«The expression ‘the international community’ needs to be redefined. Today, it is just a phrase politicians use when they want to avoid taking responsibility», thundered Chadian President #Idriss Déby# on Radio France International on June 25 of this year.
The newspapers #Le Monde# and #Le Figaro# have been dedicating weekly columns to different perspectives for almost a year, and the news magazine #Jeune Afrique# has published its own supplements on the future of the #CFA franc#. In August of this year, a man in Dakar was imprisoned for burning a 5,000 CFA franc note during a demonstration against the currency.
The CFA franc is currently used in 15 African countries with a total population of 150 million and is considered by some as an African euro. However, there are two significant differences between the CFA franc and the European currency: the CFA franc has a colonial origin and a fixed parity with the euro. The popular uprising against the CFA franc stems from its colonial history, while the elite discusses pure monetary policy—unfortunately, the book by French author Charles-Enguerrand Coste, Le franc CFA. Un atout décrié mais pourtant bien réel – The CFA Franc: A squandered yet still existing resource, only discusses the latter.
The CFA franc is currently used in 15 African countries with a total population of 150 million and is considered by some as an African euro.
Colonial power’s money
The «Franc des Colonies française d’Afrique» (CFA franc) was established by France in 1945, long before imminent decolonisation was considered possible. The CFA franc had a fixed parity with the French franc; for 100 CFA francs, you received 200 (old) French francs. By 1960, all the French colonies in Africa that used the CFA franc became independent. They created their own flags, constitutions, and national anthems but retained the colonial currency. Although it changed its name to «Communauté Financière Africaine»,the abbreviation was CFA. However, the colonial reference disappeared from the name. Most French-speaking West and Central African countries still use the CFA franc today. 3Madagascar and 3Mauritania left the currency in 1973. Still, in return, the former Spanish colony Equatorial Guinea adopted the CFA franc in 1984, and the former Portuguese colony #Guinea-Bissau did the same in 1997.
In the 1980s, the prices of most of the commodities exported by the CFA countries, such as cotton, peanuts, palm oil, oil, and gold, declined. It became increasingly clear that the value of the CFA franc was overvalued. On January 12, 1994, France and the CFA countries implemented a 50 percent devaluation of the CFA franc, so the fixed parity became 100 CFA francs to one (new) French franc. The purpose of the devaluation was to stimulate increased national production and improve competitiveness in the long run. However, the immediate result was that all goods imported from 3Europe became twice as expensive. Those who had savings in an African bank saw their fortunes halved overnight, while the elite, who had largely deposited their money in French banks, received twice as many CFA francs in exchange. When the euro replaced the French franc as the currency in France on January 1, 1999, France continued to guarantee the value of the CFA franc: 656 CFA francs were to be exchanged for one euro.
The closed Facebook group ‘No to the CFA franc – total independence’ currently has over 18,000 members.
Neocolonialism
I understand the sentiments of those who protest against neocolonial ties and ongoing dependency on France. However, I agree with Senegalese economist 3Felwine Sarr3 when he writes in Le Monde (August 28) that the issues related to the future of the CFA franc are far too complex for demonstrations against the currency to be the right path to take. ‘We must avoid the misconception that getting rid of the CFA franc will make all economic problems in Africa disappear,’ he says. And he is absolutely right. Coste’s book also clearly shows that the monetary issues related to the CFA franc are highly complex.
Stability or servility?
The African political elite does not agree on whether using the CFA franc is an advantage or a disadvantage. Former Minister of Planning in 3Togo, 3Kako Nubukpu3, also argues that the CFA franc undermines the competitiveness of the countries that use it because imports become disproportionately cheap due to the fixed and high convertibility, much higher than the economies of the countries using the CFA would suggest. He is right about this. However, Ivory Coast’s President Alassane Ouattara is more concerned with the CFA franc providing economic stability and predictability for investments and international trade. He is also absolutely right about this. Benin’s President #Patrice Talon# is convinced that ordinary people would be poorer without a strong CFA franc. On the other hand, Chadian President Idriss Déby meets the people’s demands and focuses on the neocolonial ties maintained by the CFA franc.
Coste’s book only addresses some economic and monetary issues surrounding using the CFA franc. This short book only briefly mentions the neocolonial bond and the popular uprising against the CFA franc. Therefore, despite being published this summer, it quickly becomes outdated on everything other than economic statistics.
