The Naira internationalization potential in West Africa and Africa

Michael Akume ()
Additional contact information
Michael Akume: African Export-Import Bank (Afreximbank)

Quality & Quantity: International Journal of Methodology, 2025, vol. 59, issue 6, No 1, 4893-4925

Abstract: Abstract This study investigates the potential for internationalizing the Naira as a regional vehicle currency for trade and financial transactions in the West African Monetary Zone (WAMZ), ECOWAS, and the African Continental Free Trade Area. The research is informed by Nigeria’s economic strength, external reserves, and trade dominance, suggesting that the Naira could serve as a vehicle and reserve currency in these regions. We develop a model to analyze Nigeria’s reserve-to-region total ratio based on macroeconomic fundamentals—economic strength, trade, and stability—as well as network externality measures. The findings reveal that while trade and economic stability are significant predictors, economic size is not due to limited diversification. Simulation results indicate strong potential for the Naira as a regional currency within WAMZ and ECOWAS, though its broader capacity in Africa is limited. We recommend policies to enhance production capacities in key economic sectors to boost international trade potential.

Keywords: Naira internationalization; Vehicle currency; WAMZ; ECOWAS; AfCFTA (search for similar items in EconPapers)
JEL-codes: F15 F33 F36 F53 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11135-025-02192-w Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:qualqt:v:59:y:2025:i:6:d:10.1007_s11135-025-02192-w

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/11135

DOI: 10.1007/s11135-025-02192-w

Access Statistics for this article

Quality & Quantity: International Journal of Methodology is currently edited by Vittorio Capecchi

More articles in Quality & Quantity: International Journal of Methodology from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().