West Africa Single Currency: The Lesson To Learn From European Single Currency By Dr. Mehenou Amouzou

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West Africa Single Currency The Lesson To Learn
From European Single Currency By Dr. Mehenou
Amouzou
1888PressRelease - Before talking about a single
currency or economic association between the
states members, we need to examine the current
political structure that allows a single faction
to confiscate power for twenty years or more.
Western Africa states which are represented by
Economic Community of West African States
(ECOWAS), a commission comprised of countries of
15 States with an equivalent of 300 million
people. These numbers account for 4.5 of the
world's population and just 0.5 of the world
Gross Domestic Product (GDP). With an anticipated
annual economic growth averaging approximately
5, ECOWAS is now exploring the opportunity to
create a single currency for ECOWAS member's
states mirroring the Euro for European
countries. Before talking about a single
currency or economic association between the
states members, we need to examine the current
political structure that allows a single faction
to confiscate power for twenty years or more. The
political instability of these member states have
depleted human rights and instituted a
totalitarian regime. This regime is largely based
and support by the now prominent election
policies. I say now prominent but it has been a
long standing practice for one party to the
election to exercise unpropitious acts like
intimidation, threats and even death to win a
given election. Can these countries ever abide by
legitimate election worthy to be adulated by the
international community?
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Do these countries receive sanctioned economic
aid from the world community that is visible in
the states operating budget? The question is
asked because we ponder the division of the
country's leaders agenda is it personal or geared
to support the general populous? The thoughts and
questions we ask are deafening to a community. To
think these occurrences are widespread and normal
serve to steal ones spirit. People of these
countries are defeated and are subjugated to
indentured servitude. Vote confiscation creates
political instability and its success is
currently responsible for a two to three percent
misappropriation of the country's resources. This
2 to 3 is further evident pertained to wealth
and poverty the disparity between the haves and
the have-nots. These countries often live with
97 poverty with no access to health care or
hospitals, vibrant schools systems or school at
all, clean water and other basic necessities
afforded to inhabitants of developed
countries. One ECOWAS member country received
financial assistance from a developed country to
improve the country's health care system. The
improvement was intended to benefit the country's
own people. Much to the chagrin of the developed
country a few days after receiving the funds, the
member country invested 1/3 of the financial
assistance with another western with inferior
stability to the originating country which
happens to be a Western African country. The
second point focuses on Nigeria and the
management of the country's resources. Nigeria,
one of the richest countries in Africa with an
abundance of natural resources once exported food
to neighboring African countries, Asia and the
Occident. The export of natural resources which
is very important in Nigeria with agriculture
accounting for 90 allowed the country's
nationals to eat at least three meals daily. In
1974, Nigerian currency the Naira was a stronger
currency than the United States' dollar.
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Oil was discovered in 1956, by 1974 oil revenues
constituted over 80 percent of total government
revenues and over 90 percent of export earnings,
the country's leaders were ecstatic. As the
country entered the realm of an international
juggernaut commodity it began to move budgets and
other resources away from Agriculture and
infrastructural stability's to the unknown of oil
exports. Eventually, Nigeria began to import food
and other necessities by leveraging oil and
future oil revenues which served the purpose of
budget balancing versus budget surplus. The oil
revenues were not well distributed which has led
to real socio economic problems. Oil and chemical
processing locations positioned next to the
villages, cities, schools, hospitals and farmer
lands badly affect social conditions causing
deterioration everywhere. Further, this situation
has created upheaval within the country,
particularly among women, seniors, children and
others who die almost every day with no recourse
due to these socio economic problems and the
terrorist organization Boko Haram. It seems
that the North of Nigeria is going to become a
cessation country. The faction causing
destruction arguably has the support of outside
interests who may provide military arms and funds
to continue its stronghold. If we follow the
change of custody of even the arms procurement we
may trace impropriety to the customers and even
the manufacturers then we have a solid footing
to bellow this societal destruction to the world
and various global oversight groups. These few
things mentioned above demonstrate how West
Africa needs to commit to improve and consolidate
political powers among the member states. Once
this occurs, further commit to developing an
eco-industrial plan to make the region grow from
0.5 of the world GDP to 10 which based on our
research is possible.
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WEST AFRICA SINGLE CURRENCY LEARNING LESSON FROM
THE EURO! It is very difficult to explore or to
anticipate West African single currency without
examining, reviewing or comparing the potential
currency with the European single currency. One
of the primary political goals for insisted
European integration was, and may still be, to
increase Europe's role in world affairs. This may
have occurred because of the United States
forcing France and the United Kingdom to withdraw
their forces from the Suez Canal in 1956. The
former German Chancellor Konrad Adenauer told a
French politician that individual European states
would never be leading global powers, but "there
remains to them only one way of playing a
decisive role in the world that is to unite to
make Europe. . . . Europe will be your revenge."
One year later, the Treaty of Rome launched the
Common Market. European integration started to
coordinate, to defend and protect their political
affairs and interests as a group better than just
one single country dealing in the world affairs.
European integration was conceived to
counterbalance, the USA super hegemony power and
domination in the world affairs. However,
European cohorts believed this power was only due
to Europe's position after its traumatizing
experience in World War II left it fragile and
weak. Although the Common Market was set up in
1967 to form the European Communities,
thereafter, in 1992, the Maastricht Treaty gave
birth to the European Union (EU). The EU covers
large areas of free trade, labor mobility and
scheduled for adoption of the single currency and
an integrated European market for goods and
services. The European Commission says this
mechanism's main purpose is a step toward greater
political unity. It also makes a plausible
argument that a free trade area can be successful
only if its member countries have a concerted
interest a single currency. Certainly there is
nothing in economic logic or experience, which
shows that free trade, requests the single
currency.
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The sentence 'single European currency' simply
means a European, shared economy in which most of
its member states share the same currency in
order to expedite integration within Europe. I
beg the question that the term 'single currency'
is coined by some European entity that may have
trademark rights funny but cautiously true.
Although this is an idea quite simple to
understand, its actual effects are more
complicated and difficult to analyze. The idea
of single European currency was introduced in
1999, but Winston Churchill had previously
broached and discussed the idea of a 'sharing
economy' in the early 20th Century. His idea was
promulgated on the grounds of a possible
unification of Britain and France. Churchill's
view was that Franco-British Union should
"provide for joint organs of defense, foreign,
financial and economic policies" (Shlaim 1974, p.
27). The reason this theory of fallacy as many
coined did not adhere is because he (Churchill)
based his infatuation some believe largely on its
inability to safe fail England's possible
invasion from Hitler's Germany. The single
European currency has economic and
social-political impact on the European Union.
From an economical perspective the currency
demonstrates impact on economies of scale
(production prices), trade and integration. The
member states are basically a consortium which
from a socio-political aspect boasts its
political influence on the EU. It was argued it
could also be a problem threatening the European
Economy when individual economic problems arise
in different countries.
The political difficulties that came as a
consequence of this incident are mostly concerned
with the changes in policies and appropriate
reforms implemented to help the European Union
gain enough power to come out from the crisis.
According to a report produced on March 15, 2011
by the Council of the European Union a reform in
the 'Stability and Growth Pact' has been
implemented with aims at 'strengthening economic
governance in the EU' (p. 1). More specifically,
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a change in the 'Stability and Growth Pact'
denotes changes in the national government
spending and taxation to influence the economy
(ibid.). However, this procedure may prove to be
time and cost consuming, affecting the position
of the EU and causing it to operate at a slower
rate and sometimes unstably and unproductively.
As of today the single currency experience could
be interpreted as failed policy for the European
Economy due to a mixed evaluation regarding the
impact of imposing a single currency on a
heterogeneous group of countries, other spillover
consequences, the sovereign debt crisis's, the
large trade deficit and the overall the fragile
state of European banking conditions across the
Euro zone. European leaders had too much
confidence and false hope guided by personal
motives when setting up the European Central
Bank. Giving the Central Bank power to intervene
on the diverse group of countries fixing and
solving problems that were unique to the
individual country and not the member countries
as a whole. It was a mistake to overlook and
underestimate these consequences. The
responsibility for controlling and implementing a
single monetary policy to guide each individual
country was decided by certain European political
leaders. The decision to make the shift to a
single Central bank in Germany was also coupled
with a shift of political power to these decision
makers who again were (are) guided by mercenary
motives. Germany and France played very crucial
role in the function of this new Central Bank by
dictating painful austerity measures to Greece
and Italy. Germany and France clashed on how the
financial assistance would be shared. Germany has
created a stability agreement by establishing
financial penalties for any of its members that
has a budget deficit more than 3 of GDP or a
debt that is over 60 of its GDP, but when France
and Germany violated this agreement there was no
sanction and the agreement was meaningless thus
the shift of control previously mentioned.
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A single country with its own monetary policy can
respond to economic conditions like a decline in
consumer and spending demand by lowering interest
rates to stimulate the economy (United States)
but the European Central Bank must institute a
monetary policy based on the prevailing
conditions of the entire heterogeneous group of
countries. Almost all the time, economic
conditions of different countries are counter to
each other. Which country's conditions are more
important than the others? Is there a cost
benefit analysis to deciphering which country's
conditions outweigh the conditions of the others?
This brings to question how to manage interest
rates that are very high in countries with high
unemployment versus countries where interest
rates are too low because of growing wages and
constantly adjust in large countries like
Germany. Who takes precedence? Preceding the
European Union, most of the times large fiscal
deficits meant higher interest rates or declining
exchange rates. These economic drivers acted as
immediate signals to reduce borrowing. However,
the single currency monetary union eliminated
this market signal. From 2009 to now we have
seen several French, Germans and other
governments intervene by creating regulations,
conditions and diverse agencies to stimulate the
economy. The prevailing problems persist and are
difficult to overcome because new, unforeseeable
conditions were not expected and therefore not
correctly managed. For instance, France called
for the European Central Bank to buy bonds bonds
from Italy, Spain, Greece, Ireland and other
countries with high debt to keep the interest
rates low. One country guided by mercenary
motives working to control the interest of other
countries no matter how detrimental the outcome.
This effect has plagued the EU since its
inception.
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Where does the money used to buy these short-term
bonds in the secondary market come from? What is
going to be the cost or long-term expense for the
European Central Bank and host countries? How
long will the European Central Bank hold these
bonds? What is the exit strategy? These questions
were never contemplated or even if contemplated
the proposed outcome was not enough to stop Greek
and Italian rates to reach unsustainable
levels. The Chancellor in Germany Mme Merkel
wants to use the current crisis to develop a top
down set of regulations to guide the political
union effectively a "fiscal union" oversight
with budget surpluses that would have the power
to transfer funds each year to the country
running budget deficits. In counterpart of these
transfers, the European Commission would have the
authority to examine national budgets and force
countries to follow policies that would lower
their fiscal deficits and increase
competitiveness and growth. Germany had a trade
surplus, this past year close to 200 Billion
USD. Conversely, other members of the European
community had trade deficits of 200 Billion USD.
How did Germany succeed where most other member
states failed? Does Germany have the burden of
carrying the other member states? This will
invariably lead to the demise whether slow or
sudden of the German economic system. How is the
rest of the world to view Germany's demise? It
wasn't their fault they (Germany) had to manage
its little brothers and sisters? United States,
Canada and Mexico are all member of NAFTA (North
American Free Trade Association), they don't have
a single currency but their economic association
to NAFTA is proven to work better than the
European Single Currency.
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The European Central Bank (ECB) Tough
anti-inflation policy has raised interest rates
to drop in countries such as Italy and Spain,
where expectations of high inflation have kept
interest rates high. Households and Governments
of these countries have responded to low interest
rates, increasing their borrowing to households,
raised debt to finance a surge in housing
construction and housing prices and Governments
use it to finance major social programs. The
result was a rapidly growing proportion of public
and private debt to GDP in a number of countries,
including Greece, Ireland, Italy and Spain.
Despite the increasing risk to lenders that it
implies, global capital markets have not
responded by raising the interest rates on those
with increasing levels of debt. Buyers of bonds
issued by a Government in the European Monetary
Union was equally good as bonds issued by any
other Government in the Union, forgetting " no
bail out" provision of the Maastricht Treaty. As
a result, interest rates on Greek and Italian
bonds were slightly different from German bonds
only a small fraction of a percent. All this
creates a different dynamic market that caused
the relationship between European governments and
the European commercial banks. Because banks are
heavily invested in government bonds, reducing
the value of these severely affected banks. After
this, the banks have turned themselves into their
own government without subjecting them to
creditors and depositors. This game of dominoes
started with mortgage defaults in Ireland and
Spain, creating serious problems for banks and
governments to guarantee bank depositors and
creditors added government debt had weak banks
and the government.
With the chart below it shows that countries that
are using Euro as currency and others not using
Euro but part of European community have seen
their debts increased from 2007 to 2012 to 24.3
to their GDP compared to the 27 countries which
is 26.3 to their GDP.
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It seemed that the 2007-2008 financial crisis has
just confirmed the European financial instability
problem which started earlier by printing money
from the thin air to finance Governments and
projects across the Europe. It has only worsened
during the crisis as the European Central Bank
had to increase printing money capacity with
justification being it would help stabilize the
economy but in reality has only created more
deficits and debts for these countries. In 2001
Countries like, Belgium, Italy and Greece,
respectively are heavily in debts 106.5 106.3
and 103.7 thereafter by 2008 Belgium, Italy and
Greece, had 89.2 106.1 and 112.9 compared to
their GDP. In 2012, they had Belgium 99.8, Italy
127 and Greece 156.9. The Irish, Portugal,
Spain and Cyprus who become a euro country member
in 2008 had respectively in 2001 34.5 Portugal
53.2 Spain 55.6 and Cyprus which become
European Currency member in 2008, 61.2 debts
compared to their respectively GDP, in 2012
Ireland 117.4 Portugal 124.1 Spain 86 and
Cyprus 86.6. The countries using a single
currency are still very vulnerable with uncertain
future and with the incapacity of the European
Central Bank swimming on this diverse group of
countries where the political and the economic
decision were transferred to ECB. WEST AFRICA
SINGLE CURRENCY!
For the past few years there are discussions
regarding African regions that can establish
their own single currency which will consolidate
the country political and economic maturity, self
efficient this thought is good but it is not easy
yet it is needed for improvement on legal,
economic and social level.
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Certain leaders confuse People power as
hereditary gift given by God to their family and
want to die in the power. The countries organize
election every 5 years and the people votes are
confiscated. Which country in Africa can organize
a peaceful election without outsiders to validate
the election that the loser can congratulate the
winner without a fight and nobody hurts or
mentioned massive fraud? Maybe in all the
continent there are maybe 3 to 4 countries which
are very poor numbers compare to European and
Asian continents. After more than 50 years of
independence most of these Governments just
continue to sell the raw material products and
never try to start industry or plan to process
these raw materials, which would create more jobs
and have access to new processing technology,
that will diversify the country's economy in the
process to become semi high tech country. There
is an economy boom in Africa at this moment but
this economy boom is just based on the high
demand to buy off the natural resources but not
for the country or the government to set up a
viable economy development plan to get out of
this abject poverty by exploiting the resource,
and setting up industry to improve the life style
of their own citizenry. A good economy
development plan is replaced by economy guessing
with no real plan. West Africa have been
recording economy growth between 5.5 to 15
yearly based on the need of the natural
resources with this growth some of the
government could not plan accordingly to use
these growths to position their country/region
and to be proud of their emerging market but
instead still waiting to receive aid and become a
parasite and depend on other people's pockets.
These aids are not free and come with several
conditions, which put the country behind
sometimes.
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Regarding the single currency, West Africa States
need to learn more from the European Single
Currency experiences by reviewing and analyzing,
what happened to the European Single currency?
Why countries using euro are more in debt than
the non euro zone countries? The European Central
Bank that supposed regulated and backed up the
management of the single currency has not been
very efficient to deal with the crisis and the
outcome stay uncertain. In the past few years
there was very strong goals, planning and
commitment to unify the continent and to adopt a
single currency, with a real Africa owned Central
Bank, this commitment to set up a central bank
will be backed by Gold where the Central Bank is
owned at 100 by Africa and for Africans, and the
bank decision will not be subject to any other
international institution as World Bank, IMF or
major continental bank. The African single
currency will be backed by gold not printing
money from a tiny air with direct and indirect
cost to the members and also using control of the
funds. Certain Central banks of today because
they have the authority to print money not based
on their assets in deposits but just the power
given to them to print money and this power cost
the citizen of the member states before receiving
the loan requested. It becomes very lucrative
business if you have the authority to print money
from nothing, you loan the funds, you do not pay,
and the lender becomes the title holder of you or
the country. This Single currency will be under
the Authority of a Central Bank? Which Central
Bank? What is the underlined security that the
central Bank is going to use to create or finance
its members? What is the total amount involved?
Who owns what and controls what? Or is it going
to be set up like the European Central Bank?
Africa will just be a figure head and the new
Central Bank that will just be the continuation
of ECB philosophy which is going to be worse like
other Central bank's and also most of Central
Banks are controlled by private bankers!
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The goal that was discussed a few years ago
concerning the creation of an African Single
Currency and the procedures that were in placed
are completely different than one that has been
developing now, which is going to be a collective
suicide with catastrophic consequences
politically, economically and socially. Many of
these countries are behind their own payrolls
some of the employees have to wait for 6 months
to a year before to receive their paychecks at
the same time how are these people going to live,
pay their bills and taxes? CONCLUSION The
idea of a united West Africa comes into existence
through activities that will promote its
political, economic, social and even
technological integration. The process of this
integration however, is not always something
easily achieved. The single West Africa currency
as a measure to further political integration has
proved to be beneficial when good cooperation
between member states exists in circumstances
where member states do not meet these criteria,
the single West Africa currency can prove to be
damaging not only for the 'failed' state but also
for the other member states due to their heavy
dependence on each other. FOR MORE INFORMATION
ABOUT DR. MEHENOU AMOUZOU PLEASE SEE HIS PREVIOUS
ARTICLES "The Global Banking Financial
Crisis's and Its Impact on Developing Nations
Case Study Africa" "The Economic Decline of
the USA Empire The Airplane without the Pilot"
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"The Perspective on Global Economic and
Financial Status for 2013 and its impact on the
future of the global economy?" "Could the
World and the European Financial Systems Survive
This World War III Financial crisis or it is the
end of the Western Civilizations?" "Corruption
and Development in the Developing Countries"
"The World Financial Honey Moon is over Debt
Crisis Continues to Wage War on Economy
Policy" "European Central Bank's Outright
Monetary Transactions (OMT) The Bazooka
Approach" CONTRIBUTIONS Contribution to this
article and the aforementioned series was made by
Byron K. Belser. Mr. Belser assists Dr. Amouzou
he holds a Masters of Arts degree in Development
Economics a Law degree. Raymond Bernhard West
from West International Petroleum LLC Fundacion
Paraiso Sin Fronteras BIBLIOGRAPHY
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