Replacing CFA with Eco ‘challenges the sovereignty’ of Nigerian naira - THE AFRICA REPORT

JUNE 30, 2020

By Ruth Olurounbi

The Francophone countries coming together to replace the colonial currency, the CFA Franc with the Eco, may be “a major step forward and a positive thing,” says Andrew S. Nevin, Chief Economist, Nigeria Clients and Markets Leader at PricewaterhouseCoopers (PwC). But for Nigeria, the eventual uniformed adoption of the single currency challenges the sovereignty of its naira.

It may be why the biggest economy in Africa has been reluctant to adopt the Eco, according to analysts who are studying the economic and political implications of the single currency on the continent.

“I can’t see Nigeria agreeing to answer the Eco because, in effect, you’d be losing your own monetary sovereignty,” Nevin tells The Africa Report. “Of course the CBN has been very active planning all of these things, they’ve been active in the foreign exchange market automobiles and the domestic financing requirements,” he said.

Eco causing tensions in the region

Having announced the retirement of the CFA Franc, the currency left in place by the former coloniser France, the eight countries of the West African Economic and Monetary Union (WAEMU) are anxious to have a new common currency in place by as early as July this year and have opted to replace their currency with the Eco ahead of other members of the ECOWAS, causing tension in the region.

“This sense of urgency by the UEMOA is in response to its members seeking to wriggle out of the influence of Paris. A switch from CFA Franc would mean that links with France would be severely cut and Paris will no longer help to manage the currency of UEMOA members. This move is troubling to other non-UEMOA members of the region who had hoped for a uniform roll-out of the Eco,” says Samuel Segun, Africa Analyst at SBM Intelligence in Johannesburg.

Ghana had also said it would consider joining the Eco if plans to peg it to the Euro were cancelled.

A speedy launch of the Eco is now stoking divisions  among the 15-members of the Economic Community of West African States (ECOWAS). The five anglophone countries of ECOWAS want to adopt the new currency following a slower timetable and as a new currency for the whole region, not just as a replacement for the CFA Franc.


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