Practicability of A West African Monetary Zone: A Conceptual Exploit
Unizik Journal of Economic Studies, 13(1), 64-76
14 Pages Posted: 17 Jan 2019
Date Written: March 8, 2016
What are the necessary and sufficient conditions for meeting the convergence criteria and thereafter, for the formation of the West African Monetary Zone (WAMZ), a counterpart of the European Monetary Union (EMU)? Against this background, the paper examines the practicability of achieving or otherwise the West African Monetary Zone which aims at the rapid integration of the six West African economies of The Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone. The paper employs the content analysis approach for this examination and discovered that drawing its experience from EMU, WAMZ has not been able to realize the objective of fostering rapid integration of the six economies of West African countries into a monetary union because of weak macroeconomic policy coordination within the ECOWAS sub-region, trade barriers, unstable exchange rate, and money and capital flow contracts limited formal intra-regional trade. In this regard, the paper argues that unless the fundamentals and the convergence of core macroeconomic instruments of fiscal, monetary and exchange rate policies are attained, improved upon and ensured by the integrating sub-countries, the achievement of a common monetary and economic union for the West African States may be elusive. This paper recommends the strengthening the fiscal, monetary and exchange rate policies performances by all the integrating WAMZ countries, and enforcement of the various regional agreements such as the ECOWAS trade liberalization scheme.
Keywords: European Monetary Union, Feasibility, Monetary Union, Regional Integration, WAMZ, West African Sub-Region
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