West Africa’s monetary union has agreed with France to rename its currency, the CFA franc to the Eco. As part of the agreement, the West African French-speaking countries will cut some of the financial links with Paris that have underpinned the region’s common currency since its creation.
However, the new agreement sees the Eco remain pegged to the Euro. Still, the African countries in the bloc won’t have to keep 50% of their reserves in the French Treasury, and there will no longer be a French representative on the currency union’s board.
Critics of the CFA have long seen it as a relic from colonial times while proponents of the currency say it has provided financial stability in a sometimes turbulent region.
However, critics still believe that this new deal is not what the region needs. They believe the French government outsmarted the West African leaders with these clauses, but in substance still has control of the Eco, as it had over the CFA Franc.
They argue that the West African nations should have opted out to create and have full control over its new currency which doesn’t have to be pegged on the Euro.
“This is a historic day for West Africa,” Ivory Coast’s President Alassane Ouattara said during a news conference with French President Emmanuel Macron in the country’s central city Abidjan.
In 2017, Macron highlighted the stabilizing benefits of the CFA but said it was up to African governments to determine the future of the currency.
“Yes, it’s the end of certain relics of the past. Yes, it’s progress … I do not want influence through guardianship; I do not want influence through intrusion. That’s not the century that’s being built today,” said Macron.
The CFA is used in 14 African countries with a combined population of about 150 million and $235 billion of gross domestic product.
However, the changes will only affect the West African form of the currency used by Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo – all former French colonies except Guinea Bissau.
The six countries using the Central African CFA are Cameroon, Chad, Central African Republic, Congo Republic, Equatorial Guinea, and Gabon, – all former French colonies except Equatorial Guinea.
The CFA’s value relative to the French franc remained unchanged from 1948 through to 1994 when it was devalued by 50% to boost exports from the region.
After the devaluation, 1 French franc was worth 100 CFA, and when the French currency joined the eurozone, the fixed-rate became 1 euro to 656 CFA francs.
The agreement follows talks in Nigeria’s capital Abuja on Saturday between West African leaders. Countries in the CFA bloc and other West African nations such as Nigeria and Ghana have for decades debated creating their currency to promote regional trade and investment.
The CFA franc was born in 1945 and at the time stood for “Colonies Francaises d’Afrique” (French Colonies in Africa).
It now stands for “Communaute Financiere Africaine” (African Financial Community) in West Africa and Central Africa it means “Cooperation Financiere en Afrique Centrale” (Financial Cooperation in Central Africa).
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Header Image Credit: RFI