ECOWAS has announced that it will begin using a single currency for regional trade in 2020.
For years, there's been talks about a single currency for African countries, a unified passport for African Union member states and an African airline.
Finally, it's seeming more likely that some of these plans might come to fruition.
The Economic Community of West African State (ECOWAS) has revealed that it is ready to roll out a single currency for member states next year.
This will mean that 15 West African countries that make up ECOWAS — Benin, Togo, Gambia, Senegal, Sierra Leone, Nigeria, Niger, Mali, Liberia, Guinea Bissau, Ghana, Guinea, Cote D’Ivoire, Burkina Faso and Cape Verde — will undergo an economic integration to have a common currency.
While this integration is anticipated to facilitate trade developments in the region, we want to consider what implications this has on travel between the region.
There are many challenges to travel within Africa, that make it seem difficult for Africans to travel within the continent. There have been proposed solutions to just some of the issues, as stated earlier.
A major challenge, however, is the economic barrier. Considering the successful adoption of the Euro by the European Union, travel between ECOWAS countries is projected to become much easier in terms of costs.
First, the costs of converting currencies will be eliminated for individuals who want to travel to member states.
Secondly, exchange rate uncertainty which has plagued many West African countries for years will also be eliminated. Travellers seeking to travel from countries with unstable currencies are sometimes uncertain about which way the exchange rate will move. If it moves in their favour, it makes travel a bit cheaper, but any other way could make the trip cost much more. A single currency gets rid of the uncertainty within the single currency zone.
Countries such as Cape Verde, which have long been top tourist destinations for foreigners, will seem more accessible to ECOWAS members who make use of the same currency and this will boost tourism between the states.
Price transparency is another sector that a single currency will aid. For example, a 1L bottle of water in Nigeria costs N400 on the average. However, to buy that same bottle of water at the border of Benin Republic will cost you 1000CFA, which converts to about N625. Not thinking about it, it might seem normal or difficult to compare — it's not like you can carry around a calculator with you around when you travel, to check prices.
If products are in the same currency, though, price comparison becomes straightforward. This will help travellers identify cheaper products easily.
It is almost certain that a currency union will facilitate easier travel and pave the way for other beneficial policies such as Open Skies in Africa and the African Union Passport.