The Challenge Ahead as West Africa Quits CFA franc for Eco

The Challenge Ahead as West Africa Quits CFA franc for Eco

The anticipated abolition of the C.F.A in West Africa has come into play following an agreement between France and its West African states users. The agreement has been to rename the CFA with a West African regional currency – Eco, and cut off its entire financial links to France. This was announced a few days ago by the Ivorian president, Alassane Dramane Ouattara, following an agreement between France and the concerned West African States, in Abidjan, Ivory Coast capital.

The C.F.A stood for the ‘French Colonies of Africa’ when the then colonial power introduced the currency in 1945, though it was changed after independence to ‘Financial Community of Africa.’

For years, blazing criticism has trailed the French originated currency because the countries using it are required to keep 50% of their foreign currency reserves in the French treasury.

Earlier in the year, the president of Benin Republic, Patrice Talon, has announced the decision of the eight West African countries using the C.F.A to adopt a new currency.

Under the new deal, the African countries using the C.F.A wouldn’t have to keep 50% of their treasury in France, and there will no longer be a French representative on the currency union’s board, though the currency is still tied to the Euro.

The quest for a currency free from colonial sentiment has been pushed for long with no success, owing to the disapproving reaction of the French authorities. The situation has resulted in activism from pan-Africanists from around the world that pushed viciously for the eradication of whatever remains of colonial influence in Africa.

The C.F.A comes at the forefront of activism as it appears as a symbol of French presence and authority in Africa. The currency is used in 14 African countries with a combined population of about 150 million and $235 billion of gross domestic product.

However, not all the 14 countries are in the deal to break out from the currency, only the 8 countries of West African region: Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Togo and Senegal.

The remaining six countries are mainly from Central Africa: Central African Republic, Equatorial Guinea, Congo Republic, Cameroon, Chad and Gabon. These countries are still sticking to the CFA, though it has been renamed Financial Cooperation in Central Africa, (Cooperation Financiere en Afrique Central.)

This historic turn of event was hinted on in 2017, when the French president Emmanuel Macron indicated willingness in letting the Africans have their way, unlike his predecessors. He said it’s left to African leaders to decide what happens to the C.F.A.

“Yes, it’s the end of certain relics of the past. Yes it’s progress… I do not want influence through guardianship; I do not want influence through intrusion. That’s not the century that’s being built today,” Macron said.

The need for a single currency to foster trade in the West African region has been a topic of serious concern for leaders in the region. Following a meeting held in Abuja on December 21, they came to a consensus to implement an already existing agreement – the creation of Eco in 2020. That means severing ties with the C.F.A.

But while there is optimism that the Eco will change the economic outlook of West African region, there is also concern that, by pegging the Eco to Euro, the idea of creating independent economy for West Africa has been altered.

Hady Ba, a Senegalese philosopher and a staunch advocate for a single currency for West Africa said the whole idea has been to liberate the region from economic dependence. But he doubts if the idea would ever be actualized given the kind of leaders Africa has. The author of “The Last Colonial Currency: The Franc C.F.A Story.” Ndogo Samba Sylla, said Ouattara and the rest of C.F.A. countries had hijacked the original Eco plan by allowing the Eco to be pegged to the Euro, which by his interpretation means that they have chosen to keep their ties with France instead of establishing new ones with their African neighbors.

He said the whole thing has been superficial and would have no positive impact on the countries’ ability to control their own currency. “As we’re still pegged to the Euro, we’ll have to have conservative monetary policy,” he said.

What is not sure so far is if Ghana and Nigeria will yield to the Eco being pegged to Euro when the fifteen West African countries introduce the Eco in 2020.

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