PROPOSAL
This
project research is primarily aimed at dealing with the implications of a
common currency for West African countries. As the world is geared towards
globalization, West African countries deemed it very imperative to adopt the
use of common currency in the sub-region just like their European or
Francophone counterparts.
The
central focus of this research is to know the extent to which the ECOWAS member
states have gone in establishing a common currency for West African, to find
out if the introduction of West African common currency will enhance economic
growth and development in the sub-region; to examine some policy measures introduced
to boost the adoption of a west African common currency. To achieve these, the
researcher made use of both primary and secondary data questionnaire were
extensively distributed to the officials of CBN (Enugu
zonal office), First Bank Plc (zonal office Enugu)
and NACIMA also in Enugu.
Based
on the objectives of the study, the findings reveal that the extent to which
the ECOWAs member states have gone in establishing a common currency for west
Africa is not impressive nor encouraging. The establishment of a common
currency for west Africa will only enhance economic growth and development in
the sub – region if member stats are sincere and dedicated to the common
objective, the policy measures introduced to boost the adoption of a west
Africa, common currency is less encouraging and other berecuatracice associated
with the introduction of common currency for west Africa in relation to trade
within the sub-region could not help matters. Based on this findings,
recommendations were member states that should be dedicated and committed to
the project as it will, unequivocally, enhance their economic well –being an
boost their political and economic image worldwide.
CHAPTER
ONE
INTRODUCTION
BACKGROUND OF THE
STUDY
The actual study for establishment of a common
currency for west African state (ECOWAS) and drafting of a programme of
monetary and fiscal polices of members states was between 1985 and 1986 period
(Arah, 2001: 29). In response to the study, the sub-region monetary
co-operation programme involving short and long term measures were seen to be
economic flight (Ogwuma 1998:3). The highest level of economic integration is
the monetary union, which involves the integration of trade and micro-economic
policies and establishment of a common central bank and a single currency.
The
establishment of a monetary union is however consequent on the member states,
meeting the convertibility condition of monetary and fiscal prudence and other
macro – economic convergence indicators which are the short and long term
measures. The short term measures were settlement of areas in the west Africa
monetary agency (WAMA), clearing system establishment of a credit guarantee
fund, introduction of new payment instrument like ECOWAS travelers cheques and
extension of the range of products eligible for transactions through the
clearing system. According to Ezema (2001;30) the long term measures include
liberation of trade and payment system in all member countries, liberation of
all interest and exchange rate, reduction of inflation to a single digit and
creation of a single currency zone within the sub-region by the year 2000 (the
deadline for achieving the measure by all member countries was set for 1988).
However, most member states beat the deadline while the traveler cheques issues
was delay due to political and economic muscle flexing between the Unions
Economiuqe Manetaire Quest Africa (UEMQA) members and the rest. The traveler
cheques afforded one of the most realistic steps towards achieving economic
integration and a single momentary zone, but had to suffer several postponement
due to various reasons. The initial disagreement among member states was on the
modalities for finding the cheques out of the ‘ghost†or imagined position to
the members in the scheme of things. In the words of Olajide (2001:31) at
another attempt in 1998, some CFFA zone members did not attend the summit on
the ground that the delegates wanted to conclude some contracts with their home
governments. This was done without notice even as it suffered postponement for
another meeting with France
before that of the travelers cheques launch.
In
February 1998, at the planned launching in Abuja, all disagreement were
resolved under the auspices of an adequate-hoc committee set up by the ECOWAS
heads of states composing Cote D’ voice, Ghana, Mali, Togo and Nigeria.
Univocally, the CFA zone members were in vanguard of the launching of the
travelers cheques in 1999. Ostensibly due to the successful establishment of
Euro (the European common currency which will take over the national currencies in Europe
in 2004), and therefore effectively terminate the French Support for CFA. On December 15, 2000, heads
of state and governments of ECOWAS in Bamako,
Mali approved
the decision to establish a common currency by 2003. the decision was the
result of the initiative take by Ghana
and Nigeria
in a bilateral economic meeting on December 1999 to adopt a two – track system called FAST TRACK
APPROACH (FTA) to the implementation of ECOWAS integration programmes for West African in 2004. The fast track approach recognize
the need to have a parallel zone christened West Africa monetary Zone (WAMZ)
the UEMOA to work for a gradual merger of the two at appointed period in line
with the deadline.
1.2
STATEMENT OF THE PROBLEM
In spite of the numerous efforts
made by the ECOWAS member states to establish a common currency in West Africa
which will help to foster economic integration international the sub – region
by implementing ECOWAS monetary measures, the issue of common currency is still
a mirage because of the following reasons;
i)
The
strength of the economics of these West African countries vary, so there is no
common relationship between their monies.
ii)
Divergent
tariff structure among member countries.
iii)
Low
level of intra-regional trade in the sub region since less than 5 percent of
the total international trade of the sub region is channeled
iv)
The
political instability in some of the countries of the sub region.
v)
Inability
of the proper member states to meet up with the demand of the monetary
zone.
1.3 PURPOSE OF THE STUDY
The
main purpose of this project is on the implication of a common currency for
West African Sub-region. Other purposes of the study included.
i)
To
trace the extent to which the ECOWAS member states are committed in
establishing a common currency for West Africa.
ii)
To
find out if the establishment of a West Africa
common currency will enhance the economic growth and development in the sub –
region.
iii)
To
examine some policy measures introduced to boost the adoption of the West Africa common currency.
iv)
To
find out the problem militating against the immediate establishment of the West
African common currency and ways of curbing the problem.
v)
To
profer solutions, and make recommendations based on the findings.
1.4 Research Questions
i) To what extent has the ECOWAS states gone
in establishing a common currency for West Africa.
ii) Will the establishment of a West Africa common currency enhance economic growth and
development in the sub-region?
Iii) What policy measures have been introduced
to boost the adoption of West African common currency?
iv) What are the problems militating against
the establishment of West African common currency and ways of nipping these
problems on board?
It is hoped that the finding and
recommendations of this project will.
i)
Be
a partial fulfilment of the requirement of the award of Higher National Diploma
in accountancy.
ii)
Enable
ECOWAS member states to know the problem delaying the establishment of common
currency for West Africa.
iii)
Be
a great help to future researchers who will want to share ideas.
iv)
Encourages
ECOWAS members to show more interest towards the adoption of a West Africa
Common currency.
1.5
SCOPE AND LIMITATION OF THE STUDY
The area coverage research of
this project is Enugu.
The research is to determine the implication of common currency for West Africa sub – region.
LIMITATIONS
Although the work has been successfully completed,
more could have been done if not for some limiting factor encountered by the
researcher in the course of this task. In fact, one of the hydra – headed
limitations to this study is time constraint. Inadequate time to carry out
extensive and through research on this work was totally experienced as the
researcher had insufficient time for academic work (lecturers) and that of
running around to gather the needed data for the project.
Another
problem is financial constraint. The cost of obtaining information from the
internet w two much for the researcher. Also the cost of transportation did not
help the researcher, as areas of data collection were expensive duly to the
incessant fuel scarcity and arbitrary increase in the prices of petroleum
products constrained the movement of the researcher.
In
addition to the above constraints, the researcher experienced communication
gap, non – challent attitude by the researcher’s respondents. There were
partial unwillingness of some CBN staff to render adequate service to the
researcher.
Final,
there is the scarcity of available data on the topic.
REFERENCES
Arah, N. (2001) “ECOWAS single currency
begins in
slippery note†– The
Guardian newspapers, Lagos Vol. 17 No 8, pp 181.
Ezema, M. (2001) “ECOWAS Single currency begins in a
slipper note’ - The Guardian newspapers, Lagos vol, 17, no 8 181.
Ogwuma, P. (1998): “Promoting regional Economic
integration†The Africa Experience C.B.N Bullion CBN, Publication vol. 22.
No 3.
Olajide B (2001): “Bankers
doubt possibility of single
Currency†– The
Guardian newspapers, Lagos
vol. 17, No 8. 181.
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