Globalization has no doubt encouraged countries to come together in order to gain some power and influence in the countries. The coming together is not only political but also involves an economic coming together which is the apex of this relationship. Economic federation provides an excellent platform for implementing a common currency or single currency (Kerr & Gaisford 2008). Monetary union is brought about by replacing national currencies and in their stead introducing common monetary and financial rules within common institutions which are run without allowing for any national restrictions from member states (Lynn, 2010).
A single currency and a common currency differ in the a single currency involves withdrawing a countries currency and replacing it with the unions currency while a common currency occurs when the country's currency is not withdrawn but is allowed to continue in circulation alongside the union currency (Tumpel-Gugerell & Mooslechner 2003).
There are many countries in the developing world that are in the process of establishing a regional single currency. Among these are the West African countries of Nigeria, Ghana, Guinea, Sierra Leone, and Gambia. The proposed monetary zone will be called West African Monetary Zone (WAMZ). It covers an area of 1.49 million square kilometers with a population of 192.6 million, representing 66% and 20% of Africa respectively (Oshikoya, 2010; 88). The area has a combined GDP of US $340 billion accounting for 73% and 19% of ECOWAS and Africa respectively (Oshikoya, 2010; 88).
The member countries stand to gain a lot by studying the European Union, arguably the most successful region in implementing a common currency, the Euro. The E.U journey to a common currency has been a long one starting in 1957 with the custom union (Archer, 2008). From henceforth the E.U made strides in establishing a common currency, which only became a reality in 1999. The WAMZ had set 2010 as the year to start a common currency, a rather unrealistic goal, but pushed the date to 2014 when it became clear the deadline won't be met. This paper is going to explore the lessons WAMZ can learn from E.U and challenges also. The paper concludes that WAMZ has a lot to learn from E.U on currency integration.