“the eco”—in the coming years. Proponents of the currency union argue that it would free businesses and visitors from the burdens of exchanging currencies and encourage intra-area trade, leading to a more deeply integrated and prosperous region overall.
However, the effort comes with significant costs along with operational challenges and transitional risks. As Europe has seen with the euro, even regions with strong institutions struggle to balance politics, public opinion, and monetary policy. Moreover, in Africa, it is uncertain whether the benefits of the eco will be spread evenly across the community given the disparate levels of development and various sizes of the national economies involved. Skeptics of the eco project also note that many of the hoped-for benefits of the shared currency will require an accompanying set of fundamental reforms, including stronger domestic institutional and macroeconomic frameworks.
On July 30, the Brookings Africa Growth Initiative launched the new book, “Regional Integration in West Africa: Is There a Role for a Single Currency?” in which authors Eswar Prasad and Vera Songwe explore the debates under way about how ECOWAS could achieve greater trade and financial integration, with or without a currency union, as well as the ramifications for the African continent. Panelists explored whether the countries involved are ready for the effort, which obstacles should be addressed so that the currency can be successful, and alternative paths to enhanced economic integration on the continent.
After the program, the panelists took audience questions.