Why Is Monetary Integration not Achievable in the ECOWAS? A Survey of the Challenges and the Way Forward

Abstract

The ECOWAS Monetary Cooperation Progamme (EMCP) was designed to facilitate regional trade through improvement in the ECOWAS multilateral payments system, the harmonization of economic policies and evolvement of common institutional arrangements. However, the EMCP, adopted in Abuja in 1987, has not recorded the desired progress. This paper is a theoretical survey of the factors that have inhibited the progress of monetary integration in the ECOWAS. Although monetary integration in the ECOWAS is envisaged to increase intra-trade among member countries, facilitate the establishment of a single capital market, improve macroeconomic policy coordination, strengthens common monetary authority, encourage freedom of movement of persons and also lead to market enlargement, it is not without challenges. The paper notes that the major challenges hindering the monetary integration process in the ECOWAS include; low intra-trade among member countries, fear of domination by the larger, wealthier and stronger countries, loss of revenue, uneven distribution of the benefits of integration, political instability, ethnic and religious crises and lack of political will and commitment on the part of member countries among other factors. The paper therefore, submits that the encouragement of intra-trade within the ECOWAS sub-region, massive investment in transport and communication infrastructures within the region, and improved government political will and commitment to implementing the monetary integration agreements would foster effective monetary integration in the ECOWAS for maximum benefits of all members.

Key words: Benefits, Costs, Challenges, Monetary Integration.