Currency for ECOWAS member Countries: Dissertation

Added on - 17 Dec 2019

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DISSERTATION(Single Currency for ECOWAS member countries by 2020, Reality orMyth?)1
ACKNOWLEDGEMENTFor the accomplishment of the present dissertation I would like to sincerely express bysincere gratitude to my mentor who has provided me sufficient knowledge and greater support.Further I would like to thank my friends, colleagues and family members who have guided me atever stage while conducting dissertation. Through their support I was able to complete my thesiswith effectiveness and in an accurate manner. Lastly in the series I would also like to statespecial thanks to my team members who have provided me with assistance in collecting data andin analyzing it further.2
ABSTRACTSingle currency is a phenomenon used for accepting and adopting the shared currency indifferent stated separated politically or geographically. There are various groups which deals insame currency such as all 52 states in the United Sates Of America have currency as US dollars,similarly 19 countries out out of 28 countries of European Union have accepted the commoncurrency as Euro. Use of common or single currency facilitates and encourages trade andcommerce worldwide. The present study is effective in examining the feasibility of Singlecurrency programme for ECOWAS member countries by 2020. Inductive approach has beenhere to address the content of the investigation as a important means of heading in relation withgeneralization of new theory. The data collection method in the present investigation issecondary approach.Single currency system has also supported for ensuring regional economic growth.Investments have been made by ECOWAS in social sector and effective policies have beenformed for regional development programs. Macroeconomic policies and strategies that havebeen formed by ECOWAS will support for increasing trade related activities in the enterprise.Itis affirmed that single currency in ECOWAS is supported strongly by all the political groups ofmember countries. Political support and commitments are expressed even at highest level ofstates and is favoured by all the member countries. On the contrary critical analysis conductedindicates that African countries are far away from convergence of the conditions established. It isaffirmed that single currency in ECOWAS is supported strongly by all the political groups ofmember countries. Political support and commitments are expressed even at highest level ofstates and is favoured by all the member countries. On the contrary critical analysis conductedindicates that African countries are far away from convergence of the conditions established.3
LIST OF ALL ACRONYMSWAMZWest African Monetary ZoneWAMUWestern African Monetary unionECOWASEconomic community of Western AfricanStatesEMUEconomic and monetary unionGDPGross domestic productOCAOptimum currency areaWAMIWestern African monetary instituteWAEMUWestern African economic and monetary union4
TABLE OF CONTENTSCHAPTER- 1 INTRODUCTION...................................................................................................61.1 Background of the study........................................................................................................61.2 Research Aim and Objectives................................................................................................71.3 Research questions.................................................................................................................81.4 Rationale for the study...........................................................................................................81.5 Analysis and framework........................................................................................................81.6 Significance of study.............................................................................................................91.7 Chapter structure....................................................................................................................9CHAPTER- 2 LITERATURE REVIEW......................................................................................112.1 Introduction..........................................................................................................................112.2 Meaning and concept of single currency.............................................................................112.3 Proposal of single currency submitted by ECOWAS member countries............................132.4 Merits and demerits to the member countries because of this proposal.............................142.5 Areas where member countries need to bring improvements for fulfillment of set criteria172.6 Optimum Currency Area (OCA).........................................................................................18Chapter- 3 research methodology.................................................................................................213.1 Introduction..........................................................................................................................213.2 Research philosophy...........................................................................................................213.3 Research approach..............................................................................................................223.4 Research design..................................................................................................................233.5 Research technique.............................................................................................................233.6 Data collection....................................................................................................................243.7 Sampling technique.............................................................................................................243.8 Data analysis.......................................................................................................................253.9 Validity and reliability........................................................................................................263.10 Ethical consideration.........................................................................................................273.11 Research limitation...........................................................................................................28CHAPTER- 4 DATA ANALYSIS...............................................................................................294.1 Introduction..........................................................................................................................294.2 Qualitative analysis..............................................................................................................29CHAPTER – 5 CONCLUSION AND RECOMMENDATION..................................................365
5.1 Conclusion...........................................................................................................................365.2 Recommendations................................................................................................................41REFERENCES..............................................................................................................................446
CHAPTER- 1 INTRODUCTION1.1 Background of the studyIn the year 2000 the countries of West Africa presented their desire towards speeding upthe procedure of monetary integrated initiated within the early1980s crystallized in the projectfor two phased creation of single currency in West Africa. Within this plan in its initial phasesingle currency that is referred to as ECO was to be launched by Member states of West AfricanMonetary Zone (WAMZ) in January 2015. In the another phase WAMZ was towards mergingwith Western African Monetary union (WAMU) for the creation of single currency in all thefifteen ECOWAS member states in the year 2020. After the postponements in the year 2003,2005 as well as 2009 the authorities in West African has finally in July 2014 gave up launchingof ECO in the January 2015. This is because of the reasons that includes insufficient preparationas well as economic convergence among the member states of WAMZ. In this regard they havemade decision regarding changing the strategy, abandoning the interim stage of 2015 with singlecurrency within WAMU as well as rescheduling it for 2020 the development of single currencyin the whole ECOWAS. The development of single currency within west Africa remained atimely as well as relevant project despite the post Euro Zone crisis uncertainties as well aspostponements of the single currency for fourth consecutive time of the introduction of singlecurrency within the member countries of West African Monetary Zone.At present in the international monetary context a single currency within ECOWASwould provide opportunities to West African countries to pool the monetary resources for thepursuing common as well as individual targets. It is fact that member countries of ECOWASpossess critical externally induced monetary issue that none of the country alone can address.The decision regarding West African single currency was being intensified by the presenteconomic developments within Europe specifically the European sovereign debt crisis and itsinfluence on the single currency of European that is Euro (Pattanayak and Yaker, 2010). In theincreasing number of uncertainties as to the relevance of single currency within West Africa thepresent study contributes in determining the difficulties that are being faced in West Africabecause of which the programme is getting postponed from longer duration of time.There is presence of several monetary problems that are being faced by West Africa. Asit is natural for every country to possess their own currency as well as monetary policy, the7
option related with monetary integration with other nation should be explicit choice of the publicauthorities. The major issues is related with constraints of the international monetary system.The monetary problems that is being faced by West Africa countries as well as developingcountries are majorly attributable to the present monetary system that does not effectivelyguarantee reasonable multilateral exchange rates system. The monetary policy that is beingpursued by major industrialized firms, including certain large emerging nations can result inappreciating the value of currency within West Africa. It has been examined that there is greaterimpact of monetary policies on the African economies. Another issue presents that there isweaker financial management capacity (Ekpo and Udoh, 2014). With the presence of crossborder banks in the sub-region this has become real challenge for the Western African monetaryauthorities that is with the aim to preserve the financial stability for supervising such institutions.Most of currencies utilized within 15 countries of the West Africa region are non convertible.Convertibility is considered as the possibility to freely exchange currency of the country forforeign currencies. Thus such promote better integration within world economy. Exchange rateswithin region are relatively volatile. Restrictions on the international payments assists in drivingtrade by means of informal channel as parallel exchange markets within West Africa. Monetaryintegration assist in addressing the issues relating with multiple currencies as well as fluctuationsof exchange rates that is influencing intra- regional trade.1.2 Research Aim and ObjectivesAim:To assess the feasibility of Single currency programme for ECOWAS member countriesby 2020, Reality or Myth?Research objectives:To evaluate the proposal of single currency submitted by ECOWAS member countries.To identify the monetary and non-monetary criteria for implementation of singlecurrency programme.To identify the areas where member countries need to bring improvements for fulfillmentof set criteria.To evaluate the feasibility of single currency programmes for ECOWAS membercountries.8
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