A Common Currency within the ECOWAS Zone: Lessons from a Cluster Analysis

This article examines the sustainability of the project for a common currency within the 15 countries of the ECOWAS zone. A cluster approach is used to examine if member countries form a homogeneous area with regard to selected variables based on the criteria of convergence and the theory of optimum currency zone during the period that covers the Pact implementation. The results show strong differences between the economies of the region (mainly in WAMZ) which persist throughout the period and which are against the conditions to fully fulfill the advantages of a single currency. Similar studies have already highlighted these difficulties but since the convergence Pact has been implemented (2001) and strengthened (2012) to permit an improved launch of the common currency. The updated data in the study shows no progress at this level. The article also questions the approach of the ECOWAS monetary cooperation program, which is essentially oriented to cyclical fiscal criteria in order to select eligible countries for the single currency in 2020.