KIGALI, Rwanda
Overhauling the CFA franc, a France-backed currency used by former colonies in West Africa, could give Francophone Africa more control over their economies, experts say, even as skepticism remains.
Last December, West Africa's monetary union agreed with France to rename the CFA franc the eco and cut some financial links with Paris that have underpinned the region's common currency since its creation in 1945.
Speaking at a news conference with French President Emmanuel Macron in Abidjan, Ivory Coast President Alassane Ouattara hailed the move as historic for West Africa.
The announcement followed talks in Nigeria's capital Abuja between West African leaders.
Under the reform, African countries in the bloc will not have to keep 50% of their reserves in the French Treasury, but the eco will remain pegged to the euro.
Also, there will no longer be a French representative on the currency union's board.
More economic control
Experts believe that the change will deprive France of vital savings and reserves that are being kept in Paris and its ability to influence currency values for its trade benefits.
“It will give Francophone Africa the freedom to set the value of their currency and be able to adjust it with new global trade developments and partners like China and Asia who were not significant in 1945,” Fred Muhumuza, a Uganda-based analyst, told Anadolu Agency.
“Moreso, the French currency was long ago replaced by the euro, which is driven by different dynamics that cannot be determined by Paris anymore.”
Muhumuza, an economics lecturer at Makerere University -- one of the oldest and most prestigious universities in Africa -- said with the reform, France may also lose the ability to manage the currency to promote its trade with the bloc in a situation where China’s influence in the region is growing.
“As indicated, it allows the Francophone countries to get more control of their economies and currency but denies France vital reserves that were available almost for free,” he said.
The CFA is used in 14 African countries whose combined population is about 150 million with $235 billion of gross domestic product.
But the changes will only affect the West African form of the currency used by Ivory Coast, Mali, Niger, Benin, Burkina Faso, Guinea Bissau, Senegal, and Togo in the West African Monetary Union (WAMU).
Apart from Guinea Bissau, a former Portuguese colony, the rest are former French colonies.
Regaining sovereign decisions
Macron said it was the end of certain relics of the past, as he did not want influence through “guardianship and influence through intrusion.”
"The eco will see the light of day in 2020, and I welcome it,” he said.
According to Lonzen Rugira, a Rwanda-based researcher and commentator on public affairs, the reform means that the countries will have more access to their resources because “they were borrowing their own money on interest.”
“The West African countries will be able to make sovereign decisions on how to mobilize resources without necessarily tying those decisions to France. All that money they were using to borrow their own money can be allocated to their priorities,” Rugira told Anadolu Agency.
The CFA's value relative to the French franc remained the same from 1948 until 1994, when it was devalued by 50% in a bid to boost agricultural exports from the region.
Following the devaluation, one French franc was worth 100 CFA, and when the French currency joined the euro zone, the fixed rate became one euro to 656 CFA francs.
Tearing down symbol of colonialism?
Analysts argue that the CFA represented a symbol of colonialism, past French meddling, and an affront to economic sovereignty, even as its proponents say it provided financial stability in turbulent times in the region.
In 2017, Macron highlighted the stabilizing benefits of the CFA but indicated that it was up to African governments to determine the future of the currency.
France under Macron is trying to reformulate the way it is engaging with Africa, talking about equal treatment, new relations, and mutual respect.
Rugira thinks France might have realized finally that their survival is not dependent on exploitation of their former colonies.
“You cannot talk about relations of mutual benefit when you have tools of oppression in place. You have to remove those tools that have been identified to be exploitative. The CFA was no longer tenable in the context of the new terms France wants to engage with Africa. The political environment requires their rebranding,” said Rugira.
“The French could no longer continue behaving as if nothing was happening when there was a lot of pressure against the CFA.”
To Muhumuza, the French move can certainly be seen as one way of France giving up its influence in Africa, “but only to a small extent.”
“It retains a significant military influence and will also be having a big say in the economic structure of these countries. The countries will still remain dependent on France for a lot of technical support and aid. France also does international lobbying for these countries in areas of politics, economics and aid flows,” he said.
France has promised to provide backup in the form of a line of credit if WAMU countries hit a currency crisis.
-Sustainability vs cautious upbeat
Rugira underscored the need for African nations to have their money in their own banks, saying controlling their own treasury is a “very important aspect of a country’s sovereignty.”
On the success of the eco, Muhumuza said things can be easier said than done.
“Managing the currency freedom will require a strong political commitment and independence to the technocrats to make the required decisions that politicians must support; for example, in case there is a need to devalue or ask a member country to manage its deficit to avoid affecting the entire value of the currency,” he said.
According to Rugira, if the move is not exploitative, it will get the support it needs to succeed. But if it is exploitative, Africans will have the same attitude they had toward the CFA.
He urged caution for countries to understand the nitty-gritty of the reform, noting there is a need for more transparency about the currency regime.
“The history of France in Africa makes its motive skeptical … France’s economy has benefitted very much from control of West African resources. There could be a game being played.”
