WEST AFRICAN MONETARY ZONE (WAMZ)
WHAT IS THE WAMZ?
The WAMZ is the West African Monetary Zone (WAMZ). It is an institutional cooperative framework for achieving monetary union under the commitments made in the “Accra Declaration” signed by six countries in West Africa on the establishment of a second monetary zone.
MEMBERSHIP
Five countries are members of the WAMZ. They are: The Gambia, Ghana, Guinea, Nigeria and Sierra Leone. Liberia and Cape Verde are not yet members but attend WAMZ meetings as observers.
LEGAL EXISTENCE
The WAMZ came into existence on 15th December 2000 when the five countries signed the Articles of Agreement of the Zone at the Second Summit of the WAMZ Heads of State and Government held in Bamako, Mali.
OBJECTIVE
The objective of the WAMZ is to establish a monetary union characterized by a common central bank and a single currency to replace the existing five national currencies.
ORGANS
The organs of the Zone are:
· The Authority of Heads of State and Government
The supreme body of the Zone made up of the Heads of State and
Government of the Zone sitting in Conference. The Authority normally meets twice in a year.
· The Convergence Council
The policy body of the Zone composed of four Ministers from each country representing the Ministries of Foreign Affairs, Finance, Trade/-Commerce, Regional Integration and Cooperation; the Governors of Central Banks of the five countries and the ECOWAS Secretariat. The Council meets three times in a year.
· Forum of Finance Ministers
This is the advisory body created to ensure greater involvement of Finance
Ministers in the implementation of the programme of the zone. The Forum
meets twice a year to deliberate on the status of implementing of the WAMZ programme
· The Committee of Governors
The Committee of Governors of Central Banks consists of the Governors of the Central banks of the five countries, which acts as the technical supervisory body of the Zone.
· The Technical Committee
The Technical Committee is the expert body that reviews reports and makes proposals for the consideration of the Committee of Governors and the Convergence Council. It is made up of representatives of the Convergence Council members, as well as the ECOWAS Secretariat.
INSTITUTIONS
The West African Monetary Institute (WAMI)
WAMI, the interim institution akin to the EMI of the EU, was set up in December 2000 and started operations in Accra, March 2001 with the purpose of preparing the grounds for establishing the monetary union.
The main functions of WAMI are:
· To monitor and assess the macro-economic convergence performance of member states;
· To undertake technical preparations for establishing the common central bank; and
· To undertake sensitisation of stakeholders.
The Stabilisation and Cooperation Fund (SCF)
The SCF is the solidarity fund with an initial called-up capital of $50 million set up to provide temporary balance of payments support to member states. The fund is expected to take-off in 2003.
The West African Central Bank (WACB)
This is the common central bank that is expected to commence operations in July 2005. At the moment, its statute adopted in December 2000 is being revised to bring it in line with the principles of a unitary central bank system. The main functions of the central bank will be to issue the common currency, the ECO, conduct monetary policy of the zone and manage the zonal foreign reserves.
Achievements
The main achievements of the WAMZ so far include the adoption of the legal, institutional and administrative frameworks of the Zone, such as:
· the Agreement of the WAMZ;
· The WACB Statute;
· The establishment of the SCF;
· The Statute of WAMI;
· The setting up of the WAMI;
· The initiation of the framework for monitoring and assessment of the macro-economic convergence criteria;
· Initiation of a Zonal Sensitisation Programme and launching of National Sensitization Committees (NSCs);
· The setting up of zonal and National Payment System Committees
· The putting together and adoption of relevant policy frameworks for the setting up and operations of the common central bank;
· The introduction of a WAMZ exchange rate mechanism;
· The undertaking of studies to develop a centralised banking supervisory authority to be known as the West African Financial and Supervisory Authority (WAFSA) and an efficient regional and national payments system;
· The adoption of ECO as the name of the common currency.
EXTENSION PERIOD FOR MONETARY UNION
A comprehensive assessment by WAMI of the status of preparedness of member states to form the monetary union scheduled for 2003 indicated the unsatisfactory performance of all the five countries in meeting the primary convergence criteria. Hence, the Authority at its 4th Session held in Conakry on November 7, 2002 decided to extend the date for establishing the union from January 2003 to July 1, 2005. By this extension, countries were given more time to prepare for meeting the convergence criteria as well as all financial obligations.
MAIN ELEMENTS OF THE EXTENSION 2003 – 2005
The main elements that will be focused on during the period of extension are:
· multilateral surveillance involving quarterly monitoring and assessment of
country performance;
· adoption of country programmes and incorporation of convergence targets
in national budgets and economic programmes;
· monitoring of qualitative aspects of integration including the movement of
persons, goods and capital;
· undertaking sustained campaign of sensitization; and
· putting in place the essential architectural building blocks of the union.
The critical actions to be undertaken are in two major areas:
(i) Achieving Macroeconomic Convergence
· Incorporation of convergence targets into national budgets by Ministries of
Finance
· Half yearly review of fiscal performance by Forum of Finance Ministers
· Quarterly monitoring of convergence performance by WAMI
· Four monthly assessment of convergence performance by Council
· Final assessment of status of convergence (April 2005)
(ii) Putting in place Institutional Building Blocks
The following important activities are to be undertaken:
· Commencement of contributions to the capital of the WACB (2003)
· Finalisation of revised WACB Statute (2003)
· Designation of Headquarters of the WACB (2003)
· Completion of contributions to the capital of the WACB (2004)
· Designation of Executive Board Members of WACB (June 2005)
· Commencement of operations of the WACB (July 1, 2005)
· Introduction of ECO as a virtual currency (July 1, 2005)
Issued By The
Premier Towers (8th and 9th Floors)
PMB CT 75
Accra
Ghana
Tel . 233 (21) 676901/2;
Fax: : 233 (21) 676903
E-Mail : Info@Wami-Imao.org
Website: : http://www.Wami-Imao.org
February 27, 2003