The currency which is called ECO was adopted by the Authority of ECOWAS Heads of State and Government on Saturday in Nigeria’s capital Abuja.
The West African leaders endorsed the currency at their 55th Ordinary Session and approved a road map towards the currency’s issuance in January 2020.
There roadmap is to ensure that all member countries meet three primary criteria for the adoption of the currency.
The criteria for adoption includes member countries having a budget deficit of not more than 3%; average annual inflation of less than 10% with a long-term goal of not more than 5% by 2019.
Member countries were also expected to have gross reserves that can finance at least three months of imports.
The other convergence criteria that have been adopted by ECOWAS are public debt or Gross Domestic Product of not more than 70%.
There is also the issue of central banks financing budget deficit not more than 10% of previous year’s tax revenue, and nominal exchange rate variation of plus or minus 10%.
A communiqué by Nigeria’s Permanent Secretary, Ministry of Foreign Affairs, Mustapha Suleiman said that the regional leaders instructed the ECOWAS Commission to work in collaboration with West African Monetary Agency.
The commission is also expected to work with West African Monetary Institute and all central banks to settle on a symbol for the single currency.
Meanwhile, the ECOWAS Chairman President Issoufou Mahamadou said that the revised roadmap does not affect the date for the issuance of the single currency in January 2020.
He said “We have not changed that but we will continue with assessment between now and then.
“We are of the view that countries that are ready will launch the single currency and countries that are not yet ready will join the programme as they comply with all six convergence criteria,” he added.
ECOWAS was set up in 1975 and has a combined population of 385 million.
It comprises Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.
Eight of these countries use one currency called the CFA franc. Those are Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo.
The decision to adopt one currency is similar to that of the European Union to adopt a single currency called Euro.