African Currency Unions

by Developed Africa 20. January 2014 09:00

There are a number of potential African currency unions soon to be created, which is a stark contrast from Europe's current relationship with currency unions.

The new rise of interest in creating currency unions appears to be coming from the perceived success of the West African monetary Union (UEMOA)

UEMOA member states are more fiscally disciplined than their neighbours outside the currency zone"

But the main union currently under creation is 'the eco', which is being planned by West African politicians to initial involve 6 countries in 2015, and then to expand, with UEMOA joining in 2020.

However, the Economist argues that this is a dangerous idea, and one that is extremely flawed.

Whereas UEMOA's currency union has drawbacks, the proposed eco zone may have fatal flaws"

These include: the wide ranging economies that it would cover; Nigeria has different economic and trade demands to the others, often completely opposite needs; and support would be unlikely, France might not be able to endorse it the way it does with the UEMOA.

Perhaps, an African currency union could do better than Europe, as African countries are still rising, but with such varying economies, it is hard to see how they could succeed where Europe has failed.

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