West Africa opts for currency union

Traders in six countries could be using the same money

Six West African states have agreed to create a new shared currency in the region by the year 2003.

Ghana, Nigeria, Liberia, Sierra Leone, Gambia and Guinea - agreed to set up the new currency at a summit of the Economic Community of West African States (Ecowas) in the Ghanaian capital, Accra.

At present, eight francophone countries of West Africa share a common currency in the CFA franc.

President Rawlings: Rigorous discipline will be needed

Ghanaian President Jerry Rawlings said globalisation and trends towards the establishment of large economic blocs made the need for integration among the anglophone countries all the more necessary.

"Unless this is done, our economies will remain weak, fragmented, uncompetitive and marginalised," he said.

Ghana's Finance Minister Kwamena Ahwoi said the new monetary zone might eventually be fused with the CFA zone.

Tough criteria

The BBC business correspondent says that the convergence criteria for the new currency may be set too high for many of the six countries to meet.

The primary criteria specify that inflation must be reduced to under 5% by 2003.

The countries must also ensure they have enough foreign currency reserves to cover at least three months of imports by the end of 2000, and six months of imports by the end of 2003.

Central bank financing of each country's budget deficit would be limited to 10% of the previous year's tax revenue.

"These stringent targets will require rigorous discipline and prudent economic management on the part of all member countries," Mr Rawlings said.