Creating the proposed common currency for West African countries, known as the eco, will be a challenging and lengthy process complicated by uncertainty since three countries started the withdrawal process in January, according to S&P Global Ratings.

The eco is a proposed monetary union that aims to boost economic and financial integration in the region while supporting monetary independence within the Economic Community of West African States (ECOWAS).

“We consider creating the eco will be a challenging and lengthy process. Already several years in development, project deadlines have repeatedly been postponed due to economic and budgetary convergence difficulties, as well as political discussions for projects of this magnitude being inherently complicated,” S&P Global Ratings said.

Last month, West African Economic and Monetary Union's (WAEMU’s) central bank governor, Jean-Claude Kassi Brou, reiterated support for the eco at the 64th ordinary meeting of ECOWAS. 

At the meeting, governors held preliminary discussions on establishing the institutional and legal framework for a new regional central bank.

Burkina Faso, Mali, and Niger announced their withdrawal from ECOWAS in response to sanctions that were imposed on them following a series of coups d'états, although they will remain members of WAEMU.

The withdrawal procedure takes a year. The new Senegalese president and prime minister are working to resolve the situation before this deadline, but the outcome of these discussions remains highly uncertain.

“In the meantime, we think that WAEMU membership continues to support the creditworthiness of its members,”  S&P Global Ratings said.

“The region has maintained strong macroeconomic stability, notably with inflation consistently lower than that of peers,”  S&P Global Ratings added. 

France’s convertibility guarantee strengthens currency peg credibility with the euro, while pooled reserves in the region’s central bank provide an additional buffer against idiosyncratic shocks.

WAEMU comprises Benin, Burkina Faso, Ivory Coast, Guinea Bissau, Mali, Niger, Senegal, and Togo. Its common currency is the CFA franc (XOF) and the regional central bank the BCEAO.

ECOWAS comprises Benin (BB-/Stable/B), Cabo Verde (B-/Stable/B), The Gambia, Ghana (SD/--/SD), Guinea, Guinea-Bissau, Ivory Coast (BB-/Pos/B), Liberia, Nigeria (B-/Stable/B), Senegal (B+/Stable/B), Sierra Leone and Togo (B/Stable/B). In January 2024, Burkina Faso (CCC+/Stable/C), Mali and Niger announced they were withdrawing from the bloc.