The Financial Future: The Economic Community of West African States and Financial Integration

Is a single currency possible in countries that subscribe to the CFA franc? What are the obstacles?

Financial integration can be a powerful tool for nations’ societies to gain a greater competitive advantage on the global stage. The European Union has taken decades to reach its current degree of cohesion, and although the euro has existed since 1999, it still lacks a central political authority. In Africa, Regional Economic Communities (RECs) have attempted to build cooperative areas on a smaller scale, but their ambitions are as large as those of the European Union. Specifically, the Economic Community of West African States (ECOWAS) is one of the few regions where most members already share a common currency, the CFA franc, but now want to replace it with a completely independent currency, the Echo.

ECOWAS is made up of 15 member states (Benin, Burkina Faso, Cape Verde, Ivory Coast, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Sierra Leone, Senegal and Togo). Its goal is to “create one big trade bloc through economic cooperation”. it represents 397 million people, and a gross domestic product of 684 thousand million dollars. The CFA franc has two versions, West Africa and Central Africa, and is used in 14 countries (the large economies of Ghana and Nigeria, in particular, do not use it). The two currencies have the same value (practically interchangeable), they are pegged to the euro and guaranteed by France. However, ECOWAS has spent decades thinking about creating its own common currency that would end its dependence on Europe and give its members greater financial independence. Plans for such a currency began to be proposed as early as 2003, but there were many delays. The …