ECOWAS convergence criteria are unrealistic for volatile African economies

Evidence

By pushing ahead with the so-called convergence criteria, ECOWAS introduced an austerity bias, in the same way that the eurozone member states had done in the 1990s. In trying to meet the convergence criteria, GDP growth fell sharply, and unemployment remained at elevated levels as fiscal austerity did its work, as expected. As a result of the ongoing failure to meet the criteria, ECOWAS regularly pushed out the planned introduction date – first 2000, 2005, 2010, 2014, 2015 and now January 2020. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 32 (#expands, via linked claim)

IMF data seems to suggest that a fixed exchange rate is not necessarily a good option for African countries: since 2000, sub-Saharan African countries operating in a fixed exchange rate regime have experienced an economic growth 1 to 2 percentage points lower than countries with a flexible exchange rate. This gap is due in particular to the ‘weaker growth among the CFA France zone countries’, states the IMF. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 296 (#corroborates, via linked claim)

Categorization

• XREF: connects to: Financing local food production would save rather than deplete African foreign reserves; Pursuing maastricht-style convergence criteria cut West African GDP growth and repeatedly delayed currency plans — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 32; Pan-Africanist rhetoric silences criticism of the eco’s eurozone-style risks — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 382 (+3 more)

Related

• Pursuing maastricht-style convergence criteria cut West African GDP growth and repeatedly delayed currency plans (similarity 0.93)
• African economists warned that fixed euro pegging would exclude African economies from global competition (similarity 0.88)
• Fixed exchange rate countries in sub-Saharan Africa grow 1-2 points slower (similarity 0.85)
• Fixed exchange rates force austerity when competitiveness declines (similarity 0.80)
• Currency independence alone cannot succeed without a self-centred development model (similarity 0.80)
• Four structural handicaps explain the franc zone’s poor socioeconomic performance (similarity 0.80)
• Reformers demand flexible exchange rates and growth-oriented central bank policy (similarity 0.79)
• CFA convertibility guarantee is cheap only because African economies stay small. (similarity 0.79)
• The CFA system only works while franc-zone economies stay small (similarity 0.79)
• CFA critics demand flexible exchange rates, development-oriented central banks, and banking reform (similarity 0.79)
• Eurozone membership merged CFA extraction with neoliberal austerity, worsening African prospects. (similarity 0.79)
• Franc zone growth falls below the sub-Saharan average. (similarity 0.79)

Broader Connections

• Pursuing maastricht-style convergence criteria cut West African GDP growth and repeatedly delayed currency plans #expands (0.85) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 32
• Fixed exchange rate countries in sub-Saharan Africa grow 1-2 points slower #corroborates (0.65) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 296
• Currency independence alone cannot succeed without a self-centred development model #expands (0.60)
• Four structural handicaps explain the franc zone’s poor socioeconomic performance #complicates (0.55) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 293
• Pan-Africanist rhetoric silences criticism of the eco’s eurozone-style risks #qualifies (0.50) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 382