Many countries across Africa were celebrating their Independence Day recently, including Rwanda, which makes us look back on how far we have come and the still present colonial forces that shape the nations on the African continent.
This brings us to the debate about the CFA Franc - originally the Franc des colonies françaises d’Afrique, CFA Franc is an instrument of monetary and financial domination formally set up for France’s African colonies on December 26, 1945 by Charles de Gaulle.
Today, it operates as a political tool to control African economies and also as a device for transferring, with minimal risk, economic surpluses from the African continent to France and Europe.
The currency is managed by two regional bodies, the West African Economic and Monetary Union (WAEMU), and the Central African Economic and Monetary Community (CEMAC).
African nations in the Franc Zone deposit 50% of their foreign exchange reserves with the French Treasury in exchange for the guarantee of convertibility. The question being debated lately is how these countries can get out of the CFA franc with the continued depreciation of the CFA franc against the Euro and the US dollar.
For all the criticism against the CFA Franc, such as the fact that it is a monetary system only designed to favor French companies on the continent, many still defend it on the basis that the CFA franc is the same one that allows the countries of the Franc Zone to achieve the best economic performance.
In the eventuality that these countries want to discontinue the CFA Franc as a relic of the colonial times, one potential exit would be a nationalist move by individual countries, but this is unlikely since the current crop of African French-speaking leaders do not have enough courage to challenge France individually.
In lieu of the nationalist exit, West African leaders from 15 member countries proposed a common legal tender for the sub-region. A single currency that could help address West Africa’s monetary problems, such as the lack of independence of central banks and non-convertibility of some currencies. Ultimately, a single currency and its associated regional institutions could boost investor confidence and promote trade within the sub-region. But after two decades since the first proposal of this, the likelihood of it becoming a reality is minimal.
Another argument against a single West African currency is the risk of reproducing many disadvantages of the CFA franc system and accentuating the inequalities between African countries. A single currency is always problematic in the absence of political unity and fiscal unity. Africa does not trade with itself. Overseas trade represents 80% of total trade on the continent. Trade between African countries accounts for a woeful 10%.
The least risky and more interesting scenario of the CFA Franc system exit would be the African countries collectively asking France to “leave,” by denouncing the monetary cooperation agreements and the operation accounts conventions between France and the countries in the Franc Zone.
President Emmanuel Macron has declared that any decision to change the current CFA Franc system must come from African leaders themselves. He knows, of course, that this will be hard for them, as political elites in Franc zone countries have used the system for decades to their benefit.
All of this points to the fact that only a massive mobilization of African populations in general and Pan-African social movements in particular, will make it possible to exit the CFA Franc system with the lack of political will of French-speaking African heads of state.