BBC News Online: Business

African monetary union inches closer

CFA francs will be in circulation for some time to come

The Economic Community of West African States (ECOWAS) chose the name "eco" for a new currency, which will be used in Gambia, Ghana, Guinea, Nigeria and Sierra Leone.

By 2004, ECOWAS aims to merge the eco with the CFA franc, the currency already in use in eight other of the organisation's members.

Addressing delegates at the summit, ECOWAS executive secretary Lansana Kouyate said a common currency would help to speed the process of economic integration in the region.

Obstacle after obstacle

But, like the birth of the euro, the aim of West African currency union has been dogged with problems.

So far, only Benin has met ECOWAS's four convergence criteria for creating a single currency zone in the region.

Gambia, Nigeria and Senegal have met three of the criteria.

Last year Nigeria, the largest West African Monetary Union (WAMU) member, reported inflation of 6.5%, while Ghana - the second largest - had inflation over 22%.

Falling prices in the cocoa and oil sectors - two key exports for many of these African nations - also threaten the project, making the process of diversification more difficult.

And a significant rise in the strength of the euro could also create difficulties, since the cfa is in the process of changing its peg from the French franc to the euro.