CFA Franc in UEMOA and CEMAC Region: Is France a New Colonial Tool in Africa?
Independence or Re-Dependency: What Definition of "Independence" for France's Former Colonies
Sub-Saharan African states gained most of their independence in the 1960s, except those under Portuguese colonial rule. The 60s marked the end of French and British colonialism on the continent. However, on closer inspection, this independence does not mean the same for the former French colonies. The independence of the former French colonies does not include financial de Jure and therefore economic and commercial as De Facto. Both the reason and proof of this is the CFA franc. With the exception of Guinea Conakry, all former French colonies of Sub-Saharan Africa still use the CFA franc in West Africa, grouped under the West African Economic and Monetary Union (UEMOA) and the Central African Economic and Monetary Community (CEMAC). Before the Second World War, it consisted primarily of the system established to transfer natural resources to the metropolis - Paris - and subsequently to make French companies advantageous in the continent.
The CFA Franc: A Practical Currency or a Tool of New Colonialism?
The CFA franc was originally used by Francophone countries in Sub-Saharan Africa, meaning "African Colonies of France" (in 1945) and later (from 1960) "African Financial Community" and "African Financial Cooperation". is the French abbreviation of a currency.
The CFA franc is the common currency for the "franc zone" states created on the eve of the Second World War. It consists of three regions, each with a central bank and its own currency: the West African Monetary Union (UEMOA) region consists of 8 Member States: Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal, and Togo. These countries use the West African CFA franc (XOF). The Central African Monetary Union (UMAC) region consists of 6 Member States: Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, and Gabon. These countries use the Central African CFA franc (XAF).
The CFA franc is pegged to the Euro at a fixed exchange rate. This means that it has a stable value and its value does not change relative to the Euro. The value of the CFA franc is administered by the Central Bank of West African States (BCEAO) for Western countries and by the Central Bank of Central African States (BEAC) for Central African countries. The flow of the CFA franc is controlled by these two central banks and is guaranteed by the French Treasury. This means that France has the authority to lower or raise the value of the CFA franc if necessary. The central banks of the CFA franc zone are also responsible for maintaining monetary stability and managing their countries' foreign exchange reserves. However, there is a French representative among the board members of these central banks. The CFA franc is mainly used for business and financial transactions in the CFA franc zone. It is also used as a reserve currency by several countries outside the CFA franc zone. The stable value of the currency makes it a reliable currency for international transactions.
The fact that the CFA franc is generally seen as a tool of neocolonialism is due to its association with the euro and the fact that France has a say in the monetary policy of the countries using the CFA franc. This means that France can influence the exchange rates and interest rates of these countries, which in turn can have an impact on their economy. In addition, the CFA franc largely lacks transparency and has a significant impact on the economic stability of these countries.
The CFA franc is also the engine of the FranceAfrica machine. FranceAfrica is a concept that expresses the complex relations that existed between France and its former colonies in Africa, which enriched France on the one hand and the selfish and visionless leaders of the Francophone states on the other, to the detriment of the African peoples. This concept was coined in the 1950s and 1960s to describe the influence of France on the political and economic affairs of African countries. It is a short description of France's stifling of African countries' resources and economies, with the CFA franc at its center.
CFA Franc: What Advantages and What Disadvantages?
Even though there are several advantages associated with the CFA franc, the first disadvantage alone will tip the balance: financial dependence. Because under no circumstances can we talk about the independence of a state without financial independence. The main advantages of the CFA franc can be summarized as follows:
1. Stability of value: The CFA franc, pegged to the euro at a fixed exchange rate, has a stable and predictable value, which is beneficial for companies and investors.
2. Reliability: Guaranteed by the French Treasury, the CFA franc is considered a reliable currency which makes it attractive for international transactions.
3. Saving and investing: The CFA franc is a safe and stable way to save and invest, as it is not subject to currency volatility.
However, there are a few disadvantages associated with the CFA franc. The biggest disadvantage is monetary dependency. Indeed, the CFA franc system lends itself to prosecuting neocolonialism, particularly because of its obligation to deposit 50% of reserves in the French Treasury. However, it can be explained by other disadvantages such as:
1. Low-interest rates: CFA franc interest rates are generally low, which can be a disadvantage for investors who want a high return on their investment;
2. Debt restructuring: Some CFA franc zone countries experienced debt problems and had to resort to debt restructuring programs, which had an impact on their economy and the value of the CFA franc;
3. Making exports more difficult: Because the CFA franc is pegged to the euro, it makes it a strong currency, thus making the economies of the region suffer from price competitiveness in exports. In other words, a strong currency acts as a tax on exports and a subsidy on imports, making it difficult to balance the trade balance;
4. Weakness of intra-community trade: Trade between regional economies is structurally low, ranging from 10% to 15% of regional GDP for IEMOA and 7% to 10% for CEMAC. This weakness of intra-Community trade is not surprising: as long as the regional economies have primary integration into international trade, they are more interchangeable than complimentary. A typical example is the export of processed products such as cotton and oil.
A Century of Independence: What to Do?
Today, the CFA franc, as it is pegged to the euro, is determined more by events within the eurozone than by the economic situation within the franc zone. The war in Ukraine, which dealt a historic blow to the euro, not only damaged Europe. The CFA region indirectly retaliated to this situation. Therefore, it is time for African leaders to take responsibility and address this serious issue of monetary management. This is inevitable in the ultra-modernized world, politically and financially economically. This is also a fundamental democratic issue: the managers of the UEMOA and CEMAC central banks must explain the fundamentals of monetary policy, as do the managers of all the other central banks in the world. The CFA franc must be cleared of all its woes and made clear to the entire public. Not for the benefit of the countries of the region, but for France, all the mechanisms put into action should be dismantled. If necessary, it should be completely replaced. However, this discussion must be set out not only in a popular and populist context but also in the context of financial and political economy. For although it symbolizes current neocolonialism and decades of plunder, there are useful arrangements within the CFA system. African states that suffer from this system of fairness are strongly recommended to take advantage of this advantage. In the words of a famous proverb: "The baby should not be thrown away with the bath water."