Growth Set to Rebound in West African Economic and Monetary Union

Economic outlook positive for 2012 in union's eight member countries

Regional remains vulnerable to events in Europe

Further economic integration needed to strengthen stability

The WAEMU is one of the oldest monetary unions in the world and perhaps one of the most resilient. In the past year alone, the WAEMU—which comprises Benin, Burkina Faso, Cote d’Ivoire, Guinea Bissau, Mali, Niger, Senegal, and Togo—has struggled with a long-standing political crisis in Cote d'Ivoire as well as a severe drought in the Sahel. Despite this, the International Monetary Fund, in its regular review of the grouping, expects growth in the WAEMU to rebound significantly this year.

In an interview with IMF Survey online, Herve Joly, mission chief for the WAEMU, says the union is on a fast track to recovery.

IMF Survey online: What is the Western African Economic and Monetary Union?

Joly: As the name indicates, it is a monetary union. This means that the countries in the region share the same currency, which is the CFA franc. This currency is actually pegged to the euro, and the WAEMU itself is part of what is called the franc zone.

Moreover, the WAEMU is an economic union, which means there is a single market with a common external tariff and a zone where countries share a number of common policies beyond monetary policy. In this regard, they have harmonized a number of policies such as in the taxation area or in public financial management.

IMF Survey online: The WAEMU has had to face big challenges in recent years—the political crisis in Côte d'Ivoire and the drought in the Sahel. How has the union handled these challenges and has it recovered from them yet?

Joly: Indeed, these shocks have been major shocks. They have already had an impact on growth in 2011, which has dropped to about 1 percent. This is very low for the region.

The good thing is that we expect a strong rebound in 2012, mostly as a result of these exceptional factors disappearing. For instance, there will be a very strong recovery in Côte d'Ivoire post-crisis. We also hope for a return of agricultural production to normal levels.

In some countries, there will also be a number of domestic factors explaining growth such as, for instance, large infrastructure investments to address energy issues. For example, Niger is going to start oil production.

All of that is going to go in the same direction and will allow to more than offset the fact that the external environment is not as good as...