By Dr. Moussa K. Fall, Economist, Cofounder & Dean Marselya Tech.
Given the deterioration of macroeconomic fundamentals in some countries of the ECOWAS zone, it would be wiser to allow more convergence between economies and postpone the adoption of the Eco. By readapting the optimality criteria of a monetary zone to the dynamics of the economies of the ECOWAS zone, the latter is indeed an optimal monetary zone in the making. The integration of Ghana and Nigeria, although involving somewhat systemic risks, contributes to the credibility and political will, essential for a monetary zone.
The ECOWAS has set a date. In 2027, the Eco will officially be the single currency of the zone. A major step towards stronger economic and financial integration. At first glance, this is good news for the economic dynamics of the zone, despite the existence of systemic risks that African economies cannot afford at this stage of their path towards emergence. The adoption of a single currency presupposes, beforehand, a convergence of the macroeconomic fundamentals of the countries composing the monetary zone. It involves the size of economies, their budgetary position, the volatility of their macroeconomic variables such as inflation, external debt, for example. Mastering the last two, and the convergence of other variables within the ECOWAS would be a good starting point to establish a single currency, which will make the zone an economic power capable of meeting the challenges of growth and employment. Therefore, naturally, the question arises as to whether the ECOWAS does indeed constitute an optimal monetary zone.
Clearly, the integration of Ghana and Nigeria into the future monetary community poses a challenge. The size of these economies, the volatility of their inflation rates, and their advantage in terms of accumulating foreign exchange reserves, are variables that can have a strong influence on the functioning of future monetary policies within the zone. However, these discrepancies observed between the economies of Ghana and Nigeria and those of other economies in the ECOWAS are similar to those observed in other monetary zones among member countries. A decade ago, economist Joseph Stiglitz advised Germany to leave the eurozone. The weakness of other economies compared to its performance was a hindrance to the proper functioning of the monetary zone and did not guarantee optimal growth on both sides.
It is worth noting that a group of countries in the same geographical area has the potential to create a single currency if transaction costs are a real barrier to intra-regional trade in goods and services. The pan-African payment system has indeed been established to reduce our dependence on the Dollar and the Euro for intra-regional payments. The possibility of bypassing foreign currencies for African countries is an important step towards operationalizing the continental free trade agreement.
A readaptation of the theory of optimal monetary zones to the African context also calls for mentioning a second advantage of creating a common currency, which is the integration of African financial markets. A single financial market, with transparent data flows, should connect entrepreneurs and financial actors. The end of the balkanization of African financial markets will encourage the mobility of factors of production beyond capital alone.
Finally, there is a real political will for industrialization in the countries of the zone, leading them to engage in strategic partnerships with foreign powers. By repeating the same pattern in different countries, these foreign powers contribute to sectoral diversification by reducing investment gaps in strategic sectors such as energy and infrastructure.
Given the economic and financial dynamics of the zone that have just been mentioned, the ECOWAS can be considered an optimal monetary zone in the making. From there, the integration of Ghana and Nigeria is part of a real political will. Meeting all optimality criteria will not be enough to make the zone a homogeneous economic power; political will is essential for the survival and dynamics of a monetary zone. Having the same currency as Ghana and Nigeria is not without risk for other ECOWAS member countries. The first two may have to introduce controls on outgoing capital flows at times, and meticulously manage inflation, risking a deterioration of their trade balances that will affect the common currency.
The figures for external debt, inflation, and key rates in Ghana and Nigeria in 2025 show a fundamental gap in economic dynamics within the ECOWAS. With debt restructuring underway, the central bank’s key rate in Ghana was 25% in July 2025. At the same time, Nigeria had an inflation rate of 21.9% and a key rate of 27.5%. These particularly high key rates were perfectly justified for these two economies given their inflation rates and strong currency depreciation. In the UMOA zone, public accounts and the level of external debt for Senegal, for example, can significantly hinder the dynamics of economic convergence between states. Economic convergence between states is primarily driven by public and private investment dynamics, and prospects for improving the business climate.
It would be prudent and logical, given the macroeconomic fundamentals, to postpone the adoption of the Eco; while hoping that sectoral diversification initiatives encouraged by foreign direct investments, institutional reforms, and revitalization of intra-regional trade will allow for a significant convergence of all ECOWAS economies in the next four years. Under no circumstances should we consider the Eco without Nigeria and Ghana. Technical issues can be addressed more serenely. Savings and investment will be the main guarantors of the monetary zone (bank liquidity, foreign direct investments, and national public and private investment), the more massive they are in respective countries, the more flexible exchange rates will be unnecessary. Exchange rate risks will be lower, and we will have more control over inflation and interest rates in the zone.
Furthermore, a community stabilization fund must be created, housed in three main central banks (BCEAO, BEAC, and Other) which will play a leading role in the future adoption of the Eco. A third central bank must bring together the other countries outside the BEAC and BCEAO. Coordinating the objectives of monetary policies between these three structures will be essential to maintain the dynamics and homogeneity of the economies in the zone.
