The president of the Republic of Benin, Patrice Talon, has announced that West African countries will be withdrawing their foreign reserve CFA franc, from France. Talon said in an interview with France24 that it is a unanimous decision by user-countries in the West African region to withdraw the fund.
“We unanimously agree on this, to end this model,” he said.
“The Central banks of African countries of WAMU (West African Monetary Union) will manage all these foreign currency reserves and will distribute them to the various central banks partners in the world,” he added.
Since 1945, the West and Central African Francophone countries have been tied to CFA Franc, which reserve is in France. The situation has technically tied the economies of the West African countries to France and by extension, the European Union (EU), which means, EU economic policies affect Francophone West African countries.
In January, Liugi Di Maio, an Italian deputy prime minister blamed France for contributing to the immigration crisis in Europe through its financial activities in Africa. He said France has been exploiting former West African colonies through CFA franc, currently being used by 14 countries in Western and Central Africa. According to ANSA, the Italian news agency, Maio said of the French president, Emmanuel Macron; “first he lectures us, then continues to finance public debt with the money with which he exploits Africa,” he said.
When the CFA franc was created in 1945, it was pegged to the French currency then, the French Franc (FF). The CFA franc continued to be used until recently when members of the Francophone region decided to create something that will represent freedom from colonialism. There are now two different versions of it: the CFA franc of the West African Economic and Monetary Union (WAEMU), which has eight member countries, and the one for Central African Monetary and Economic Community, which has six members.
However, both versions of CFA are still pegged to the Euro and tied to the French economy. France holds 50 percent of the foreign exchange reserves of the countries using CFA, 14 of them in all. Recently, there has been a loud call for the CFA franc countries to assert their total independence from what has been described as neocolonialism that has left countries without control of their own currency.
In August 2017, a protest erupted in Dakar, the Senegalese capital over the continuous use of the CFA by African countries. Led by Kemi Seba, the infamous activist who burnt a 5,000 CFA note in defiance, it was a wakeup call to all francophone countries that still use the currency to create their own and demonstrate their total freedom from colonialism.
Pro-democracy youth movements in West Africa such as Y’en a Mare in Senegal and le Balai Citiyen in Burkina Faso have recently made the scraping of CFA their focal point. They say it’s time to end the obvious influence that France is still exercising on Africa.
These movements and protests have the complement of Liberate Africa from Monetary Slavery: Who Profits from the CFA Franc? A book published in 2016, by a group of African and European economists. The book criticizes the CFA as a means of post-colonial exploitation by France. Though France has always maintained that the participation of member countries has been out of their willingness, and the CFA reserve initiative has been to help stabilize the currency of her former colonies, using Guinea as an example, economists disagree. Morocco, Tunisia and Algeria all broke away from the CFA to issue their own currencies, which when compared to countries in CFA are significantly stable.
The argument has been that the CFA is a good currency for those who benefit from it. Talk of the major French and overseas corporations, the executives of the zone’s central banks, the elites wishing to repatriate wealth, heads of states who are not ready to step on the toes of the colonial masters yet.
France has evidently been the highest beneficiary of the CFA, a fact clear by their attitude toward African leaders who oppose the arrangement and those who support it. African leaders who support the CFA franc have enjoyed quid pro quo from France, in the form of a total support for them no matter what they do, while those who showed signs of dissent were fiercely opposed by the French government.
France holds a de facto veto on the boards of the two central banks within the CFA franc zone. Since 2010, when the Central Bank of West African States (BCEAO), was reformed, the conduct of monetary policy has been assigned to monetary policy committee. The French representative is a voting member of the committee, while the president of WAEMU commission attends only in an advisory capacity. Moreover, the European Central Bank also dictates the monetary and exchange rate policies CFA franc zones.
The French authorities have kept mum on the recent events regarding CFA franc, and so did African leaders until Talon broke the silence. But during his presidential campaign, Emmanuel Macron was quoted to have said that moving away from the CFA is the decision of African countries.
Since 2015, the 74-year old French legacy has seen increased dissent from around the world. In 2017, Kemi Seba’s protest against the CFA, through his NGO, SOS Pan-Africa (Urgences Panafricanistes) garnered momentum across Africa, Europe and in Haiti. Pan-Africanist, economists and activists all came together to urge the countries in the CFA zone to break away.
The resuscitation of the call to break away from CFA, and move the African funds to other destinations in Europe, is however, highlighting the incredible fact that Africa still lacks the capacity to function independently. One of the economic challenges the continent has faced is a single currency to facilitate easy exchange and intra-African trade.
The proposed currency (Eco) that could have served as an alternative to CFA was due to go into use in 2015, but has been deferred until 2020. So there is no alternative currency for the 14 countries currently on CFA.
Although, Talon didn’t give a timeframe for withdrawal of the fund, 2020 is just around the corner with its uncertainties. If Ecowas fails once again to facilitate the circulation of Eco, the quest to withdraw from CFA will likely mean moving from the influence of one European country to the other.