Africa contributes approximately 4% of global greenhouse gas emissions and the estimated cost for the continent to reach net zero by 2050 is around $2.8 trillion. But it faces significant challenges in securing the funding for this transition to net zero. At the same time, more than 640 million people in Africa still lack access to energy – the electricity access rate is just over 40% across the continent, which is the lowest in the world.

Countries in Africa need to find new ways to provide the energy their growing populations need, while also making the transition to net zero along with the rest of the world. A regulated single currency regime could help to redirect billions of dollars lost in foreign exchange transactions to fund the net-zero transition for the African continent.

Due to the complexities of global trade, Africans sometimes have to exchange an African currency for US dollars and then exchange it a second time with the intended African currency. This adds an estimated $5 billion a year to the cost of intra-African currency transactions. A union of currencies could eliminate the costs incurred in foreign exchange transactions, saving resources that could be used to finance Africa’s net-zero transition.

West African countries are already working on such a plan. The Economic Community of West African States (ECOWAS) covers a population of more than 400 million people across 12 nations. This regional economic body could support Africa’s journey towards net zero through the use of a proposed shared currency called the Ecozone.

The Ecozone, or Eco, is a proposed single currency for West Africa that would work just like the Eurozone does for European countries. It could be used by the ECOWAS countries to promote trade, integrate markets, strengthen economic ties and make the region stronger. An ECOWAS common currency would also support Africa’s net-zero transition in three main ways:

The Eco would eliminate the cost and time of intraregional payments, as well as uncertainties around bilateral exchange rates. The elimination of these expenses would create savings that could allow the private and public sectors in ECOWAS countries to redirect funds to supporting Africa’s transition to net zero.

Research also shows that the Eco could trigger more intraregional trade in the non-oil related sectors, helping the green economy further.

The use of the Eco by ECOWAS will mean fixing and arranging the foreign exchange rate used by the people and businesses of this region of Africa.

Having a fixed exchange rate will likely, over time, give the proposed single currency a higher value. This, in turn, could make net-zero financing, donations and financial contributions by ECOWAS countries as significant as those of their counterparts in the Global North.

ECOWAS must exercise strong willpower to overcome the hurdles that have stood against the realization of a common currency. If the ECOWAS countries are finally able to bring the Eco to fruition, it will also rejuvenate their political will to use it in innovative ways that fast-track net zero.

Political will is needed in the fight against climate change. ECOWAS must harness its political will to ensure the implementation of the Eco as a long-term strategy towards moving Africa closer to net-zero emissions.

The Eco is not the first attempt to bring West African countries into a common currency union. The first effort dates back to 1945 with the creation of CFA franc among the francophone countries of the region. There were further attempts at tightening trade through a single currency in 1965 and 1975. In 2019, ECOWAS leaders adopted the name “Eco” for the single currency for West Africa, but political and economic factors have marred its implementation.

At the 2023 ECOWAS summit, the adoption of the Eco was a top priority. But the Eco, which is set to come into effect in 2027, continues to face one major challenge: the absence of a consensus on its use among African countries.

Africa must deploy all useable economic tools in the fight against climate change and play its part in the global net-zero transition. If ECOWAS countries can agree on how to regulate and deploy it, the Eco could be one of those economic tools.

The introduction of the Eco as a unified currency poses various challenges, including risks of non-compliance, bureaucratic hurdles, resistance and violations. These issues necessitate comprehensive regulation. An Ecozone law is needed to regulate the use and the circulation of the Eco across the 12 ECOWAS member states.

ECOWAS could expand the existing ECOWAS Common Investment Code and Policy to encompass the implementation of the Eco. This code is designed to govern investment operations within the ECOWAS market, ensuring a cohesive approach to economic integration.

But enacting a specific ECOWAS Common Currency Code, would provide tailored guidelines for the Eco’s use, establish sustainable practices and impose sanctions for non-compliance by member states. This will provide a streamlined body of regulations that can be referred to when disputes arise as to the use of the Eco. It will also provide the depth and comprehensiveness needed to ensure ECOWAS countries can successfully transition to and use a common currency.

A common currency and accompanying regulations can be used as tools, not only for regional economic prosperity, but also to help Africa meet it’s climate goals. If ECOWAS moves forward with the Eco, it will represent a crucial step toward achieving net zero – not just in Africa but globally.

https://www.weforum.org/stories/2025/03/how-a-common-currency-union-called-the-ecozone-could-help-west-africa-reach-net-zero/