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ABSTRACT
In light of proposed reforms to the West African Communauté Financiere Africaine (CFA) franc, as jointly announced by the French and Ivorian Presidents in December 2019, this article considers the changing economic and political backdrop of this post-colonial arrangement. It describes the factors that led to its creation and the elements that have enabled it to endure for over half a century, in contrast to non-Francophone Africa, where monetary links to the former colonial power were quickly severed after independence. It is argued that some of the benefits of the CFA arrangement have receded over time, while the arguments against it have not, both from an economic and a political perspective. Despite these reforms, there is considerable uncertainty and a lack of consensus over possible alternatives to the current CFA franc arrangement, and as a consequence the future monetary geography of West and Central Africa remains unclear.
Disclosure statement
The author declares no conflicts of interest in preparing this article.
Funding
This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.
Notes
1 For the West African CFA franc, the initialism refers to ‘Communauté Financière d’Afrique’. For the Central African CFA franc, the initials stand for ‘Coopération Financière en Afrique Centrale’.
2 Kirshner, “Inescapable Politics of Money.” (Emphasis in original)
3 CFA originally stood for ‘Colonies françaises d’Afrique’, but was later changed to ‘Communauté française d’Afrique’.
4 Translated from the original: ‘montrant sa générosité, son désintéressement, ne voulant pas imposer à ses filles lointaines les consequences de sa propre pauvrété, fixe des cours différents pour leur monnaie’. Pigeaud and Sylla, L’arme invisible de la Françafrique, 24.
5 Coquet and Daniel, “Quel avenir pour la Zone franc?”
6 Gulde, “Overview, Chapter 1 in the CFA Franc Zone.”
7 Bourmaud, “France in Africa,” 60.
8 Lombard and Carayannis, “Making Sense of CAR: An Introduction,” 10.
9 Charbonneau, France and the New Imperialism, 282.
10 French Togoland was an autonomous republic within the French union from 1955.
11 French Cameroon was mandated to France by the United Nations after the First World War, and later became a part of the French Union.
12 Mauritania left the zone in 1973, while Guinea left in 1959.
13 Masson and Pattillo, Monetary Geography of Africa.
14 Nugent, Africa since Independence: A Comparative History, 7.
16 Houphouët-Boigny (Côte d’Ivoire), Touré (Guinea), Keita (Mali), Daddah (Mauritania), Diori (Niger), Senghor (Senegal), Maga (Dahomey).
17 Stasavage, Political Economy of a Common Currency, 108 observed that even in 1989, seven of the 24 top posts in Cameroon, Côte d’Ivoire, Gabon and Senegal were held by graduates of the institute.
18 Cited in Hallett, Africa since 1875, 39.
19 O’Connor, “Guinea and the Ivory Coast.”
20 Guillaume and Stasavage, “Improving Policy Credibility,” 1402.
21 Yansané, “Some Problems of Monetary Dependency,” 445.
22 Engberg, “Operations Account System in French-Speaking Africa.”
23 Devarajan and De Melo, “Evaluating Participation in an African Monetary Union.”
24 Abdih and Tsangarides, FEER for the CFA Franc, 11.
25 Bank of France, annual report on CFA zone 2015.
26 Guillaumont and Guillaumont Jeanneney, “Les Accords de Coopération Monétaire de la Zone Franc.”
27 Taylor, “France à Fric: The CFA Zone.”
28 Tinel, “Le Fonctionnement et le Rôle des Comptes d’Opérations,” 6–7. Original: “Le principal intérêt du gouvernement français dans ce système relève de la géopolitique internationale, car il lui permet de conserver ses anciennes colonies dans sa sphère d’influence.”
29 Nubukpo et al., “Sortir l’Afrique de la Servitude Monétaire.”
30 “La stabilité monétaire à laquelle ont conduit les accords monétaires est certainement favorable au développement, mais elle n’est pas suffisante pour le promouvoir.” Guillaumont-Jeanneney and Guillaumont, “Les accords de coopération monétaire de la zone franc,” 13.
31 Dembélé, “La zone franc: instrument de contrôle.”
32 Stasavage, “When Do States Abandon Monetary Discretion?”
33 Martin, “France’s African Policy in Transition,” 84 describes six events that are symbolic of France’s changed African policy: ‘the passing away of Houphouët-Boigny and Foccart; the La Baule doctrine; the Abidjan doctrine and the devaluation of the CFA franc; French setbacks in the Great Lakes region; the Zaire/Democratic Republic of the Congo/DRC débacle; the Franco–South African rapprochement; and French immigration policy’.
34 Emilie, “Macron’s Africa Tour.”
35 RFI, “La France Est Ouverte à une Reform Ambitieuse du Franc CFA.”
36 Giorgioni, “CFA Franc Zone: A Political Re-Evaluation.”
37 At end-2018, the monetary base in UEMOA stood at 27.7 trillion CFA francs (42 billion euros), 1.8% of French GDP. Using 2017 figures, the equivalent numbers for CEMAC are 10.6 trillion CFA francs (16 billion euros), or 0.5% of French GDP.
38 OECD tax database.
39 Yates, “Paradoxes of Predation in Francophone Africa.”
40 Heilbrunn, “Oil and Water? Elite Politicians.”
41 2018 BCEAO Annual Report, 47. Foreign currency assets were 10.4 billion euros on 31 December 2018, of which 67.4 percent were deposited in the operations account.
42 Taylor, “France à Fric: The CFA Zone.”
43 INSEE database.
44 Bloomberg: https://www.bloomberg.com/quote/GFRN10:IND
45 OECD International Direct Investment database; FDI positions by partner country.
46 UNCTAD World Investment Report 2019, 49.
47 Using the OECD GeoBook data on bilateral net ODA flows.
48 IMF, Direction of Trade Statistics (DOTS).
49 Glick and Rose, “Currency Unions and Trade: A Post-EMU Reassessment.”
50 Tsangarides et al., “Are Africa’s Currency Unions Good for Trade?”
51 Figures are quoted from UEMOA and CEMAC annual reports – a combination of 6% for CEMAC and 11% for UEMOA.
52 IMF DOTS, 2018 figures.
53 Tchatchouang, CFA Franc Zone: A Biography.
54 La Stampa, “Di Maio accusa la Francia di colonialismo, ambasciatore d’Italia convocato a Parigi.”
55 Le Monde, “La zone franc et le franc CFA méritent un sérieux dépoussiérage.”
56 Charbonneau, “Franco-African Security Relations at Fifty.” 114.
57 Ibid.
58 Kroslak, Role of France in the Rwandan Genocide.
59 Smith and Glaser, cited in Yates, “Paradoxes of Predation in Francophone Africa,” 142.
60 Ibid.
61 Yates, ibid., reports that the military budget was reduced from 3% of GDP in 1982 to 1.4% in 2015.
62 New York Times, “Crisis in the Sahel Becoming France’s Forever War.”
63 Le Monde, “Pour Emmanuel Macron, le ‘colonialisme a été une erreur profonde, une faute de la République’.”
64 Spero, Dominance–Dependence Relationships.
65 Dufrénot, “Monetary Autonomy in the West African Countries.”
66 Veyrune, Fixed Exchange Rate and the Autonomy of Monetary Policy.
67 Defined as deposits that are immediately repayable on demand.
68 The IMF forecast these current account surpluses to remain above 2% until at least 2024.
69 Guyer, “Introduction: The Currency Interface and Its Dynamics,” 5.
70 Berg et al., “Monetary Policy Issues in Sub-Saharan Africa.”
71 Using the Consumer Price Index data from the World Bank’s World Development Indicators.
72 Using large panels, the threshold range for developing countries has varied from 10 to 11% (Espinoza, Leon, and Ananthakrishnan, Estimating the Inflation–Growth Nexus) to nearly 20% (Ibarra and Trupkin, “Re-Examining the Relationship between Inflation and Growth”).
73 “It seems quite possible in our view that in 20 years [the CFA franc zone] will no longer exist in its current form. While there may well be a currency union, perhaps with additional members, it seems more likely that it will not be pegged to the euro with the help of France.” Masson and Pattillo (2004), 165.
74 Fernandez and Rodrik, “Resistance to Reform: Status Quo Bias.”
75 2016 interview with Le Monde, titled “ADO à propos du franc CFA.” Original text: ‘Mais, écoutez, qu’est-ce que nous voulons d’autre?’
Additional information
Notes on contributors
James Wilson
James Wilson has a DPhil (PhD) from the University of Oxford, where his research concentrated on the CFA franc monetary zones in Western and Central Africa, and monetary and exchange rate policy in fragile and conflict-affected states. Prior to this, he spent five years working in investment management. He received a BA and MPhil in economics from the University of Cambridge.