A Tale Of Two Currencies: How CFA Affected Western Africa
In an attempt to permanently engrain their colonial presence and ties to these countries, the French Republic imposed a new currency called the CFA. The acronym stands for Communauté financière d’Afrique (‘Financial Community of Africa’). This currency has been the symbol of France’s continued grip on West and Central Africa for almost a century. However, in December 2019, the Ivory Coast lead the movement in declaring a new currency that would belong to them and seven other neighbouring countries. This new currency called ‘Eco’ became the beacon for these countries to finally become 100% independent and be in full control of their economic situation. And yet, where the Eco was thought to improve cross border trade in the West African region and boost their economic development, it instead failed to take root as the replacement of the controversial CFA franc. In addition, Anglophone West African countries have expressed their discontent with the adoption of the ‘Eco’ currency as it underlined the struggle of regional influence between Ivory Coast and Nigeria. So in the midst of all this friction and fight for economic independence, was the adoption of a new currency the right move for Francophone West Africa? Let’s have a chronological tell of events to fully cover the scope of France’s influence over the West African region’s currency turmoil.
Ah Colonialism, My Old Friend
Yes, the root of most African can be traced back to colonial times, and the grip Europeans had on the continent. In an attempt to compensate French slave owners for losing their ‘property’ after the abolition of slavery in France in 1848, the government established colonial banks under the authority of the Bank of France. Half a century later and in 1901, the Bank of West Africa was created and had for aim to be the monopoly on the production and distribution of French francs in the French colonial empire in Subsaharan Africa. The people resisted the change in currency from their traditional ways of using small shells called cowries and bracelets called manilla because they knew that losing control over their currency would affect their autonomy when it comes to production, consumption and exchange of goods. After unsuccessfully integrating the French currency in West Africa because of many decades of local resistance, the only solution was the creation of a new currency that would be unique to the French colonies of West Africa, the CFA Franc. Fast forward another half-century, and the Bank of West Africa was split into two banks, one in West and Central Africa each. The implications were that the CFA was unique to each of the two African regions. Even in an attempt to ‘Africanize’ the bank by hiring African staff in the 1970s, it was all a political act to be more acceptable in a post-colonial context. However, The CFA franc still functioned according to the same principles and purpose established during the colonial period. (Christensen, 2021) In addition, France still had direct control over monetary and exchange rate policies over Central and West African countries that were under the CFA currency. The purpose was so that the French Republic could maintain a network or, in other words, a ‘satellite’ of economies in Africa that complement their own. That would make these countries’ resources such as raw material and trade power essentially in the hands of the French.
CFA And Neo-Colonialism?
It is important to keep in mind that the creation of the CFA put French companies in a very good position to profit from what we will now call the ‘CFA countries’. n fact, later on, any foreign company operating in the Euro could benefit from the same advantages that primarily consisted of reduced transaction costs and protection from exchange rate risks. (Christensen, 2021) The nature of the CFA and its implications in being overvalued meant that CFA countries tended to value imports as opposed to exports when both the Western and Central sub-Saharan African are extremely rich in resources and minerals. This gave companies in the Euro Zone an insane advantage over trading and left CFA countries powerless with their natural goods. In other words, neo-colonialism was booming well after all African countries gained their independence in the second half of the 20th century. The implications of the CFA include negligence of investment in the agricultural sector as well as in the manufacturing sector because trade was put at the forefront of CFA countries’ economic power, which would benefit French companies and other ‘Euro’ companies. Bank loans are primarily targeted at large companies and governments to the detriment of SMEs in general. (Christensen, 2021) Therefore, the fact that CFA countries experience low levels of credits to the economy and that the currency’s exchange rate was constantly overvalued meant that domestic production in those countries severely suffered for more than 50 years. This also means that because France’s form of neo-colonialism on CFA countries’ monetary and financial power has greatly impeded their attempt at structural transformation and regional integration, which in turn affected their economic development.
Money. Money. It’s All About The Money!
It is imperative to note that this continued neo-colonial monetary bond added to the system of centralised political regimes in CFA countries and made them more responsive to the priorities of the French government and companies and foreign investors than to the interests of their own citizens. To put it simply, the existence of the CFA Franc encouraged, favoured or even pushed for a certain type of political leadership. It is evident that most of the CFA leaders are individuals who did not question the hold that this currency had on their countries and, therefore, never questioned the limitations imposed by it. In most cases, you would find that these leaders have in fact, benefited from active support from the French government in the past 50 years. (Christensen, 2021) But with the old generation of political leaders slowly fading off, an insurgence of new-age pan-Africanist unrest began to question those same relations with France and its monetary hold over their region.
Be Gone, CFA Franc! …Or Not Really?
Lead by Ivory Coast in December 2019, the West African region of CFA countries (which is made up of 8 countries) decided to transition from CFA Francs into a new currency called ‘Eco’. And although it seemed like the CFA would finally be completely eradicated, some critics called it to be a form of whitewash that would inherently only change the name of France’s neo-colonial grip on the region. While non-CFA countries like Ghana backed the decision, other Anglophone West African countries felt blindsided by this decision, and it added to the linguistic divide in the West African region. (M’Bida, 2020) That is because the ‘Eco’ was intended to become West Africa’s unified currency and Nigeria was not prepared to shift to a new currency that had little to no economic power attached to it. There are opinions that this change will not be very effective without a trade union agreement between all countries in the new ‘Eco’ zone or, in other words, Western Africa. (Kavas, 2021) In addition, the adoption of the new ‘Eco’ currency is continuously delayed as almost a year after the reforms were announced by Ivory Coast, the new currency has yet to be in action. In September 2020, Ivorian President Alassane Ouattara announced that further economic integration was delayed because of Covid-19. Taking into account what he has said and the other setbacks that the Eco currency has faced since its announcement, it is projected that the implementation of the new currency will be pushed to up to 5 years. An astronomical timeframe considering that those opposed to Eco will have their argument solidified that the change of currency was just an empty reform. (Been, 2021)
So… What Now?
It is undeniable that previous norms are being challenged by up and rising pan-Africanists who want to bring good change to the continent. Although the execution of transitioning from CFA Franc to Eco could have been handled much better, especially when talking about its implementation, it was still an important first step in taking control of the region’s monetary and financial power. Change is never easy, especially when a problem has been rooted since the days of slavery and colonialism and translated into neo-colonialism for over half a century. The wounds are deep, but the change must still happen, and that is what all aspiring young African leaders must aim for. Make the continent better!
- M’Bida, A. (2020). Anglophone West Africa kicks back at use of Eco to replace CFA franc. Retrieved 26 March 2021, from https://www.theafricareport.com/22312/anglophone-west-africa-kicks-back-at-use-of-eco-to-replace-cfa-franc/
- Kavas, A. (2021). Another move against French colonialism: The eco currency in Africa | Opinion. Retrieved 25 March 2021, from https://www.dailysabah.com/opinion/op-ed/another-move-against-french-colonialism-the-eco-currency-in-africa
- Christensen, J. (2021). The CFA Franc as a vivid symbol of colonial continuities in Francophone Africa – Tax Justice Network. Retrieved 27 March 2021, from https://www.taxjustice.net/2021/03/22/the-cfa-franc-as-a-vivid-symbol-of-colonial-continuities-in-francophone-africa/
- Been, K. (2021). End of the CFA franc: A possible turning point in Francafrique? | Global Risk Insights. Retrieved 27 March 2021, from https://globalriskinsights.com/2021/03/end-of-the-cfa-franc-a-possible-turning-point-in-francafrique/