Hopefully in few years, the lessons will not be forgotten. In a currency union under a control of supranational central bank, one country can cause lots of pains to all the members. The euro was evidently weakened because of the debt crises in Greece and other PIIGS countries. Fortunately, the euro zone has great economies in the likes of Germany (and say France) that can rally other countries to salvage its member. The IMF concluded the deal when it saw that Germany and other countries in the union bought into the deal.
This is a big lesson for Africans in Ethiopia planning a single currency in the continent. One country has the potential to drag the single currency down. The euro just rebounded to a two-month high after the passage of the package within a week. That shows that Greece sovereign debt was affecting the euro in the international market. You cannot decouple one nation from the union.
If Nigeria accumulates debt and experiences trade shocks through oil and fails to service its debts, it can drag the currency into a level that will break the African economy. The bad news for Africa is that the most financial irresponsible nations are the big ones. That means they will be the ones that will be bailed out by the smaller ones. How do you handle that? Maybe, ask IMF to ‘buy’ them all since the small ones are already too weak.
Euro zone is learning practical lessons it could not learn since it began the experimentation on currency union more than fifty years ago. But one good thing works for them, their economy is not too leveraged on minerals and trade shocks are minimal. From France to Italy, there is a kind of uniformity in their economic landscapes. They are driven by knowledge. Unlike Africa, our over dependence on minerals and hydrocarbons implies we can bust anytime. In the 21st century, commodity market is not a good fulcrum to drive a currency union. It could be catastrophic as technologies advance and create alternatives.
If you think that crude will matter in 25 years, think again. I foresee scrapping of all the crude indices in the major international exchanges within the next three decades. Before 2030, either Europe or US will require all new cars to be solely powered by electricity (i.e., zero gas). And all utilities will be required to offer green energy to all its customers. Then who will care to know when OPEC is meeting!
For Africa, I maintain that the way forward is to approach a knowledge based strategy and develop structured Knowledge Economic Communities across the regions. Let the states pull resources and advance technology and revamp the economic nerve cells of Africa. Currency union could come after we have integrated technologically. If we do this, at least, we can afford to raise $41 billion to bail out Nigeria or South Africa if either gets into sovereign debt crises.