Keypoints:
- PAPSS already eases local-currency payments
- ECO must deliver deeper monetary gains
- Governance and convergence remain decisive
THE ECO has been discussed for decades as the currency that could draw West Africa’s fragmented economies into a single monetary space. After repeated delays, ECOWAS leaders have again attached a date to that ambition: 2027.
But the latest decision is not evidence that banknotes or a regional central bank are ready. It is a political commitment to move forward with countries that meet agreed economic conditions and are willing to participate.
The Pan-African Payment and Settlement System, or PAPSS, sharpens the debate. If cross-border payments increasingly use national currencies, the ECO must offer more than cheaper transfers.
A target, not a finished currency
At its July 19 summit in Lungi, Sierra Leone, ECOWAS reaffirmed its commitment to introducing the ECO in 2027. Leaders agreed that implementation should begin with countries meeting the bloc’s macroeconomic convergence criteria and ready to participate.
States unable to qualify would receive support to join later. The approach strengthens ECOWAS’s multi-speed single-currency strategy, allowing a smaller coalition to proceed without waiting for simultaneous compliance across the region.
That flexibility may be the only realistic way to avoid another postponement. Yet a phased launch creates another uncertainty.
A union involving several smaller economies would carry less weight than one including Nigeria, Ghana or Côte d’Ivoire. ECOWAS has not named the opening participants, making its scale impossible to judge.
PAPSS changes the argument
The case for a common currency has traditionally rested partly on the cost and difficulty of moving money between West African countries.
A Ghanaian importer paying a Nigerian supplier may face currency conversion, limited foreign-exchange liquidity and delays. The ECO could remove the need to exchange one participating member’s currency for another and make regional prices easier to compare.
But PAPSS is already addressing part of that problem.
Developed by Afreximbank in collaboration with the AfCFTA Secretariat, PAPSS enables customers to initiate cross-border payments in their own currencies while beneficiaries receive funds in local currency. It was successfully piloted in the six West African Monetary Zone countries before its commercial Africa-wide launch in January 2022.
Where participating institutions and currency routes are available, businesses can pay in one national currency while recipients receive another, reducing reliance on dollars or euros.
That reduces the need for customers to source hard currency for individual transactions, although PAPSS’s daily net-settlement process can still involve hard-currency accounts held with Afreximbank.
PAPSS is not a substitute for monetary union. It connects different currencies; the ECO would replace the national currencies of participating states.
A payment platform can make a cedi-to-naira transfer faster, but it does not abolish the exchange rate. Someone still carries the conversion cost and risk, and sufficient liquidity must remain available.
The ECO would go further by removing exchange-rate uncertainty between participating states and creating a single monetary-policy area. That is also why it carries much greater political and economic risk.
The ECO must offer more
PAPSS raises the standard by which the ECO should be judged.
It is no longer enough to argue that West Africa needs a common currency because cross-border payments are difficult. Technology is already reducing some of that friction without forcing countries to surrender control of their national currencies.
The stronger case for the ECO must rest on deeper benefits: more stable intra-regional exchange conditions, a larger financial market, improved policy credibility and West African control of a common monetary institution.
Those gains are not automatic. A badly governed currency could spread instability rather than contain it. If one large member pursued unsustainable fiscal policies or suffered a banking crisis, the effects could reach every country sharing the currency.
The ECO must therefore be more than PAPSS with banknotes. It would need institutions capable of enforcing rules, managing liquidity and supporting members facing shocks.
PAPSS can act as a bridge while leaders negotiate the harder question of sharing monetary power.
Neither project can solve every obstacle facing West African commerce. Traders also confront poor roads, congested ports, customs delays and inconsistent regulations. A common currency may reduce payment costs while leaving goods stranded at a border.
The ECO could support integration, but cannot create it alone.
Sovereignty means sharing control
For many supporters, the ECO offers a chance to reduce dependence on monetary arrangements inherited from the colonial era.
Yet joining it would not leave each government in full control of its money. Participating states would transfer important powers to a common central bank.
Interest rates could not be set solely for conditions in Accra, Abuja or Freetown, and governments would face limits on deficits, borrowing and monetary financing.
Sovereignty would be pooled.
That could represent a meaningful break from external influence if the new institutions were transparent, accountable and governed by participating West African states. But it would not guarantee equal influence.
The central bank’s voting system will matter. A model based mainly on economic weight could give Nigeria overwhelming power. Equal votes could leave larger economies reluctant to surrender control.
ECOWAS has not publicly resolved that tension.
The euro question remains open
The claim that the ECO will not be linked to the euro cannot yet be treated as fact.
ECOWAS has not announced whether the currency will float, follow a managed exchange rate, track a basket of currencies or maintain an external peg. It has instead acknowledged that central-bank governors must agree on outstanding issues before implementation.
A 2019 WAEMU reform proposed adopting the ECO name while retaining the CFA franc’s fixed exchange rate with the euro and France’s convertibility guarantee.
The reform package also provided for the withdrawal of French representatives from key monetary bodies and the end of reserve centralisation at the French Treasury.
Those arrangements have neither been confirmed as the blueprint for the broader ECOWAS currency nor conclusively ruled out.
The omission leaves unanswered how the ECO would interact with the CFA franc and its existing monetary institutions.
Claims that France is actively blocking the project are also difficult to verify. France’s historical influence in the CFA system is well documented, but allegations of present-day sabotage require evidence.
Convergence is the immediate test
The most measurable obstacle comes from within West Africa.
ECOWAS requires annual average inflation of no more than five percent and a budget deficit within three percent of GDP.
Central-bank financing of the deficit must not exceed 10 percent of the previous year’s tax revenue, while reserves must cover at least three months of imports.
Secondary conditions limit public debt to 70 percent of GDP and nominal exchange-rate movements to 10 percent in either direction.
ECOWAS’s 2024 assessment found that only Benin and Cabo Verde met all four primary requirements. Six countries achieved at least three, but inflation, fiscal pressure, foreign-exchange shortages and external shocks continued to weaken compliance.
Those results explain the phased approach and show why political commitment alone cannot guarantee credibility.
A country joining the ECO would lose the ability to devalue its currency during a crisis or set interest rates independently.
Without a regional stabilisation fund or similar support, an economic shock in one member could spread across the union.
Nigeria could determine the scale
No country matters more to the ECO’s future than Nigeria.
Its economy and population would give the currency regional weight. An ECO without Nigeria could still help smaller economies trade, but it would fall short of the transformative project ECOWAS has long promoted.
Nigeria’s participation would also be politically difficult. Abuja would have to surrender the naira and accept regional decisions made alongside much smaller economies.
Its inflation, budget choices and foreign-exchange pressures would affect every member. Other governments would want safeguards against Nigerian dominance.
Ghana and Côte d’Ivoire raise similar questions. ECOWAS has not confirmed that any of the three will participate in the first phase.
AES plans add pressure
The departure of Burkina Faso, Mali and Niger adds another political dimension.
AES leaders have raised the possibility of a common currency as part of their sovereignty agenda, but they have not announced a settled central-bank framework or reliable launch timetable. The three countries continue to use the West African CFA franc.
Another ECO postponement could reinforce the argument that ECOWAS struggles to deliver major regional projects.
What would make the ECO credible?
The ECO could reshape West Africa’s monetary future, but only if it offers more than a new name and launch ceremony.
ECOWAS must identify the first participants, establish a trusted central bank, agree transparent voting rules and define the exchange-rate regime.
It must also create credible support for members facing recessions, commodity shocks or banking crises.
PAPSS means the region does not have to choose between immediate payment integration and a future common currency. It can make cross-border trade easier now while testing whether the foundations for monetary union are strong enough.
That makes PAPSS both an ally and a challenge.
It is building the connections a more integrated region will need, but also proving that some benefits associated with the ECO can be achieved without abolishing national currencies.
For businesses and citizens, the true test will not be whether ECO banknotes appear in 2027. It will be whether the currency protects savings, lowers commercial costs and creates confidence in the institutions managing regional money.
Until ECOWAS can demonstrate those foundations, the ECO remains a compelling political ambition rather than a completed monetary future.
