Victor C. Ariole argues that ‘Africa Currency Union’ will pay Nigeria better
The currency world has a government and whether we like it or not, any local currency is a mere subset or, at worst an insignificant element in a global subsets led, as at now, by the dollar. Even the Renminbi acknowledges that. Metaphorically, legal persons in the currency government are the recognised central banks of the world, and the African Francophone countries have a central bank that stands strong as a subset against the African Anglophone countries which are mere insignificant elements parading cedi, naira, leone, dalasi and Liberian dollar; that is, Ghana, Nigeria, Sierra Leone, Gambia and Liberia, respectively.
If Nigeria intends to be a leader of Africa so as to see the light toward UN Security Council seat, it should start now proving that it could not be dragged further as done in AFCFTA by small Rwanda, and propose ACU, as an extension of ECO, African Currency Union.
Both Spanish Africa – Equatorial Guinea, and Portuguese Africa – Guinea Bissau, Cape Verde – adhere to CFA which makes CFA a better “person” in the currency governance than the four mentioned Anglophone African currencies. Equatorial Guinea being the highest per capita in GDP, feels pained in its CFA’s “convenient” adherence as President Macias Nguema is praying Africa to relieve them of the pain by finding a way to get France to hands-off its grip on CFA. And Macron is responding to that by encouraging ECO, which Nigeria had committed great resources for over a decade incubating with headquarters in Ghana, to take shape. Macron expects ECO to be tied to euro, a better subset of the “currency government”.
People argue that CFA is tied to France that keeps 50% or 30% of their revenue as reserve, depending on “currency governance” crises, and that it serves better France’s interest than Africa’s interest. However, people are not also seeing the fact that when the Anglophone African countries’ reserve, viewed in dollars, fails to double in the reserve what their annual budget projects, or that their actual revenue fails to keep pace with expected reserve ratio, like the CBN decrees it for the local banks, both foreign investors and importers re-think the credit-worthiness of such country, and trading and investing activities suffer. We have heard recently that when Nigeria’s external reserve goes below $20billion, it will not be attractive any longer for import activities, which means other countries will no more be keen in accepting credit notes from Nigeria. Some also say, 90 days worth of import trading reserve is the base for trust.
Compare that with the trust enjoyed, and financial discipline observed, by the Francophone African countries. Their collective central bank, for west Africa, BCEAO – Bank Centrale des Etats de l’Afrique de l’Ouest, situated in Dakar, tasks the countries for better transparency and fiscal discipline. Check out this, as picked from their portals, 2020 January – December Sustained Budget Cycle
Country/Population Revenue Expenditure
16.5million $3.8billion $4.4billion
26 million $13.4billion $9.6billion
18.4 million $3.8billion –
Check out also the Nigeria’s figure for 200 million people operating below $30billion budget with great deficit and about 25% for debt servicing.
The five Francophone countries represented by: one low performer and one high performer with a neutral group that averages $3.5billion could lead to approximating them to having $35billion well balanced budget (10 of them including Guinea Bissau) as against Nigeria’s weak budget of below $30billion.
Indeed it is high time Nigeria had a re-think of its position and agree to cooperate with them for a better Africa, hence act by initiating ACU – African Currency Union. Like the leader of Nigerian traders expressed on a TV Station, an African currency will serve Nigeria best as Nigerian traders are found in all the nooks and crannies of Africa. Even as strange and insignificant as Portuguese speaking African countries like Mozambique, Angola, Cape Verde, Sao Tomé and Guinea Bissau seem to be for Nigeria, Nigerians are very much present there, trading. The input of those traders is definitely greater than the formal presence of Nigeria in international fora, as Sao-Tomé and Principes protégé. When you join either Ethiopian airline, Cabo Verdo airline or Askya, you see Nigerians making connection to such places, as you wonder why they are not connecting to Nigeria.
So, trade wise Nigeria stands to gain as it expands remittances beyond dollar and euro to fluid one that enables facing other subset valid currencies like Arab mediated ones – rial, dinar, riyal as well as Renminbi (Yuan) and Japanese Yen, both recongised subsets in the “currency government”. I use government here because even as insignificant as naira is, it has a governor; and Libyan dinar had wanted to overthrow it at the time of Khadaffi.
As small as Libya is, it was speculated, as per WikiLeaks, that Sarkozy of France engineered the assassination of Libya’s late leader on the grounds that he was planning to have Libyan dinar converted to Pan-African currency beyond the radar of supposed Global Financial Integrity (GFI), and positioning it quite friendly to Lord Mayor of London control; a Mayoral City shielded against all control and yet from there, their PM, Cameron, announced that Nigeria is fantastically corrupt; pulling the rug… A richer city than all the Anglophone west Africa put together. It is not as London itself from where BOJO moved to PM status.
Now that Macron has taken a step towards freeing the hold of CFA, Nigeria should negotiate with Frame to have ACU so that both central Africa and west Africa could lead in the currency unification of Africa before more division is created as Brexit sets-in.
Ariole is a Professor of French and Francophone Studies at University of Lagos