Tracking progress on macroeconomic policy and institutional convergence
In this era of globalization, regional integration appears inevitable in order to expand economic opportunities in Africa, since larger markets allow for better use of economies of scale. In addition, the mobility of factors across borders, as well as the coordination and harmonization of monetary and fiscal policies, all facilitate faster economic growth and higher levels of well-being for the participating countries. It is for this purpose that ECOWAS was established in West Africa. It is the main regional economic community in West Africa, which now brings together all 15 countries of the sub- region. For several years now, ECOWAS member countries have been implementing macroeconomic policies that have been coupled with convergence criteria in a bid to create a common currency in the sub-region.
This effort relies on two sub-entities. The process of convergence was strengthened by UEMOA which, following the devaluation of the CFA franc in 1994 and in a bid to better control its exchange rate, instituted it in its eight member countries. Multilateral surveillance is one of the UEMOA countries. Multilateral surveillance is one of the UEMOA mechanisms and it is monitored by the Commission, which submits six-monthly reports to it. The statistical data used in this context are those provided by National Economic Policy Committees, in compliance with the Directive No. 01/96/CM on the implementation of the multilateral surveillance of macroeconomic policies in the UEMOA member States.
Thereafter, non-member countries of UEMOA, excluding Cape Verde, joined this process with a view to creating the West African Monetary Zone (WAMZ), whose monitoring mechanism is ensured by the West African Monetary Institute (WAMI). These countries have adopted the ECOWAS convergence criteria as de- fined by the Conference of Heads of State and Government by Decision A/DEC.7/12/99.
Lastly, the West African Monetary Agency (WAMA) coordinates the multilateral surveillance within the fifteen countries of ECOWAS, thus taking into account the process conducted by UEMOA.
Consequently, it produces six-monthly reports which describe the implementation of the ECOWAS Monetary Cooperation Programme (EMCP). The latter was adopted in Abuja in 1987 by the Conference of Heads of State and Government of ECO- WAS member countries, with the aim of establishing a harmonized monetary system and common management institutions.
The short-term goal, as described in WAMA reports, is the harmonization of rules governing economic and financial management.
In May 2009, a road map for the monetary cooperation programme was adopted by the Convergence Council of the Economic Community of West African States (ECOWAS). It reiterates the importance of macroeconomic convergence and the harmonization of structural policies to ensure macroeconomic stability, before the launch of the single currency in West Africa. Lastly, in October 2013 in Dakar, the Heads of State and Government renewed their commitment to the schedule agreed on by entrusting the case to the Presidents of Niger and Ghana. That is the background to this study initiated by the Sub-Regional Office for West Africa of the Economic Commission for Africa (ECA/SRO-WA).
In this vein the study divided in 3 parts, contributes to accelerate the process of regional integration and socioeconomic development of the West African sub-region. It gives:
- an analysis of the theory of integration and convergence, as well as its rationale in the West African region;
- the actual status of the progress made in terms of macroeconomic policy convergence in the sub-region; and
- a critical assessment of the implementation of macroeconomic policies and of macroeconomic convergence providing relevant recommendations.