Adesina: Eco Currency will be Catalyst for AfCFTA

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Omololu Ogunmade in Abuja

President of Africa Development Bank (AfDB), Dr. Akinwunmi Adesina, yesterday in Abuja said the move spearheaded by eight Francophone West African countries for the take-off of Eco for the region, would boost the $3.3 trillion trade on the platform of African Continental Free Trade Area (AfCFTA).

Eco is the proposed uniform currency for members of the Economic Community of West African States (ECOWAS).

Eight Francophone West African countries including Cote D’Ivoire had in agreement with France, their colonial master, resolved to replace ECO with CFA with a caveat that it will be pegged to the Euro. France had imposed CFA on all its former colonies since independence.

Only Ghana among the Anglophone West African countries had expressed support for the adoption of the currency by the eight countries without meeting the criteria for its adoption yet.

But speaking with State House reporters after a meeting with President Muhammadu Buhari, Adesina said it’s more sensible to engage in trade of that magnitude with a single currency.

He threw his weight behind the expected debut of ECO, expressing beliefs that Buhari was consulting with other African leaders on how to meet the criteria for the use of the currency.

He said: “I think that at the end of the day, the biggest thing to happen to Africa is the African Continental Free Trade Area (AfCFTA). That free trade area itself is worth over $3.3 trillion in terms of trade.

“Obviously, we have been able to trade in various currencies. It’s not optimum to trade in so many currencies. So, it makes common sense to have a unified currency and of course for that to even be achieved.

“I support Eco greatly. I think it’s a great idea to do. But obviously, there are a number of convergence criteria that would have to be met and I am sure that our president is talking with other presidents to be sure that they can meet those criteria and the region can be fully integrated.”

On his view on the move by the Francophone countries to align Eco with Euro, Adesina believes that is secondary for now, explaining that the most important thing now is how to entrench well integrated monetary and fiscal policies in the region.

According to him, the steps currently being taken by the heads of states and government on the currency are encouraging.

“But the issue for us is going to be how to have a well integrated monetary policy and fiscal policy within the region.

“That is the most important thing first, and then, you figure out the rest later. But I am very encouraged with the progress of the heads of states on this particular issue and I am very confident that President Muhammadu Buhari will make even greater progress on that,” he assured.

Speaking on the overrall state of African economies, the AfDB boss disclosed that the continent is currently confronted with infrastructure deficit of $68 billion and financing deficit of $108 billion.

However, he disclosed that the apex continental bank had been striving to bridge the deficit gap, saying if the opportunity of the availability of $1.8trillion sovereign wealth fund, insurance and pension funds is explored, such deficit will be largely addressed.

“Today, Africa has an infrastructure gap of about roughly $68 billion to $108 billion infrastructure financing gap. At the African Development Bank, we have been working so hard to close that particular gap. “When it comes to the issue of attracting capital to do that, there are three things that I will say. First, we have to also look at home, today in Africa, the size of the sovereign wealth fund and pension fund and insurance pool of funds (mutual funds) is about $1.8trillion.

“If we can just tap a little from that, we will close very quickly the infrastructure gap that we are talking about,” he said.

He disclosed that the bank created African Investment Forum last year as a platform to draw investments into the continent.

According to him, the forum has been productive, yielding an interest of $37.8 billion in less than 72 hours.

He also said a second forum was created this year, which yielded the interest of $40.1 billion in another 72 hours.

“Africa Investment Forum is making tremendous success. Last year that we started, we were able to secure an investment interest of $37.8 billion in less than 72 hours.

“This year (2019), we have the second forum and we were able to secure an investment interest of $40.1 billion in less than 72 hours.

“So, that tells you that Africa is the region to investment and the return on investment in Aftica is quite high,” he added.

Adesina then proceeded to highlight the rates of economic growth in Africa in the previous year, comparing such growth with the growth rates in Asia.

‘On economic growth, I am very proud of what Africa has achieved in the past year. Essentially, this year, there are 35 countries that are growing at three percent to five percent and 20 countries that grow at above five percent. That is incredible.

“You have to look at that by understanding that globally. Foreign direct investments coming to Africa has been fantastic. Africa’s foreign direct investment this year grew by 11 percent.

“When you take a look at Asia, Asia grew by four percent. If you have a look at it globally, foreign direct investment declined by 13 percent. “When you take a look at developed countries, their foreign direct investment declined by 23 per cent. So, Africa is actually doing quite well. As we look towards the future, basically, our focus is going to be how do we support the Continental Free Trade Area?

“We will continue to provide investment infrastructure. I have said it. We will continue to do a lot in infrastructure,” he pledged.