Since 1945, the CFA franc has been the currency used by French colonies, and the usage of the currency continued after independence. Benin President Patrice Talon revealed that the West African Monetary Union has unanimously agreed to take back control of its currency, withdrawing foreign reserves of the West African CFA from France. The move has been welcomed across the continent.
Benin Republic’s President Patrice Talon announced that the West African Monetary Union wanted to take back control of its currency. A unanimous agreement was reached by the eight African countries – whose foreign reserves are kept in France – to pull the reserves of their CFA franc from France. The countries which include Togo, Burkina Faso, Mali, Senegal, Ivory Coast, Niger and Guinea Bissau all use the French regulated francs.
The Franc which is used by 155 million people on the continent across 14 African countries is one of the colonial relics in many French colonised countries. This is the first time that a president has announced the withdrawal of the West African CFA Franc from France.
In 1958, Guinea’s President Ahmed Sekou Toure rejected the offer of then French Prime Minister Charles de Gaulle to approve a new French constitution for Guinea. A 95 per cent vote by Guineans wanted complete independence, including monetary independence. According to the New York Times, “Within one week, France pulled out all 4,000 colonial servants – administrators, doctors, judges, technicians and teachers. Departing civil servants burned blueprints, archives and machinery manuals.”
President Talon said, “we now unanimously agree that this model needs to end. The Central Bank of the West African Monetary Union will manage all of the currency reserves and will dispatch them to the different partner central banks across the world.”
The CFA is divided into two, the Economic and Monetary Community of Central Africa (CEMAC) which includes Chad, Cameroon, Central African Republic, Gabon, Equatorial Guinea and Republic of Congo. And the West African Economic and Monetary Union (WAEMU) which includes Senegal, Guinea-Bissau, Mali, Ivory Coast, Burkina Faso, Togo, Benin Republic, and Niger.
The CFA franc was created in 1945 after the 1944 Brettons Wood Agreement which saw the world usher in a new global monetary system with the U.S dollar replacing the gold standard. The Brettons Wood agreement cemented America’s dominance as a world economic power. The CFA franc is tied to the Euro, and follows the fluctuation of the Euro. The creation of Eco, the newly proposed West African currency designed to replace the CFA franc by 2020 led to an official separation with the Euro.
The CFA franc has always been condemned for its representation of neo-colonialism. This new announcement has been received with positive reactions and paves the way for further integration of the continent.
“We are finally heard ,” said the collective Sortir du franc CFA in a press release after Beninese President Patrice Talon’s release on the issue of the withdrawal of foreign exchange reserves of African countries from the French treasury. The group also congratulated “sincerely the Beninese Head of State for this courageous decision, which, if implemented, would de facto mark the end of the CFA franc, the last colonial currency in the world”.
“The debate on the CFA franc is not economic and technical, it is first and foremost a political and symbolic issue. You don’t have to be an economist or an expert to know that the CFA franc is a psychological wound and humiliation for millions of Africans. France, by trying to maintain the CFA franc at all costs, is behaving like a colonial occupying power with our countries,” says the collective Sortir du franc CFA.
Fearing that after his remarks, Beninese President Patrice Talon, would find himself isolated on the issue, Sortir du franc CFA appealed to other presidents of the CFA zone to support him.
“By the declaration of the Beninese Head of State, this colonial currency is now in agony and our all-out mobilization is bearing fruit. We therefore appeal to all African youth to support the future single currency of ECOWAS, which will replace the CFA franc. The time for unity has come: let us stop the untimely quarrels, calm the debate to promote a smooth transition from CFA franc to Eco,” says the collective Sortir du franc CFA and acknowledges the challenges to be met. “Of course, this future single currency may need adjustments, improvements in its implementation. If necessary, it is up to Africans to make the necessary corrections without foreign interference: neither French, Chinese nor Russian… “concluded the group.
Criticisms of CFA Franc
The currency has been criticized for making economic planning for the developing countries of French West Africa all but impossible since the CFA’s value is pegged to the euro (whose monetary policy is set by the European Central Bank). Others disagree and argue that the CFA “helps stabilize the national currencies of Franc Zone member-countries and greatly facilitates the flow of exports and imports between France and the member-countries”.
The European Union’s own assessment of the CFA’s link to the euro, carried out in 2008, noted that “benefits from economic integration within each of the two monetary unions of the CFA franc zone, and even more so between them, remained remarkably low” but that “the peg to the French franc and, since 1999, to the euro as exchange rate anchor is usually found to have had favourable effects in the region in terms of macroeconomic stability”.