By Thomas Fort
The end of the nineteenth and early twentieth centuries saw France acquire vast swathes of Central and West Africa, with the final vestige of this empire breaking away only in 1977 after Djibouti gained independence. This gradual erosion of the French Empire on the map disguises the reality of the French power which has lingered longer, now playing out on the stage of Africa’s monetary governance.
When it comes to exerting control over faraway lands, the French Republic still holds many more cards than some may believe. Currency lies at the heart of this authority, specifically the West African CFA franc and the Central African CFA franc, which together create the CFA franc zone and are used today in fourteen African states. Created in 1945 as a response to the weakness of the French franc following the Second World War, this currency’s purpose was originally to ensure that French colonies in Africa would be protected from the effects of devaluation. Whilst there is change on the horizon towards a reinvention of the currency, the consequences of a monetary policy with imperialist roots continue to hang over these African nations.
The value of the CFA franc is pegged to that of the Euro with a fixed exchange rate, the monetary policy of which is formulated in the European Central Bank in Frankfurt – and herein lies the first point of contention. Such a relationship fundamentally makes it incredibly difficult for any of these states to form something which could be viewed as an independently constructed monetary policy, subsequently diluting individual and unique economic needs and helping to erase national borders, creating a single entity of economically governed space, rather reminiscent of colonial Africa. The levers of authority can be found in Frankfurt and Paris rather than in Ouagadougou or Lomé.
Not only that, but states using this currency have been obligated to deposit 50% of their foreign exchange reserves in the French Treasury. The currency’s role may be seen as a mechanism which “facilitates the flow of exports and imports between France and the member-countries.” However, this is precisely the point. An ease of business with France, and the 2.2% of global GDP which the French economy is able to offer as of 2021, serves French interests before African ones and prevents such states from independently diversifying their trading relations with the rest of the world in the way they may want to. This means any ‘special relationship’ which may be forged with Paris is difficult to replicate elsewhere. It is no surprise, therefore, that France in the twenty-first century remains the main trading partner of the CFA franc zone states.
The pegging of the CFA franc to the Euro, a currency with both global prestige and strength is a seeming anchor of macroeconomic stability and a guardian against spiralling inflation. Fundamentally, however, it also serves as a hindrance by stifling any competitiveness which may emerge from any activity or initiative in the private sector in the region through keeping the prices of exports higher in global markets. Through this arrangement, France and the engines of its economy may promote stability but suffocate progress, conducting monetary policy in a manner which cannot provide the same level of reciprocal economic benefit. As of 2018, the GDP of these states accounted for as little as 4% of that of France.
In 2019 however, a change was announced, with a rebranding of the West African CFA Franc announced by French President Emmanuel Macron with his Ivorian counterpart alongside him. As part of the change, the French representative on the board of the West African CFA franc zone Central Bank (BCEAO) will be removed, the BCEAO will no longer have to place at least 50% of foreign exchange reserves in the French Treasury and the currency will see a name change to “Eco.” The changes are expected to come into force in 2027. These moves appear to be the starting gun on the road to monetary sovereignty, but they are not. Instead, they will arguably serve symbolic roles and do little to alter the economic landscape which tips the balance in Paris’ favour.
A change of name and the removal of a French presence on paper will not bring about the significant change needed to release West African economies from constraint, but instead will supply a simple approach of hastily papering over any obvious signs of French neo-colonialism. The fixing of exchange rates serves to already alienate and corner the financial systems of the zone, which will not be set free just because a French representative has been recalled. Power will still emanate from Paris, albeit with a little more stealth. This is made all the more clear when you learn that, according to reports, the French will appoint an ‘independent’ representative themselves, with Paris unlikely to approve any candidate who presents a threat to their economic position.
A ripping up of the requirement to place a minimum of 50% of foreign exchange reserves in the French treasury is further performance rather than concession. The total stock reserves held here was recorded as less than 1% of French government expenditure in 2018, showing French sacrifice to be negligible. Furthermore, as of 2019 the cost of borrowing on French government debt stood at 0.12%, substantially lower than the 0.75% interest the state pays back to the West African Economic and Monetary Union (UEMOA). In accordance with these changes, the states of the zone could find alternative places to store these assets. However, as France rewrites its role, it will simultaneously back these states into a corner almost as tight as the one they were in before.
Whilst these funds could theoretically be liberated, where exactly would they go? To bring macroeconomic stability, they would have to go somewhere fundamentally low risk, but low risk means low return, and the 0.75% of interest paid by the French Treasury provides an option which may be hard to replicate, and so unwise to abandon. By doing this, France provides little economic incentive to break away. Its previous action in response to such cases has already crippled any ambitions of credibility and stability in other states before, such as when Guinea broke away from the union in 1960 and France responded by flooding the Guinean economy with false banknotes, which does not paint a rosy picture of life outside France’s economic clutch. The response may not be so direct now, but France will seemingly maintain levers of some kind to pull more strings than any decree may concede.
And that’s just the West African CFA Franc, with all these proposed changes doing nothing to serve the six states which make up the second group of the currency umbrella, those of the Central African CFA Franc zone. It seems as if the states in both zones are not being led down the path of economic sovereignty, but simply one which will maintain the status quo. France seems all too content to allow its former realms to drift down a newly dug economic pathway, albeit one dug by the French themselves.
Following the currency’s creation in 1945, CFA stood exclusively for ‘franc of the French Colonies of Africa’ when translated into English, becoming ‘franc of the African Financial Community’ and ‘franc of Financial Cooperation in Central Africa’ in the Western and Central zones respectively, as decolonisation was underway. These name changes are symbolic only on the surface, with the near future seeming to offer little to counter France’s economic hegemony and allow independent and sovereign monetary policies to truly flourish. Empires today may no longer exclusively appear as boots on the ground and jets in the sky, but rather as any form of captivity, and the French government continues to make a mockery of the notion of a free and independent African continent.
The views expressed in this article are the author’s own, and may not reflect the opinions of The St Andrews Economist.
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