The idea of the single currency for the West African region was first mooted almost 30 years ago in the hope of boosting cross border trade and economic development.
Leaders of the member states of the Economic Community of West African States, known as ECOWAS, formally agreed on Saturday to name a planned common currency the "ECO".
The 15-member group announced at the end of a summit in Abuja, the Nigerian capital, that "ECO was adopted as the name of the ECOWAS single currency."
The idea of a common currency for the West African region was first mooted almost 30 years ago in the hope of boosting cross border trade and economic development.
The aim is to have the currency in place by next year and leaders in Abuja reaffirmed the "gradual approach to the single currency starting with countries that meet the convergent criteria," a statement said.
It said the currency would be based on a flexible exchange rate regime, coupled with a monetary policy framework focused on inflation targeting.
Member states should pursue appropriate policies and structural reforms that will sustain accelerated growth and the structural transformation of their economies, it added.
Dangerous for region's economies?
Economists say they understand the thinking behind the currency plan but believe it is unrealistic and could even be dangerous for the region's economies which are dominated by one single country, Nigeria, which accounts for two-thirds of the region's economic output.
ECOWAS was set up in 1975 and comprises Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo –– representing a total population of around 385 million.
Eight ECOWAS countries –– Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo –– currently use the CFA franc.
They are moored to the single European currency and are gathered in an organisation called the West African Monetary Union, or WAMU.
But the seven other ECOWAS countries have their own currencies, none of them freely convertible.