After two days of high-level discussions, West African ministers and central bank governors recently agreed on a draft report on the establishment of a regional currency. The report will be reviewed by heads of State in July, 2019 on the establishment of a new regional currency. Among the key issues agreed upon are the exchange-rate regime and the monetary policy framework. The Ivorian Finance Minister, Adama Kone told the press, "At a ministerial level, we've established a roadmap." This means West Africa is on track to have a single currency which will replace the problematic CFA Franc in eight countries in West Africa, provided they meet the convergence criteria.
The franc de la Communaute Financiere de l”Afrique (CFA Franc) is a currency embroiled in controversy primarily due to its colonial roots. In January 2019, Italy's populist Deputy Prime Minister, Luigi Di Maio accused France of underdeveloping and colonizing Africa. He argued, "France is one of those countries that by printing money for 14 African states prevents their economic development and contributes to the fact that the refugees leave and then die in the sea or arrive on our coasts." Maio added that "If Europe wants to be brave, it must have the courage to confront the issue of decolonization in Africa."
The CFA Franc is pegged against the Euro and proponents argue that this has brought stability to West Africa by insulating it from inflationary pressure. However, opponents have argued that the currency is a colonial relic and maintaining it is anachronistic. After all, the CFA Franc was created on the 26th of December in 1945 by General de Gaulle's declaration. France intended to facilitate financial integration among its colonies and it is unclear why the colonial currency lived beyond the end of colonialism. After independence, the Francophone countries of West Africa signed monetary cooperation deals which pegged the CFA Franc against the French franc and later, the Euro. However, the states also had to deposit 50% of their external reserves to the French treasury. The French have retained economic control over their previous colonies but that era is coming to an end.
In the words of Guinea's Alpha Condé, "I am a supporter of a regional currency and in 2020 we will have a single currency in the ECOWAS countries, whether they speak English, Portuguese or French, and CFA franc will become outdated." Hopefully, the bloc does not postpone the process yet again as has happened since the adoption of the ECOWAS Monetary Cooperation Programme (EMCP) of 1987 in Conakry.
Image Credit: ECOWAS