By Chiamaka Egwu
Nigeria must urgently align its macroeconomic policies with the economic convergence criteria of the Economic Community of West African States, ECOWAS, if it is to play a leading role in the proposed regional single currency, Lead Consultant for Industry and Private Sector Development at the ECOWAS Commission, Prof. Ken Ife, has said.
In a press statement, Ife said Nigeria’s economic weight within the sub-region made compliance with the bloc’s agreed macroeconomic benchmarks critical to its influence over the proposed currency and the broader process of monetary integration.
He recalled that during his participation at the EU-Africa Summit in Portugal around 2007, he had advocated a phased approach to the regional currency project, with countries that met the macroeconomic convergence requirements commencing the process while others joined subsequently.
According to him, the convergence framework has since evolved, with ECOWAS adopting four primary and six secondary criteria that member states are expected to meet.
The four primary criteria include annual inflation of not more than five per cent, an overall fiscal deficit, including grants, of not more than three per cent of Gross Domestic Product, GDP; central bank financing of fiscal deficits limited to 10 per cent or less of the previous year’s tax revenue; and gross external reserves sufficient to cover at least three months of imports.
The six secondary criteria include public debt of not more than 70 per cent of GDP; positive real interest rates; exchange-rate fluctuations maintained within a plus or minus 15 per cent band; tax revenue equivalent to at least 20 per cent of GDP; domestically financed capital expenditure of at least 20 per cent of domestic revenue; and government wage expenditure not exceeding 35 per cent of tax revenue.
Ife said Nigeria had performed well against three of the four primary requirements but needed to make further progress on inflation, stressing that bringing inflation down to single digits should become a long-term national economic objective.
“Single-digit inflation should be in our line of sight by 2030, if not earlier,” he said.
He argued that sustained compliance with the convergence criteria would strengthen Nigeria’s position in negotiations over the design and management of the proposed regional currency.
According to him, Nigeria’s failure to align with the framework could also limit its ability to influence key decisions on the future monetary arrangement.
Ife said the proposed 2027 target for the regional currency made it necessary for member states to address outstanding convergence requirements and develop credible pathways towards monetary integration.
He maintained that meeting the criteria should not be viewed merely as a requirement for the currency project but as part of a broader strategy for macroeconomic stability and stronger regional economic integration.
