Ghana Calls for ECOWAS-Wide Currency to Facilitate Petroleum Trade with Dangote Refinery
Detailed Breakdown:
Ghana’s Push for a Unified ECOWAS Currency
Ghana has proposed the creation of a common currency for the Economic Community of West African States (ECOWAS) to streamline trade and reduce reliance on the U.S. dollar, specifically to facilitate fuel transactions with Nigeria’s Dangote Petroleum Refinery. The suggestion was made by Mustapha Abdul-Hamid, Chairman of Ghana’s National Petroleum Authority, during the OTL Africa Downstream Energy Week in Lagos.
Reducing Dependence on the Dollar
Abdul-Hamid emphasized that heavy dependence on the U.S. dollar puts pressure on local currencies across African countries, leading to currency devaluation and higher prices for imported goods, including fuel. According to him, this reliance on the dollar creates unnecessary trade barriers within the ECOWAS region. He pointed out that, under the current system, Ghana would need to pay in dollars to import fuel from Nigeria’s Dangote refinery, and Nigeria would face the same dollar demand if it needed fuel from Ghana.
Benefits of a Common Currency
The proposed ECOWAS currency aims to ease cross-border trade and make essential imports, like petroleum, more affordable for member states. Abdul-Hamid explained that such a currency could lower the cost of fuel by reducing the need to acquire dollars, which is especially important as Nigeria has shifted to a deregulated petroleum market. Without the need to secure large dollar reserves, African countries would experience less currency fluctuation and maintain greater price stability in fuel and other imports.
Collaborative Infrastructure and Trade Integration
In light of the Africa Continental Free Trade Agreement (AfCFTA), Abdul-Hamid called for deeper cooperation among West African nations. He argued that an integrated approach to infrastructure, as well as economic and fiscal policy, would allow ECOWAS countries to leverage each other’s resources and create a unified petroleum market. He noted that as Dangote refinery ramps up to its full 650,000 barrels-per-day capacity, Ghana is eager to become a significant customer rather than relying on more distant suppliers like Rotterdam.
Addressing Fuel Smuggling Concerns
Abdul-Hamid further urged Nigeria’s regulatory authorities to curb fuel smuggling from Nigeria to Ghana, proposing dedicated security units to monitor and control cross-border fuel flows. Additionally, Dangote himself has encouraged local fuel marketers to prioritize domestic purchases, emphasizing that his refinery currently has over 500 million liters in storage while Nigerian firms seek fuel abroad.
The Broader Vision
The move for a unified ECOWAS currency reflects a broader vision of regional self-sufficiency and economic resilience. As the West African region continues to grapple with fuel price volatility and currency depreciation, Ghana’s proposal aligns with broader goals to foster trade within Africa and reduce dependency on external currencies.
Detailed Breakdown:
Ghana’s Push for a Unified ECOWAS Currency
Ghana has proposed the creation of a common currency for the Economic Community of West African States (ECOWAS) to streamline trade and reduce reliance on the U.S. dollar, specifically to facilitate fuel transactions with Nigeria’s Dangote Petroleum Refinery. The suggestion was made by Mustapha Abdul-Hamid, Chairman of Ghana’s National Petroleum Authority, during the OTL Africa Downstream Energy Week in Lagos.
Reducing Dependence on the Dollar
Abdul-Hamid emphasized that heavy dependence on the U.S. dollar puts pressure on local currencies across African countries, leading to currency devaluation and higher prices for imported goods, including fuel. According to him, this reliance on the dollar creates unnecessary trade barriers within the ECOWAS region. He pointed out that, under the current system, Ghana would need to pay in dollars to import fuel from Nigeria’s Dangote refinery, and Nigeria would face the same dollar demand if it needed fuel from Ghana.
Benefits of a Common Currency
The proposed ECOWAS currency aims to ease cross-border trade and make essential imports, like petroleum, more affordable for member states. Abdul-Hamid explained that such a currency could lower the cost of fuel by reducing the need to acquire dollars, which is especially important as Nigeria has shifted to a deregulated petroleum market. Without the need to secure large dollar reserves, African countries would experience less currency fluctuation and maintain greater price stability in fuel and other imports.
Collaborative Infrastructure and Trade Integration
In light of the Africa Continental Free Trade Agreement (AfCFTA), Abdul-Hamid called for deeper cooperation among West African nations. He argued that an integrated approach to infrastructure, as well as economic and fiscal policy, would allow ECOWAS countries to leverage each other’s resources and create a unified petroleum market. He noted that as Dangote refinery ramps up to its full 650,000 barrels-per-day capacity, Ghana is eager to become a significant customer rather than relying on more distant suppliers like Rotterdam.
Addressing Fuel Smuggling Concerns
Abdul-Hamid further urged Nigeria’s regulatory authorities to curb fuel smuggling from Nigeria to Ghana, proposing dedicated security units to monitor and control cross-border fuel flows. Additionally, Dangote himself has encouraged local fuel marketers to prioritize domestic purchases, emphasizing that his refinery currently has over 500 million liters in storage while Nigerian firms seek fuel abroad.
The Broader Vision
The move for a unified ECOWAS currency reflects a broader vision of regional self-sufficiency and economic resilience. As the West African region continues to grapple with fuel price volatility and currency depreciation, Ghana’s proposal aligns with broader goals to foster trade within Africa and reduce dependency on external currencies.