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I. Introduction Greetings: Your Excellency, on behalf of the management and staff of West African Monetary Institute (WAMI), and on my own behalf, I welcome you to WAMI. We are deeply honored to have you here on an official visit to our Institute. It demonstrates your personal commitment, and that of Nigeria to the ideals of economic and monetary integration in West Africa. WAMZ MU: Your Excellency, as you know, the Heads of State and Government of The Gambia, Ghana, Guinea, Nigeria and Sierra Leone launched the West African Monetary Zone (WAMZ) in December 2000, with the objective of establishing a common central bank and the introduction of a single currency, similar to what obtained in the CFA Franc Zone. Benefits and Costs: The Monetary Union is expected to eliminate exchange rate risk and uncertainty, facilitate intra-trade among them, promotes investment and economic growth. However, by joining a monetary union, no individual country's central bank will be able to set interest rates, nor adjust its exchange rate vis a vis the others. Postponement: However in spite of the potential benefits, the single currency—ECO--for the WAMZ has been scheduled to be launched on December 1, 2009, following two previous postponements in 2003 and 2005 as none of the countries could attain the convergence criteria required for the launch of a Monetary Union. The WAMZ is, therefore, at a cross-roads. II. Nigeria and the WAMZ The WAMZ is home to some 190 million people, of which seven out of ten are Nigerians. The combined GDP is $340 billion, with Nigeria accounting for 85.2 percent, followed by Ghana (10.2%), Guinea (2.8 %), Sierra Leone (1.2%), and the Gambia (0.6%). Anchor Economy: Experience has shown that the establishment and sustainability of a monetary union is greatly influenced by anchor economies. This was the case in the EMU where Germany and France played a key role in moving the project forward. The overwhelming economic size of Nigeria in the zone is a political economy reality that cannot be ignored. Economic Convergence: On the basis of the primary convergence criteria, Nigeria’s performance has been robust. The country consistently satisfied the four primary convergence criteria in 2006 and 2007, but slipped on the inflation criterion in 2008 due mainly to the effects of the ongoing global financial crises and the rising food prices, which constitute about two-thirds of the CPI. The prospect in the medium term is bright as the current crisis is projected to ease considerably in the next two to three years horizon. Financial Sector: Nigeria is currently providing leadership in the WAMZ in terms of financial sector integration evidenced by the expansion of Nigerian banks to all WAMZ countries, following the bank and other financial sectors consolidation. However, the country’s capital account, though considerably open has not been fully liberalized and the cross-listing of stock has not yet fully been operationalized. Customs Union: The country has adopted the ECOWAS ETLS. The common external tariff has also been adopted, although there are some unresolved issues regarding the fifth band that the country in conjunction with other ECOWAS has proposed. The protocol on free movement of persons has been implemented. Nigeria is the only country in the zone that currently publishes quarterly GDP. However, there is dearth of employment data, though steps are being taken to address the issue. III. Nigeria and WAMI The WAMI was created to mid-wife and fast track the process of a second Monetary Union. Nigeria contributes 60.40% of the Annual Budget of WAMI, in accordance with the ECOWAS budgetary contribution summary. WAMI presently has a staff strength of 44 from 5 member countries. 10 Nigerians occupy professional positions, including the Director-General. IV. Outstanding Issues Legal Ratification: Nigeria is yet to review the legal instruments of the WACB, WAFSA and the WAMZ Agreement by relevant agencies. Sensitization: So far it appears that, although the single currency is meant to serve the interests of the people, both publicity and education about the introduction of the currency seem to lag far behind the program. It also appears that the business community has not been fully engaged with the process of economic and monetary integration. It is therefore important that effective measures are designed to involve all stakeholders, including legislators in the various countries. Heads of State Summit: Before I conclude, let me take this opportunity to express my sincere gratitude to the Nigeria Authorities for their sustained cooperation with WAMI on the WAMZ program. A Summit of ECOWAS Heads of State is scheduled to be held in Abuja, Nigeria between May and June this year. We solicit for your assistance towards a successful hosting by Nigeria and we use this opportunity to extend an invitation to your Excellency.
Chart 1
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