The CFA franc is the creation of the French government in 1945. The French guaranteed the currency with a fixed exchange rate of 50CFA to a franc. Francophone nations since independence have to make a deposit of 50% of their total foreign assets into the French central bank. Basically, the French secured the strength of the franc in international currency trade. Today, the CFA is seen as the stumbling block to growth as it appears to favour France which has pegged the CFA to the Euro since 1999. So, after 60yrs of post colonialism and pressure from African citizens the various heads of state have been forced to request their money back.
For decades the CFA worked well for the francophone nations, but economic stagnation which affected the French economy in 1994 forced devaluation to 100CFA to a franc. This implied that African countries will have to increase the funding of their reserves with the French central bank to maintain the 50% rule. To do this cuts in wages, layoffs had to be done in the member countries which invariable led to several civil unrest. This was the signpost needed to begin a clamour for a re – assessment of the arrangement.
In the light of worsening economy and hardships many francophone leaders refused to bring up the discussion with the French government about the CFA and its effect on their domestic economy. Cote d’Ivoire’s president Alassane Outtara had gone so far to say that the CFA zone countries are better off than Anglophone countries due to growth and low inflation. However, the flip side of the argument is that countries using the CFA enjoy less foreign direct investments since the 90’s as compared with the Anglophone countries.
The lack of FDI’s is playing a great role in limiting economic growth. The result is that there are no new emerging sectors in the member nation’s economy that can absorb jobless youths. The youth unemployment rate is the reason thousands of Africans make the journey into Europe through Spain and Italy. Italy’s former deputy prime minister Luigi Di Maio said “ 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 die in the sea or arrive on our coast’.
A stinging rebuke of the currency system came in late 2019 from the AU ambassador to the US Dr. Arikana Chihombori-Quao who defied the age old respect to the French by demanding that ‘France can no longer take 500 billion out of Africa”. Her vigorous campaigns on the issue got her fired from the job, which has made her far more popular as 90,000 people signed a petition for her reinstatement.
Dr. Chihombora-Quao outspokenness contributed greatly to force francophone heads of state to eventually see the damage the CFA currency system has done to member nation’s economy.
The CFA franc became history in the month of May when the French Council of Ministers ratified the bill to end the currency. However, they proposed a replacement to be called the Eco which will not require deposit of any kind. Proponents of the new currency want it to be adopted by all West African countries – including Nigeria.
From Opera News Hub