The single currency programme of the West African Monetary Zone that will help facilitate trade within the sub-region is being threatened as none of the countries has met all the convergence criteria.

The Heads of State and Government of the WAMZ had met in Abuja on June 22, 2009, where they took a decision to postpone the commencement date of the monetary union to on or before January 1, 2015.

Following the postponement, WAMZ had imposed on member countries four primary criteria that must be met for the effective take off of the project.

The criteria are a single digit interest rate for member countries; reduction in fiscal deficit; robust gross external reserves that will cover three months of imports; and the central banks’ ability to finance fiscal deficit.

Of the four criteria, Nigeria satisfied three in 2012; The Gambia met three; Ghana, one; Guinea, three; Liberia, three; while Sierra Leone satisfied two criteria as against one in 2011.

The Acting Director-General, West African Monetary Institute, Mr. Tei Kitcher, and the Minister of State for Finance, Dr. Yerima Ngama, both confirmed the deterioration in the convergence criteria by member states.

They spoke in Abuja at the 34th technical committee meeting of the WAMZ.

Ngama said, “The rate of inflation in WAMZ rose to 12.6 per cent in June 2012 from 11.6 per cent in June 2011. Price increases in the non-food items were the main driver of inflation in the zone.

“Fiscal deficit (excluding grants) as ratio of GDP was below the minimum four per cent in six countries, while gross external reserves were enough to cover at least three months in five countries. Central bank financing of fiscal deficit was below the required 10 per cent of the previous year’s tax revenue in five countries.”

Ngama said the challenges being faced by the global economy in the wake of the Euro Zone debt crisis had brought to the fore the urgent need for more collective efforts towards the actualisation of the new date for the monetary union.

He said, “This meeting will provide us the opportunity to take stock of the progress made and to chart the way forward taking consideration the current turmoil in the Euro zone.

“Information at my disposal indicates that despite the challenges that necessitated the postponement of the WAMZ monetary union, performance of member countries on the convergence scale deteriorated significantly from a score of 79.2 per cent in June 2011 to 62.5 per cent in the review period. Real Gross Domestic Product for the zone was projected at 6.9 per cent in 2012, compared to estimated growth rate of 8.7 per cent as at June 2011.”

The minister said the growth rate in GDP was driven by increased activities in the agricultural, services and industrial sectors in most member states.

He, however, lamented that inflationary pressures picked up slightly during the review period as the consumer price index went above the trend line.

Ngama called on member states to “explore innovative ways of enhancing domestic revenue and rationalise expenditures.”

In the same vein, Kitcher said following the lifting of the suspension of disbursement by the African Development Bank, the payment system project would resume this year in all the four beneficiary countries.

“AfDB has agreed to extend for the last time the completion date of the payment system development project from December 2012 to June 2014,” he said.

Source: Punch (written by Ifeanyi Onuba)