JOINT FORUM ORGANIZED BY WEST AFRICAN BANKERS’ ASSOCIATION (WABA) AND WEST AFRICAN MONETARY AGENCY (WAMA) –28 June 2021

Introduction

WAMA and WABA organized a joint forum on the theme: “The Role of Commercial Banks as Important Stakeholders towards the Implementation of the ECOWAS Single Currency and the ECOWAS Payment and Settlement System Integration Projects”.

The general objective of this joint forum was to update commercial Banks in the region on the ECOWAS Single Currency and ECOWAS Payment and Settlement System Integration Project as well as highlight their roles as critical stakeholders in the ongoing processes.  

Specifically, the objective of the joint forum was to:

1. better involve commercial banks, and other financial institutions in ECOWAS in these Projects as key stakeholders;
2. foster ownership of the project by commercial banks, get their observations and guidance on the two projects which could positively impact on implementation; and
3. create a permanent dialogue platform for all these entities to foster experience sharing which would be mutually beneficial.

I – OPENING SESSION

The opening session was marked by two speeches from the Director General of WAMA, Mr. Momodou Bamba Saho and the Secretary General of WABA, Mr. Sega Balde.

Mr. Sega Balde welcomed Managing Directors and their representatives to the forum and assured them that this constructive engagement process in order to take their views on board will be the modus operandum going forward in order to ensure ownership and effective delivery of the two projects.  

The opening remarks were delivered by the Director General of WAMA, Mr. Momodou Bamba Saho who briefed participants on the two projects and their importance as well as the role of commercial banks are expected to play in the ongoing efforts to set up the regional RTGS, Regional Clearing House and the Regional Switch in order to have an integrated and cost-effective ECOWAS Payment and Settlement System. Thereafter, Mr. Saho declared the forum open and wished participants successful deliberations.

II – PRESENTATIONS

Mr. Alieu Ceesay made a presentation on the ECOWAS Single Currency project which is geared towards the attainment of a single currency and a common central bank for the Region. Mr. Ceesay noted that the desire of founding fathers to achieve economic and monetary union remained paramount and also need to be based on sound macroeconomic fundamentals for the union to be sustainable. He noted that countries therefore need to meet a set of primary convergence criteria in respect of budget deficit (including grants), Central Bank financing of budget deficit, average inflation, gross international reserves in months of import cover. The criteria are detailed below:

• Primary Criteria
  • Budget deficit/GDP: ≤ 3% 
  • Average annual inflation: < 10%
  • Central Bank financing of Budget Deficit: ≤ 10% of the previous year’s tax revenue
  • Gross external reserves: ≥ 3 months of imports
• Secondary Criteria
  • Nominal exchange rate:  stable (+/- 10%); 
  • Total public debt to GDP:  ≤70%;

It was also noted that achieving and sustaining performance under the above criteria remained challenging. Some policy harmonisation aspects of the programme were also yet to be fully realised. The presentation also highlighted the key areas under a new Roadmap (2022-2027) that has recently been formulated.

The different Stages of Economic Integration were stated as follows: free trade area, customs union, common market, economic/monetary union and political union. It was noted that significant achievements have been recorded under the ECOWAS Trade Liberalisation Scheme (ETLS), ECOWAS Common External Tariff (CET), ECOWAS Common Investment Policy, Harmonised Supervisory Frameworks, an integrated ECOWAS Payment and Settlement Systems (EPSS), amongst others.

Mr. Sekou Oumar Pendessa, Payment Systems Specialist, made a presentation on the ECOWAS Payment and Settlement Systems (EPSS) Project which is essentially aimed at attaining an upgraded and interconnected/interoperable payment system in the ECOWAS region. He highlighted the EPSS roadmap (activities, expected output) on what should be the way forward in the next two to three years, in a more detailed fashion. The roadmap was discussed with payment systems experts in member central banks and other regional institutions, alongside the 4th validation workshop, held on 24 of February 2021. The validated regulations will now be sent to the Committee of Governors and the Ministerial Council and the Authority of ECOWAS Heads of States and Governments for adoption and further directives.

III – DISCUSSIONS, KEY CONCLUSIONS AND RECOMMENDATIONS                                                

The discussions, which were moderated by Dr. Grade Momele Kipre, Director of the Financial Integration Department, focused on the difficulty to attain the monetary union (single currency) stage of the integration process in the region over a protracted period of time, despite the significant dividends that could be derived. However, participants unanimously concurred on the viewpoint that some of the building blocks such as an integrated (ECOWAS) Payment and Settlement Systems, ETLS, CET, ECOWAS Common Investment Policy, implementation of sea, road and air transport can yield positive dividends to citizens of the Community.

Discussions also focused on the need to draw lessons from the European Union experience particularly in the area of effective surveillance even after adoption of the single currency, address fiscal responsibility rules, as well as to factor explicit entry and exit criteria, sharing the costs and benefits of monetary union as equitably as possible while recognising that regional integration was also about solidarity and the need to have a strong voice as a region.

Another issue raised was the expected budgetary contributions of banks (or other regulators) to the implementation of the EPSS project. The response was that banks will be informed in good time to be able to factor these in their budgeting and planning processes so that they have the time to make the necessary investments to upgrade their information systems. Regulators will appreciate whether they should be required to pay a financial contribution for the implementation of the project.

IV – CLOSING SESSION

The forum ended in a positive note with the participants welcoming this process of constructive engagement to address issues of common interest and the decision to maintain it going forward.

Mr. Mostafa Dafir on behalf of participants thanked WAMA and WABA for organising this important forum and participants for their valuable contributions. He urged his colleagues to take ownership of the ongoing process and wished for a continued and enhanced collaboration, between WAMA and WABA on the one hand and commercial banks on the other.

Mr. Saho noted the constructive discussions and encouraged WABA to continue organising this kind of forum. He declared the forum closed.

Further enquiries on the Forum and the other issues discussed could be directed to the following.