In an interview with the London-based New African Magazine last year, Mamadou Koulibaly, former president of the Ivorian National Assembly, and also Finance member and economist, labelled the French-led CFA franc arrangement as ‘financially repressive, unfair and morally indefensible’. The CFA franc, established in 1945, remains the currency of eight west African countries, and six central African countries. This arrangement was inherited from the post-colonial area over sixty years ago when most of France’s former African colonies chose to remain in a monetary union with France. The union has not evolved with the participating nations and the current disadvantages of such an arrangement are numerous.
Theoretically, this benefits the African countries as well: they pay in exchange for centralisation of their foreign exchange reserves, and particularly, fixed parities as the CFA is attached to the euro at a fixed rate of 655.957 per euro, guaranteed by the French treasury. This benefit, however, depends upon the stability of the euro, something which should not be taken for granted. In return, the participating countries are mandated to deposit 85 percent of their foreign exchange reserves into an ‘operations account’ in the French Treasury, estimated to hold over 400 billion.
The African countries cannot touch this money, however France is free to invest it as they please with no obligation to disclose the profits of these investments to the African governments. France is able to lend their own money back to the African countries, with interest. What’s more, France determines the exchange rate for the CFA Franc. Thanks to unilateral devaluations, the flow of cheap African exports to France have been secured, simultaneously impoverishing many African workers.
The French controlled CFA franc is a relic of colonialism in which one country reaps the benefits of another’s suffering. This is a significant factor in maintaining the overwhelming poverty of the francophone countries and has thus far remained under the radar with many even commending the French management of the CFA franc. However, many prominent African leaders such as Koulibaly find the interference to be a hindrance to progression.
The former president of Senegal, Abdoulaye Wade, a strong proponent of economic sovereignty, emphasised the need for the money deposited in the account to be returned to the countries to benefit their economies. In New African Magazine, he said, ‘Central bank reserves of member states must be returned to member states in one way or another. I insist on this, and particularly because we have been raising this issue for a long time.’ The CFA franc can be equated at worst to financial slavery and at best a patronising system which stifles any attempts at modernity by trading economic independence for a masque of economic stability.