The Statutory Meetings of the West African Monetary Agency (WAMA), the West African Monetary Zone (WAMZ) has ended in Freetown on a positive note. The meetings held at the Bintumanai International Conference Centre from 3rd-10th February, 2017 included the 40th Meeting of the Technical Committee, the 34th Meeting of the Committee of Governors and the 37th Meeting of the Convergence Council.
Sierra Leone, being the host country of the Statutory Meetings, had her officials elected to head various Committee Meetings taking over from the sister country of Guinea. These include: the Development Secretary in the Ministry of Finance and Economic Development, Mr. John Sumaila was elected Chairman of the Technical Committee of the WAMZ, the Governor of the Bank of Sierra Leone, Dr. Kaifala Marah, elected as Chairman of the Committee of Governors and the Minister of Finance and Economic Development, Mr. Momodu Lamin Koroma was elected as Chairman of the Convergence Council. All three elected Sierra Leoneans will hand over their baton of responsibilities at the next Statutory Meetings of the WAMA and WAMZ in Monrovia, Liberia later this year.
The overall objective of the meetings is to gauge and assess progress of member countries in the drive towards the establishment of a Common Central Bank and the introduction of a Single Currency, with a view to achieving monetary integration to ensure rapid socio-economic development through harmonized and sound fiscal and monetary policies in all member countries which include, The Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone.
At the opening of the 40th Meeting of the Technical Committee, the Director-General of the West African Monetary Institute (WAMI), Dr. Abwaku Englama noted that Sierra Leone did not comply with three of the convergence criteria namely, the inflation, the fiscal deficit and the central bank financing.
However, the Chairman, Mr. John Sumaila, Development Secretary in the Ministry of Finance and Economic Development reaffirmed Sierra Leone’s commitment to the WAMZ project, noting, “Our resolve to reach the desired goal is still as strong as ever despite the serious global and regional challenges confronting us.”
He assured Sierra Leone’s commitment to implementing sound economic policies to ensure economic stability and compliance with the WAMZ convergence criteria. He however lamented on the twin shocks of the Ebola Virus Disease outbreak and the collapse in global price of the country’s lead export, the Iron Ore, which he noted, had negative impacts on the economy generally thereby undermining the country’s macroeconomic stability and poverty reduction goals. He informed the Technical Meeting that prior to the twin shocks, Sierra Leone was making significant progress in the areas of macroeconomic stability and poverty reduction, with the recording of double digits economic growth of 15. 2 percent in 2012 and 20.7 percent in 2013, with a projected growth rate of 11.3 percent in 2014. He said inflation was contained at a single digit while the exchange rate was relatively stable with interest rate on government securities declining significantly. With all of these, Mr. Sumaila was confident to report that Sierra Leone had achieved all four primary convergence criteria in 2013. All of these, unfortunately, were squashed by the unprecedented Ebola Virus Disease outbreak and as government battled with that emergency, then came the other shock of a dwindling price of the country’s leading export commodity, Iron Ore.
Besides these challenges, Mr. Sumaila elucidated the numerous macroeconomic measures adopted by government to address the situation and pledged the commitment of the country to also carry out reforms recommended under the ECOWAS Protocol to promote regional integration.
Mr. Sumaila expressed optimism for “a bright” medium term prospects for Sierra Leone’s economy, which he estimated to have recovered by 4.9 percent in 2016, and a projected growth of 5.4 percent in 2017 and 6.1 percent in 2018. He went on to assure that inflation will return to a single digit in 2017, with the country’s gross foreign reserve averaging at 4 months of import cover in the medium term, and that the exchange rate is expected to stabilize as exports increase combined with the implementation of prudent fiscal and monetary policies. “We are therefore hopeful that Sierra Leone will satisfy the convergence criteria and become a member of the ECOWAS Monetary Union in 2020,” Mr. Sumaila assured.
During the 34th Meeting of the Committee of Governors of Central Banks of the WAMZ, the Vice Governeur of the Banque Centrale de la Republique de Guinea, Mr. Gnanga Komata Gounou on behalf of Dr. Lounceny Nabe, the outgoing Chairman of the Committee of Governors, pointed out that the global economic environment was fraught with uncertainties emanating from persistent economic slowdown that is exacerbated by the Brexit and the elections in the United States of America. These he maintained are challenging for the regional integration project in the sub region. He therefore called for further reflection that will bring about “credible and realistic options” that would ensure informed decisions in the WAMZ.
He lauded the contributions of WAMI in the areas of payments system development, promotion of trade related issues and strengthening the financial sector in the region.
Dr. Kaifala Marah, newly elected as Chairman of the Committee welcomed delegates to the meeting and conveyed fraternal salutation from President Dr. Ernest Bai Koroma, and the Government and people of Sierra Leone. He paid tribute to outgoing Chairman of the Committee, Dr. Lounceny Nabe for steering the affairs of the WAMZ over the last six months, particularly highlighting his exemplary leadership and commitment to the goals of the WAMZ.
Dr. Marah reaffirmed Sierra Leone’s commitment to the WAMZ integration agenda. He highlighted the challenges faced by the country at the domestic front, pointing out that the country was contending with hikes in prices of basic commodities as a result of exchange rate depreciation and domestic food supply shocks. He also noted that the recent upward adjustment of domestic prices of petroleum products has also brought in its wake additional pressures on domestic prices of goods. He however expressed his determination to get the inflation under control and achieve exchange rate stability.
He went on to note that until 2016, Sierra Leone had been consistently achieving the three primary convergence criteria, but that due to the challenges encountered in 2016, performance on the primary convergence scale deteriorated to only one criterion. “Despite these challenges, we will pursue policies to re-establish compliance with all four primary criteria, while improving performance on the secondary convergence scale.
He assured his colleague Governors of the country’s commitment to the proposed WAMZ Commission, and indicated that broad consultations would be held with relevant stakeholders to discuss the study done by WAMI and make their considerations known.
Dr. Marah reechoed the several “common challenges” facing Member States that include, weak infrastructure and the attendant financing gap for infrastructure development and underscored the importance of addressing them collectively. According to him, one of the ways of tackling infrastructure financing gap is through the use Pension Funds of Member States of the WAMZ which he expressed belief, has worked in other economies.
The Director-General of WAMI, Dr. Abwaku Englama in his statement to the Governors indicated that from the latest assessment of Member States’ performance on the primary convergence criteria (end June 2016), he maintained that only Liberia satisfied all four criteria, with Guinea and Nigeria satisfying three each; Ghana satisfying two while The Gambia and Sierra Leone satisfied one each. With regards the secondary convergence criteria, Dr. Englama noted that Ghana, Liberia and Sierra Leone satisfied all, while Nigeria, The Gambia and Guinea satisfied one criterion each.
Dr. Englama recalled that the study on the establishment of the WAMZ Commission was initiatied by the Convergence Council of the WAMZ at its 34th Meeting held on July 17, 2014 in Abuja, Nigeria, following the abandonment of the Two-track Approach to monetary integration.
Meanwhile following thorough deliberations on the issues under discussion, the Convergence Council decided on the following, inter alia:
Adopted the report on the macroeconomic development and convergence in the WAMZ as at end June 2016 and urged Member States to:
Endeavour to diversify their economies so as to minimize the impact of shocks, domestic or external, as well as stimulating their economies through targeted spending in growth-enhancing sectors for employment generation and poverty reduction;
Strengthen fiscal consolidation through expenditure rationalization and revenue mobilization measures. Tax administration must be strengthened, including enforcement strategies aimed at curbing tax evasion and excessive duty waivers in a bid to enhance revenue collection and consequently improving on the fiscal deficit to GDP ratio;
Restrain the rising wage bill in some Member Countries through the development and implementation of the Public Financial Management Reforms;
Member States that are yet to commence implementing the CET should make efforts to resolve issues hindering the take-off as those countries which have implemented the CET have not suffered any revenue losses;
Directed WAMI to undertake a study on the implications of fragility and vulnerabilities of Member States’ economies on the convergence process with implementable recommendations at the next statutory meetings;
Directed WAMI to finalise and represent the paper on “Managing Commodity Price Shocks in the WAMZ: The Role of Fiscal Monetary, and Exchange RATE Policies” at the next Statutory Meetings;
Endorsed the transformation of WAMI into a Commission based on Scenario 2(the lean structure) with an estimated cost of US$6.166,831.51 for the first year as against Scenario 1 with a cost estimate of US$12,121,949.30;
Approve the roadmap leading to the establishment of the proposed WAMZ Commission, including the preparation of a project document, proposals for the amendment of the WAMZ Agreement and the convening of WAMZ Heads of State Summit to consider and approve the establishment of the Commission;
Urged the beneficiary Member States to fund, on equal basis, the shortfall of US$86,796.20 on the WAMZ Payments System Project arising from the exchange rate losses due to appreciation of the US dollar against Unit of Account;
Directed WAMI to prepare a proposal and seek funding for the WAMZ Payments and Settlement System (WAMZPASS), which will establish among other functions, an inter-linkage between the RTGS of the WAMZ Member States via SWIFT to facilitate cross border trade through efficient and safe transfer of funds and also serve as a platform for quoting and trading in WAMZ national currencies;
Noted the report on the progress made in capital market integration in West Africa and urged Member States to redouble efforts to address the inhibiting constraints to deepen the process in the WAMZ;
Directed WAMI to establish three sub-committees i.e. Legal and Institutional, Payments System and Operations, to facilitate the work of the Expert Committee on Quoting and Trading in WAMZ national currencies;
Noted the Report on the 8th Forum of WAMZ Trade Ministers and urged Member States to implement the recommendations of the Forum to accelerate trade integration in the Zone and the wider ECOWAS region;
Noted the Report on the newly constructed WAMZ Trade Integration Index and directed WAMI to update and publish it annually;
Noted the progress on the implementation of the extended ACBF Capacity Building Project and tasked WAMI to explore other financing sources for capacity building for the achievement of the goals of the WAMZ;
Approved the WAMI Work Programme and Budget for 2017 in the sum of US$4, 894,674.31 with additional US$65,000.00 to reinforce the activities of the CSWAMZ, bringing the total budget to US$4, 957,563.54. Member States’ contribution amounts to US$4,301,666.54, a surplus of US$635,897.00 and interest income of US$20,000.00;
Directed WAMI to update the staff Manual and submit it for approval;
Directed WAMI to submit periodic internal audit reports to the Committee of Governors;
Approved the implementation of Provident Fund Scheme for the few non-seconded WAMI staff;
Approved the Statutory Retirement Age at WAMI to be sixty years, and;
Approved the extension of contracts of those who have attained the age of sixty prior to this recommendation to end-June 2017.
Under any other business, the Deputy Governor of the Central Bank of The Gambia, Mrs. Oumie Savage-Samba, on behalf of the Minister of Finance and Economic Affairs and the Governor of the Central Bank of The Gambia, conveyed the sincere thanks and appreciation of the people and Government of The Gambia to His Excellency, Dr. Ernest Bai Koroma, President of the Republic of Sierra Leone, for his role in the resolution of the recent political impasse in The Gambia.
Minister of Finance and Economic Development of Sierra Leone, Mr. Momodu L. Kargbo recognized the significant contributions of Heads of regional integration institutions, i.e. ECOWAS Commission, WAMA, WAMI WAIFEM to economic integration and capacity building in West Africa.
This was acknowledged and accepted by Dr. Abwaku Englama, Director-General of WAMI on behalf of his colleagues.
The next meeting of the Convergence Council would be held in Monrovia, Liberia at a date to be communicated to Member States in due course.
By Sayoh Kamara, PRO MoFED
Friday March 03, 2017