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Monetary Imperialism & Apartheid in Africa: The CFA Franc

Sherri Donovan discusses the financial and monetary policy of the African Financial Community (CFA) and its legacy of French colonialism

| Sherri Donovan |

Colonialist Northern nations utilize the IMF, the World Bank, legal frameworks, imposition of fiscal austerity, tax rules and privatization to deprive African cultures and countries of their own resources and to ensure such resources flow to the imperialistic nations and international corporate benefit.

After World War II, France was economically devastated and its currency was weak. France wanted the resources and wealth of African peoples and lands, and to extract it on exploitive terms. In the late 1950’s and early 1960’s after the independent movements and struggles of African peoples ( often met with brutal violence by Europe), Charles de Gaulle’s neo- colonization conditioned political independence of new West and Central African nations to maintaining economic ties to France to France’s advantage. As Franz Fanon stated, “Colonialism never gives away something for nothing.” Currency arrangements have in the past and continues under Macron to be a critical tool in transferring wealth and resources from Africa to France.

CFA stands for Communauté Financière Africaine (African Financial Community). The CFA is a colonial currency created December 26, 1945 by General De Gaulle and his finance minister. This was the same day that France ratified the Breton Woods agreement and the new parity of the french franc was presented to the newly born IMF. Fixed exchange rates trace back to the Bretton Woods period when 63% of Southern countries had their currency pegged to that of an imperialist country.

The CFA was originally translated as “Franc of the French Colonies in Africa” The CFA is still used in West and Central Africa by 14 countries and split into two monetary zones. The eight countries of West Africa using the CFA, with an ISO currency code of XOF are Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo. They represent the West African Economic and Monetary Union, or WAEMU, founded in 1994 to build on the foundation of the West African Monetary Union, founded in 1973. The six countries of Central Africa using the CFA, ISO currency code of XAF are Cameroon, Chad, Central African Republic, Congo Republic, Equatorial Guinea and Gabon. They comprise the Central African Economic and Monetary Union, or CAEMC.

Although separate, the two CFA franc currencies have always been at parity and are effectively interchangeable. All were former colonies of France except Guinea-Bissau and Equatorial Guinea. All maintain French as an official language except Guinea Bisseau. Comoros also has its own central bank tied to France and is considered part of the CFA system.

In 1960, France actually had a larger population — around 40 million people than the 30 million inhabitants of what are now the 15 CFA nations.( including Comoros). In 2021, 67 million people live in France and 183 million in the CFA zone.According to UN projections, by the year 2100, France will have 74 million, and the CFA nations more than 800 million.

Given that France still controls their financial destiny, through the CFA, the situation is increasingly a monetary apartheid. The CFA is issued by three separate central banks, Banque Central des Etats de l’Afrique de l’Ouest ( BCEAO) and the Banque des Etats de l’Afrique Central( BEAC). Comoros has a separate bank, (BCC). It is mandatory that French officials sit on the boards of all of the CFA franc central banks and the French government has the authority to monitor all financial transactions of these 15 nations. The French people were permitted to vote on whether or not to adopt the Euro through a referendum. The African peoples of the CFA nations were denied any such right, and were excluded from the negotiations that would peg their money to a new currency. The French government can veto the decisions of the BCEAO and the BEAC. The monetary policy favoring European priorities is set by the European Central Bank ( ECB), previously set by the Banque de France. France is acting similar to an IMF for these West & Central African nations. The World Bank and the International Monetary Fund have historically worked in concert with France to enforce the CFA system, and rarely, if ever, criticize its exploitative nature.

French colonialism goes beyond money. It also affects education and culture. For example, Farida, a Togolese activist said, the World Bank gives $130 million per year to support Francophone countries pay for their books for public schools. Farida says 90% of these books are printed in France. The money goes directly from the World Bank to Paris, not to Togo or to any other African nation. The books are brainwashing tools, Farida said. She points out, that “They focus on the glory of French culture, and undermine the achievements of other nations, whether they be American, Asian or African.” French language is promoted heavily by France to ensure the colonial system of keeping the monetary and economic system bound to France. There are more French speaking people in Africa than France. Based on my personal observations of over twelve years of spending time in Senegal, most of the French who visit or reside in Senegal refuse to learn a word of Wolof. They expect all West & Central African people to speak French. The French are shocked or laugh in a condescending manner when they hear me converse without French, in Wolof (albeit simply).

Of course France has a long-standing pattern of subverting democracy and elections to maintain monetary and economic exploitation. An important part of the CFA system is French support for dictatorship. With the exception of Senegal, not a single CFA bloc country has ever had meaningful democratization. As Farida points out, “Every single successful tyrant in Francophone Africa, has had the full backing of the French government” as long as an African colonial elite will favor France. The French Treasury guarantees the convertibility of the CFA into the French Franc, and now the Euro. Independent economic and financial planning is impossible for these West and Central African nations.

The CFA system confers five major benefits to the French government: bonus reserves to use at its discretion; big markets for expensive exports and cheap imports; the ability to purchase strategic minerals in its domestic currency without running down its reserves; favorable loans when CFA nations are in credit; and favorable interest rates when they are in debt.

As Senegalese economist, Ndongo Samba Sally points out,

“By pegging the CFA franc to the Euro, now the African countries and their central banks are more or less submitted to the same restrictive rules in terms of inflation, public debt and public deficit.

The CFA guaranteed France’s chokehold on African economies and ensured wealth drainage to France. When the CFA was created, it served France’s interest by being born and maintained overvalued. It stopped the African nations selling competitively to Asian and Latin American nations and to trade exclusively with France. The overvaluation of the CFA kept France from having to use US dollars as the Breton Woods required which would have been very costly against the weak French franc. Controlling the monetary policies of 14 African nations (15 with Comoros) justified giving France a seat and vote at the UN Security Council.

In addition, the value of the CFA franc has been widely criticized as being too high, which many economists believe favours the urban elite of the African countries, who can buy imported manufactured goods cheaply at the expense of farmers who cannot easily export. The CFA permitted France to obtain raw materials and products from its former colonies by issuing a credit to the CFA nations.”

Ndongo states, “If you take also the level of competitiveness of African countries of the franc zone they fare the worst in the world. In West Africa, except Côte d’Ivoire all of the remaining countries are chronically in a state of trade deficit. Countries like Benin, Niger, Mali, Burkina Faso, they never recorded one year of trade surplus. They are structurally in a situation where they have to be indebted in foreign currencies. They will never be able to develop because the mechanism of the CFA franc will never allow them to be developed.”

Ndongo explains, “Because you have no monetary sovereignty. So this is the case of the CFA franc zone and that’s why there is no economic dynamism at all. Economic growth in the CFA franc zone is never triggered by internal dynamics, but just by external dynamics. For example, good terms of trade and cheaper interest rates … on international financial markets. So this is the sad story of the CFA franc. Somehow owing to these mechanisms when there are economic crises it’s much more difficult for CFA franc countries than others because the exchange rate cannot be used as a policy variable. As they follow the neoliberal rules, so public deficits are not really encouraged and the central banks generally in those circumstances follow an orthodox monetary policy, and that means that whenever there are economic crises, the main way of adjusting economically is what is called internal devaluation. That means lowering internal prices and limiting public deficits and letting the private sector enterprises go bankrupt. That is the main mechanism of adjustment in the CFA franc.”

As Landry Signe concludes, “The CFA franc zone as a whole has thus resulted in:

  1. Limited intra-regional trade, especially in Central Africa.
  2. High dependence on producing and exporting a limited number of primary commodities.
  3. A narrow industrial base.
  4. A high vulnerability to external shocks.


For example, In 1994, France devalued the CFA franc, raising the parity rate from 50 CFA francs per French franc to 100 CFA francs per French franc. CFA member countries’ governments imposed wage freezes and layoffs in the wake of the CFA devaluation, leading to widespread unrest over inaccessible goods for consumers and unmanageable price controls for suppliers.” African families lost of half their monetary savings.

Many African economists, including Senegalese economist, Demba Moussa Dembele and Togolese economist Kako Nubukpo explain that dependency on European monetary policies is a restriction to growth due to a hyper-fixation on inflation.

Protests against the secrecy, repression and use of the CFA and for its abolition has historically existed and is growing since 2015/2016. In 2018, seven artists from 10 countries released the rap song “7 minutes against the CFA franc” to drum up popular support for dumping the currency.

As Landry reports, “Large numbers of unemployed youth throughout sub-Saharan Africa—which may reach over 350 million over the next two decades—are often the loudest opponents of the CFA zone. Other pro-democracy movements, like Y’en a Marre in Senegal and Le Balai Citoyen in Burkina Faso, consider the dismantling of the CFA zone as essential to their campaigns to reform their countries’ respective governments. Other protests have included Kemi Seba, the Benin-born French activist who was charged with burning CFA notes in Senegal before being deported.”

In 2020, 66% of the Togolese people polled believed the CFA existed to benefit French interests and should be abolished. The Senegalese slogan “France Dégage” became a West African rallying cry for the French to be transparent and to withdraw, “walk” away from the West and Central African monetary system they enforced. Resentment has also been fueled by the presence of French military troops in the Sahel desert.

Chad’s President Idriss Debby said back in 2015 that the CFA was pulling African economies down and that the “time has come to cut the cordon that prevent Africa to develop.” He called for a restructuring of the currency in order to “enable African countries which are still using it to develop.”

Nigerian President, Muhammadu Buhari has been demanding, since 2017, a divorce plan from the French treasury of the eight West African countries that use the CFA franc. The recent protests are Pan-African and popular.

Abolition of the CFA and new currencies are necessary for financial sovereignty.

It is important to note that for five decades Senegalese & other Africans resisted the use of French currency and previously had mixed currencies including cowries from the Indian Ocean. The French utilized the military to force the use of the French currency only. They also imposed taxes to be paid in French currency which also forced the use of French currency.

Two years after independence, Guinea refused the French currency and produced their own currency. France launched a military operation, and the French secret service sabotaged the economy by flooding the market with counterfeit notes. Guinea still has not economically recovered since then.

Togo in the 60’s had a leader trained at the London School of Economics, Sylvanus Olympio, who was about to launch the country’s own currency and diversify trade partners when he was assassinated.

In 2011, France used the Central West African Bank to place a financial embargo against Ivory Coast and bombed the Presidential palace to install its candidate.There were also attempts to challenge France in the 1970’s and the 1990’s. France has engaged in over forty interventions in the CFA countries since “political independence”.

Solutions for change in currency

On December 22nd, 2019, due to political and grassroots pressure, it was announced jointly by France and the Ivory Coast that the CFA in West Africa , not Central Africa would be replaced by a currency to be called Eco.

The Eco has not been implemented due to legal, technical and political problems. It is tracked for implementation in 2027. The Eco would still be pegged to the Euro, and require European fiscal restraints. It would not require 50% of the reserves be kept with the French Treasury but France would keep its role as guarantor of convertibility of the Eco like the CFA. An indirect form of control by the Banque of France and the French treasury would exist with France requiring information about the management of reserves and if French government debt securities were purchased. MMT economists, like Djongo correctly point put that this “reform” or mutation does not represent significant social change to serve African people. It has been described as “window dressing”.

In 2019, the French Minister of Affairs issued a report that 49% of french companies operating in the CFA zone consider it a favorable place for profits now and in the future; and the same report predicted that even 60 years from now the CFA should not be abandoned but just reformed even under a different name.It should be noted that the announcement of the Eco was made after Italy criticized France for its monetary policies in Africa. Luigi Di Maio, Italy’s former deputy prime minister and minister of foreign affairs at the time, revived the controversy about the role of the CFA franc on Africa’s development with a statement, “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.” In response, France expelled the Italian ambassador.

There are two macroeconomic proposals for change. The national exit and the pan-African exit. African nations as Ndongo clarifies, “could exit the CFA franc on a national basis. That means Senegal would say, ‘I want my own national currency’ and so I’m exiting the CFA franc. This is the path followed by Guinea, Mauritania, and Madagascar. And legally speaking, it [would be] very easy. The Senegalese government would just have to notify the West African monetary union of this decision, and in six months they could have their own national currency.”

But it’s difficult because if you go alone, you don’t know what consequences you could face from France. French sanctions, embargos, political isolation, military operations and assassinations have caused great disruptions and poverty to places like Guinea and Mali. Mali rejoined after exiting.

The Pan – African exit means “instead of African countries trying to initially have their own currency, they say, ‘we no longer need France’ France could [then leave] the CFA franc system.”

Ndongo continues, “With regard to the issue of how to get out of the monetary status quo, there are in my opinion, four different points of view. First, there is the perspective I call symbolic reformism, which consists [of] touching only the visible systems of monetary coloniality without touching the fundamentals of the CFA franc system. This includes proposals such as changing the name of the CFA franc, having banknotes and coins manufactured outside of France, and even further reducing the deposit rate of foreign exchange reserves at the French treasury. Emmanuel Macron, for example, made this type of proposal, and he even suggested that he was open to expanding the CFA franc zone to a country like Ghana.”

In other words, France is seeking to expand its empire by adding African countries not currently utilizing the CFA.

The approach most favored by Ndongo is: “sovereign abolitionism that is an exit from the CFA franc that breaks with the neoliberal model of economic integration and that strengthens the sovereignty of individual countries and also the sovereignty of [countries] collectively. If we put aside the political criticism of the CFA franc, the real economic criticism is that the CFA zone must not exist because it has no economic justification. It is not a so called ‘optimal monetary zone.’ Each country must have its own national currency because economic fundamentals, levels of development and productive dynamisms are not the same. But saying that does not mean that we cannot have systems of solidarity between African countries.”

Ndongo perceptively speaks of “solidarity national currencies. Concretely, that means that each country has its own national currency with its national central bank. The exchange rate parity is determined according to the fundamentals of each country, and countries have a common payment system. Their currencies are linked by a fixed but adjustable parity to a common unit of account, and also there is solidarity in the management of foreign currency reserves. Finally, there are common policies to ensure energy and food self-sufficiency, because in the ECOWAS zone energy and food products represent between 25-60% of the value of imports, depending on the country.”

Ndongo explains, “The advantage of this option… is that it makes it possible to reconcile macroeconomic flexibility at the national level, that means the possibility to use the exchange rate as an instrument of adjustment, and at the same time to have solidarity [between] African countries. This option also helps break the Anglophone, Francophone, and Lusophone divide, [which] is a legacy of colonialism. “

The other two viewpoints criticized by Ndongo include, a “proposal of [basing] the exchange rate of the CFA zone on a basket of currencies, but the problem with this perspective is that it is simply unrealistic because it ignores the functioning of the CFA zone. Exchange rate flexibility is not an option in the CFA system because the convertibility guarantee is offered at a fixed exchange rate and in the currency of the guaranteeing authority. Many people who claim to be experts and moderate [still don’t] understand that the demand for flexibility is incompatible with the maintenance of French guardianship; it is one or the other.”

Neoliberalism abolitionism is an exit from the CFA franc that follows the neoliberal monetary integration model. It is a ‘eurozone model.’ There are countries in West Africa who want to be part of the single currency project of the ECOWAS (Economic Community of West African States), a single currency project for West Africa. Sharing the same currency is not justified among ECOWAS countries, owing to a number of factors, like for example Nigeria’s disproportionate weight. Nigeria accounts for at least 70% of West African GDP. [As well], there are differences in economic specialization. Nigeria is an oil producer and exporter, whereas, you will find in West Africa at least nine countries which are net oil importers. There is also the fact that economic cycles are not synchronous in West Africa and the level of inter-ECOWAS trade is very low. All of these elements point to the fact that a single currency is premature and not justified economically in West Africa. We have to also say that there is no planned federal fiscal mechanism, but rather, limitations on public debt and deficits… That means, in case of economic crisis, countries in this currency union would only have the option of so called internal devaluation [via] the lowering of internal prices, which often comes to austerity policies and the growth of unemployment.”

Digital currencies and the role of China are also two factors that may impact the future of the CFA zones. As reported by MERIC:

“China’s presence in countries like Senegal and Côte d’Ivoire is growing rapidly. …Where in 2000 France was the number one exporter to all of its African former colonies, by 2017 it retained this status in only three…Chinese lending to these countries increased 332 percent in 2010 – 2017 compared to 2000 – 2009, and contracts awarded to Chinese firms trebled in value in the same period – with Chinese contractors taking on high-profile projects like the Soubré dam in Côte d’Ivoire…This economic emergence is backed by a concerted Beijing push to deepen China’s footprint in Francophone West Africa, centring on Senegal as ‘the gateway to West Africa’ (西非门户). Xi visited the country in 2018, baptising it a Comprehensive Strategic Partner and the first West African state to join the BRI (all bar Benin have followed suit). Beijing has cultivated Senegal with gifts – including an arena for the national sport and a Museum of Black Civilisations – and selected it as the first Francophone and West African country to host the FOCAC Summit (to be held in Dakar in 2021). Chinese analysts expect this to pave the way for a deeper penetration of Francophone West Africa. Indeed, an important development is the number of Chinese migrants bypassing French altogether to conduct their business in Bambara, Wolof, and other African languages. With the Beijing Foreign Studies University expanding its range of African languages, this trend is not limited to the informal level – and may emerge as a valuable soft power tool…China’s emergence in West Africa directly challenges French economic interests. Chinese companies have moved into sectors long dominated by French players: civil engineering, extractives, telecoms, ports. French national champions – Vinci, Eiffage, Orange, Bouygues, Total, Areva, Alstom – must now go toe-to-toe with Beijing’s giants…”

As researched by doctorate Che, “In 2013, China launched the ‘One Belt One Road’ (also known as the ‘Belt and Road’ or ‘New Silk Road’) Initiative, the most ambitious infrastructure investment project in history, which is designed to facilitate ‘going global’ by connecting Asia, Europe, and Africa. Since the adoption of the ‘go out’ policy, even France’s historical sphere of influence in Africa, particularly the Franc Zone, has experienced a surge in Chinese trade, grants, loans, and investments. As of 2017, according to UN international trade data for goods (see table below), China had overtaken France as the number one source of imports for a number of Franc Zone countries, namely Burkina Faso, Cameroon, Côte d’Ivoire, and Togo, and occupied second spot behind France in Mali and Senegal.”

Fanny Pigeaud and Ndongo Samba Sylla conclude that, “in all of the countries where the CFA and Comoros francs circulate, the underdevelopment of human potential and productivities is the norm.” As understood by former President of Ghana, Kwame Nkrumah, assassinated former President of Burkina Faso, Thomas Sankara, and assasinated first Prime minister of the Republic of the Congo, Patrice Lumumba, independent financing and development can not take place without an independent currency.

Sources:

Africa’s Last Colonial Currency, the CFA Franc Story | Ndongo Samba Sylla & Fanny Pigeaud

Monetary imperialism in Francophone Africa – an interview with Ndongo Samba Sylla

Background Information Study Guide to the Fabric of Reform, International Monetary Fund (IMF)

Will the ‘ECO’ replace the CFA franc? | Al Jazeera

West Africa renames CFA franc but keeps it pegged to euro | Reuters

West African countries change currency, shed French ties | Cindi Cook

Africa Report: The Perilous Journey to a single West African Currency

West African CFA Franc Reform: What’s Changing in 2020 | Africa Report

How the France-backed African CFA franc works as an enabler and barrier to development | Landry Signe

Fighting Monetary Colonialism With Open Source Code | Alex Gladstein

The African Currency at the Center of a European Dispute | New York Times

China in Francophone West Africa: A challenge to Paris by Mercator Institute for China Studies (MERICS)

China’s Rise in the African Franc Zone and France’s Containment Policy | Afa’anwi Ma’abo Che

One reply on “Monetary Imperialism & Apartheid in Africa: The CFA Franc”

With regard to the ongoing discussion of MMT and the “US dollar regime,” Sherri’s piece has much to offer. The CFA/French imperialism example is similar to the regime imposed on the whole world by US dollar domination of the IMF. At the same time, Sherri’s prescriptions for resolving the problems in west and Central Africa — which she derives from MMTer Ndongo Samba Sylla — reveal the path toward greater financial independence, even within the existing framework. For these countries, the first step is dropping the CFA franc and adopting their own sovereign currencies, nation by nation. With currency sovereignty, options for national development take a leap forward, even within the constraints of the on-going, worldwide dollar regime. Another MMT analyst, Fadhel Kaboub (of Tunisia), has written extensively on this intermediate approach. What remains is design and implementation of a new international financial regime (a rewrite of Bretton Woods) that would depose the dollar’s (the US’) present domination. Some have proposed a “basket of currencies” replacement of the dollar as world reserve currency, but that is just a sketch. China, apparently (per Michael lHudson), is looking into a financial alliance with Russia (and others) that might someday create a counterweight to the dollar. I’m thinking that, when American progressives gain control of our government and can decide the appointment of a Fed chair who votes progressively at the IMF, serious, constructive plans for a new global financial regime will be elaborated, discussed and adopted.

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