CFA Franc currency: A thorn in African Economy

Details

Parent Category: Africa and The World

Category: DateLines

Created on Wednesday, 09 April 2014 00:00

Hits: 77905

CFA Franc currency: A thorn in African Economy

By Wendpanga Eric Segueda

At least 12 billion Euros is the amount that the 14 French speaking African countries must put to France’s treasury each year. This amounts to 50% of their foreign reserve, just one tax among others that the countries are forced to pay since the creation of the currency in 1945.

The CFA Franc is currently being used in two large regions. In West Africa, eight countries share the currency: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. The corresponding Central Bank of the West African states (BCEAO) is based in Dakar, Senegal.

The Bank of the Central African States (BEAC) is located in Cameroon and incorporates five more countries: Central African Republic, Chad, republic of the Congo, Equatorial Guinea and Gabon.

Albeit the banknotes and coins for the two CFA regions may be different, it is the same currency. At the time of its creation, CFA meant French Colonies of Africa. During the wave of decolonization starting in 1958, the meaning was changed to French Community of Africa.

Since the decolonization in the region was completed by 1960, the denotation of CFA changed to Financial Community of Africa in West Africa and Financial Cooperation of Africa in Central African. Experts assume that the adjective “French” was dropped to hide the influence of France.

However, this influence is so obvious that the Ivorian monetary expert, Nicolas Agbohou, argues: “France is the sole owner of the CFA”. Although the central banks are located in Africa, France is still effectively present in both of their administrative councils.

Moreover, France also has a veto right. Given that important decisions must be taken unanimously, France uses its power of veto and postcolonial rule to steer the countries.

Unforgotten is France’s decision in 1994 to significantly, devaluate the CFA. The currency consequently lost 50% in value. “The reason is that France wanted to buy the country’s resources for a dirt-cheap price”, Agbohou comments.

Evidently, the CFA countries are not in control of their own cash flows. They cannot autonomously change the currency rate. Souleymane N’Diagne, economist at Bambey University, in Dakar, complains about this lack of liberty.

“If the countries had a self-controlled currency they could choose themselves to keep the exchange rate low and sell cheaply on world markets, or value the currency higher and buy more on the world market”, he says.

The CFA has always been linked to the former French Franc, now it is pegged to the Euro. According to the economist N’Diagne, this linkage is at the disadvantage for the CFA countries. The Euro is a strong currency. 1 Euro corresponds to 655,957 CFA.

“If a currency is valued too highly, prices for exports are overcharged and they are no longer competitive. That is how the concerned countries face trade deficits”, N’Diagne explains.

For almost 70 years now, the economies of the 14 French speaking countries have been suffering from the tricks of their former colonist. But who is to blame in this scandal? France’s exploitative politics towards Africa is no secret.

Well remembered is the statement of France’ former president François Mitterand in 1957: “Without Africa, France will have no history in the 21st century”. Jacques Chirac, his successor, held a similar speech: “Without Africa, France will slide down into the rank of a third world power”.

On the other hand, African leaders are behaving like cowards and betraying each other for the interests of France. Just to name a few examples: The first elected president of Togo, Sylvanus Olympio, decided in 1963 to get out of the CFA Franc and issue the country its own currency.

Some days after he started printing this currency, he was assassinated. He was killed by Etienne Gnassingbe Eyadéma, who supposedly received money from France.

In 1962, the former Malian president, Modibo Keita, was victim of a coup perpetrated by Moussa Traoré, former French Foreign Legionary.

Like Olympio, Keita wanted to withdraw from the CFA Currency. Guinean president Sékou Touré was the only Anti-CFA African President who survived.

In 1960, he disposed of the currency and created the Franc Guinéen. France tried to eliminate him, but to no avail. Subsequently, France destroyed everything in the country which represented the so-called benefits from French colonization.

The slavery exerted by the CFA currency has lasted enough. This, at least, is the signal that the French speaking West African countries seem to give.

In 2003, the West African CFA counties announced the creation of a common currency, in cooperation with the other countries of the Economic Community of West African States (ECOWAS).

In his function as outgoing chairman of ECOWAS, Ivorian leader Alssane Ouattara confirmed at the end of March that the single currency will become a reality by 2020. Let’s hope that that the region’s leaders will resolve their differences and create a sovereign currency in the interests of the countries.

Source : Wendpanga Eric Segueda