Nigeria and Ghana which are often considered as the two reliable locomotives of the ECO, the project
single currency of ECOWAS, are experiencing serious difficulties with the international situation
current. Rating agencies Moody's and S&P Global Ratings have both reduced or maintained
the outlook for their sovereign ratings to negative.
Both countries are heavily impacted by falling crude oil prices not only below
budget forecasts for the year 2020, but also at historically low levels.
For Ghana, this international situation translates into a risk of strong pressure on its reserves.
change. Even if the country mobilized very early this year $3 billion and more recently $1 billion
with the IMF, its balance of payments risks suffering from the repatriation of capital by non-residents
causing a depreciation of the local currency with risks of inflation.
As for Nigeria, we have seen that the naira which at the end of March 2020 had already been devalued by 17%
by the Central Bank was trading at 498.5 against a US dollar in the non-deliverable market for
currencies. This market is generally used by companies to protect themselves from probable variations
exchange rates between currencies.
It is not certain that this level of depreciation of the naira will be confirmed in the near future. Already in March
2020, the Central Bank of Nigeria predicted that "a sharp depreciation of the currency would affect the
the country's ability to repay the debt in foreign currency and in this case, a contraction in public spending
in capital and social infrastructure becomes highly inevitable”.
Current oil prices do not bode well for the two countries. Black gold is the main
Nigeria's source of foreign exchange earnings and Ghana's second largest export after gold.
The current situation has revealed the structural weaknesses of these two countries which are often presented
as essential pillars in the construction of ECO, the single currency project of ECOWAS.
Even without covid-19, the external position of the two countries was already worrying, in particular that of Nigeria which
is also Africa's largest economy in terms of gross domestic product (GDP). Given the current situation,
their performance on the convergence criteria necessary for their adoption of the ECO has improved significantly
degraded.
The reaction of the WAEMU countries which have taken the lead is highly awaited.