We all know that Europe
have a common currency called Euro. It is still trembling to find stability.
The euro crisis has put most people off currency unions. But, it seems that,
Africa is not shaken up or put off due to this crisis. An African Monetary
Union is proposed (like European Union) creation of economic and monetary union
for the countries of the African Union. This union will be administered by the
African Central Bank. By forming such union the Africa will go for the creation
of new unified currency (same like EURO)
An International
Agreement was signed on June 3, 1991 in Abuja, Nigeria (called as The Abuja
Treaty) and created the African Economic Community. They called for African
Central Bank to follow by 2028 and the current plan is to establish an African
Economic Community with a single currency by 2023. (Source: Wikipedia)
An article in “The
Economist” (in 7th December, 2013 print edition) said that “In
November the leaders of five countries of the East African Community (EAC)
agreed to form a monetary union within ten years. A month before West African
politicians agreed on a plan to introduce a new shared currency, the Eco,
over the next few years. It should eventually subsume West Africa’s
existing currency bloc—but not its central African cousin.”
“Under the proposal an
initial group of six countries will adopt the eco by 2015 (see map). Five years
later the members of the West African Economic and Monetary Union (known as
UEMOA, its French acronym), which currently share a currency called the West
African CFA franc, are to adopt the Eco too, creating a
currency union of over 300 million people.”(for full article click here)
The Economist concluded
that “If a region as rich as the euro zone has struggled to cope with such
pressures, the likelihood that the poorer and less well-governed places hoping
to adopt the Eco could is tiny.”
My Perception
When the entire global
economy is debating whether EURO as a currency will survive or not? This new
currency union is really an eyebrow raiser. Despite of having many developed
economies EURO is facing so many crises then how can Eco or Afro (hypothetically
it may be name of African common currency) survive. Some may think that there
is a scope that Eco or Afro may survive, because, there are many developing
economies (even though tiny) in Africa. But, to have a common currency means to
have common policy measures and common (more) effective administration. Can
Africa do it?
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