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Slow reform may hurt West African monetary bloc's rise

Monday, June 12, 2017

Subject

Prospects for the West African Economic and Monetary Union (WAEMU)

Significance

Economic growth in WAEMU reached 6.1% in 2016, outperforming peer regional blocs including its closest rival, the East Africa Community (EAC), which (excluding South Sudan) grew by 5.8%. However, business environment reforms lag those of the rest of sub-Saharan Africa, which could dampen longer-term growth.

Impacts

  • Despite recent progress, growth rates need to increase above 7% for at least 20 years for the zone to reach middle-income status.
  • The structural depreciation of Nigeria's naira could erode regional integration as importing within the zone becomes more expensive.
  • Security fears in Ivory Coast could shift investors' focus to Senegal -- despite Yamoussoukro's recent eurobond success.
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