West African ECO: 9 things to know about new currency

Fifteen countries in West Africa already agreed to use the single currency called “Eco” by 2020, even as experts are divided on the positive gains the currency will have on the region’s economy.

BBC News reports that negotiations for the currency have been on for 30 years before it was formally adopted.

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The Economic Community of West African States (ECOWAS) has, however, said that the rollout of the currency will follow a gradual process.

If you live in any of the countries in the region, it is important to know some things about the currency that would drive West African economy when it finally launches.

Here are nine very important things to know about Eco:

1. Launch date

The ECO currency will launch in 2020, a year from now. However, the exact time is not known.

2. Flexible exchange rate

The currency promises to have a flexible exchange rate to ease inter-country use so that users of the currencies can easily convert their local currency to the currency or vice versa.

3. Average annual inflation of less than 10%

Any of the 15 countries must have less than 10% average annual inflation as a condition for the launch of the currency. What this means is that any country with a higher inflation rate would not be part of the team.

4. Budget deficit of not more 3%

Another condition for all the 15 countries adopting the new currency is that they must have not more than 3% budget deficit. This means that their annual spending must not be more than 3% of their budgets.

5. Availability of at least three months gross external reserves reports

Another condition is that the countries must be able to present their gross external reports of three months on their imports.

6. Central Banks financing of budget deficits must be checked

Whatever the central bank of any country will use to bail out budget deficits, it must nit be more than 10% of the revenue made from the country’s tax of the previous year.

7. Countries using CFA France slightly discouraged

Due to the low interest rate enjoyed by countries who use France-backed franc, such could be discouraged as the currency is already driving high investments for them already.

8. Mixed reactions that it could be dominated by Nigeria

While some slightly fear that it could be dominated by Nigeria, the largest economy in the region, others believe that is a good thing and could offer the country access to a bigger market.

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9. Appeal to cut off colonial link

The proposed new currency is also seen as a move to cut off colonial link where countries currencies are still heavily influenced by their colonial background, could have a currency of their own.

Meanwhile, Legit.ng earlier reported that ECOWAS heads of state and government on Saturday, July 1, adopted ECO as the name of the single currency to be issued in 2020.

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Source: Legit.ng