Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 49)

The ECOWAS single currency proposed to take off in January 2020 seems unlikely1. This is partly due to the failure of member states to meet all the preliminary requirements in the original treaty. Countries like Guinea Bissau and Togo are the ones to meet the primary conditions of a budget deficit of 3% or less, an annual inflation of less than 10%, as well as a gross reserve significant enough to finance at least three months of imports2. Togo is the sole country to satisfy the second criteria of debt/Gross Domestic Product of less than 70%; central bank financing of budget deficit of 10% or less of previous year’s tax revenue; and nominal exchange rate variation of plus or minus 10%. Nigeria has achieved the budget deficit requirement with 2.8% as at 2018 and has currently grown its reserve. However, with the inflation level of 11.6%, the nation is yet to satisfy preliminary requirements for the ‘Eco’ currency. This implies a possible extension on the initiation date. Going forward, member states should make concerted efforts to strengthen domestic macroeconomic frameworks and reduce bureaucratic delays that severely constrain exports and imports at the border, among others, prior to the inception of the Eco single currency.

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