WEST AFRICAN MONETARY INSTITUTE

The Heads of State of five countries in West Africa, as part of the fast-track approach to integration, decided in Accra, Ghana, April 20, 2000 to establish a second monetary zone, to be known as the West African Monetary Zone (WAMZ), by the year 2003. These countries, namely: The Gambia, Ghana, Guinea, Nigeria and Sierra Leone signed the 'Accra Declaration', which defined the objectives of the zone as well as an action plan and institutional arrangements to ensure the speedy implementation of their decision. It is envisaged that this Zone will be merged with the CFA Franc Zone to form a single monetary zone in West Africa.

At the second summit of Heads of State and Government of the Zone, held in Bamako, Mali, December 15, 2000, a number of important documents relating to the institutional, administrative and legal framework for establishing the zone were adopted by the five countries, as follows:

• the Agreement of the West African Monetary Zone (WAMZ);
• he Statutes of the West African Monetary Institute (WAMI);
• the Statutes of the West African Central Bank (WACB); and
• the provisions on the Stabilization and Cooperation Fund (SCF);

The date for the introduction of the common currency has been rescheduled to December 1, 2009 in order to give member states more time to fully comply with the convergence criteria.

WAMI - THE INTERIM INSTITUTION
In order to facilitate the creation of the common Central Bank and the introduction of a common currency, an interim institution, the West African Monetary Institute was set up in Accra, Ghana, in January 2001 and commenced operations in March 2001.

WAMI – THE MANDATE
The Institute is charged with the responsibility to:

• Prepare the design and operational architecture for the emergence of the common central bank;
• Undertake the technical preparations towards the introduction of the common   currency;
• Monitor and assess the performance of member states on the convergence criteria;
• Ensure policy harmonisation in the areas of payments system, Statistics, the financial sector, current and capital account liberalisation, trade liberalisation and free movement of goods and services.

WAMI PROGRAMME
The Authority of Heads of State and Government of the West African Monetary Zone, (WAMZ) through the Banjul Declaration of May 6, 2005, postponed the commencement of the monetary union in the WAMZ to December 1, 2009.  The Banjul Declaration not only expanded the WAMZ work programme for facilitating the emergence of the monetary union, but also restructured and repositioned WAMI with the authority and without prejudice to the WAMZ Agreement, to effectively deliver on her mandate.

Subsequently, the new WAMZ programme, in addition to macroeconomic convergence surveillance, is focused on other components relating to the actualization of a single economic space. These other structural benchmarks include programmes for the creation of a Customs Union in the WAMZ; Development of a Zonal Payments and Settlement System to facilitate cross border trade; and Statistical Harmonization. Others are financial sector integration; ensuring an enabling environment through the ratification and domestication of WAMZ legal statutes; effective sensitization programme; the   promotion of programmes for regional development and the activation of WAMZ Institutions.

THE JOURNEY SO FAR
The launching of the WAMZ monetary union was postponed twice: January 2003 and July 1, 2005. At that time, some of the major challenges included: the difficulty of member countries meeting the agreed convergence criteria; weak and poor policy harmonization; rudimentary payments systems development; significant variations in statistical reporting; and absence of capital account convertibility.

In recent years, macroeconomic developments in the WAMZ countries have been generally favourable. Modest growth has been recorded, inflation moderated, the fiscal position improved and external sector viability enhanced. For example:

• Real GDP grew from 5.6% in 2006 to 6.1% in 2007.
• Inflation fell from 11.5% to 8.2%
• Fiscal position remained sustainable with a ratio of the fiscal balance (excluding grant) as a percentage of GDP at 0.1%
• A viable external sector with gross reserve estimated at 11.5 months of import.
• The Gambia and Nigeria have met all the four primary convergence criteria since 2006.
• Member countries have generally abstained from recourse to the central banks for fiscal deficit financing.
• There is use of WAMZ national currencies in intra-WAMZ trade.
• Ghana and Nigeria have deployed the real Time Gross Settlement System for large value transfers.
• The African Development Fund has provided a grant of US$23 million for the financing of RTGS, Automated Clearing House and other payments system components in The Gambia, Guinea and Sierra Leone.
• The Zone has adopted a common cheque standard and common automated cheque processing system.
• A common payments system statute has been adopted.
• The Zone has adopted common e-banking guidelines.
• Legal instruments have been drafted and awaiting ratification and domestication by the member countries.
• All member countries have adopted the ECOWAS Classification of Individual Consumption by Purpose (COICOP) method of compiling consumer prices data.