The end of the CFA franc announced by Emmanuel Macron and Alassane Ouattara

The CFA franc will be replaced by the Eco and the money reserve of African states at the Banque de France will be eliminated.


President Emmanuel Macron in Abidjan, Saturday, December 21, 2019. Image: Ludovic MARIN LUDOVIC MARIN/AFP

The CFA franc received its farewell from France on Saturday, December 21, a few days before the sixtieth anniversary of independence.

Emmanuel Macron, President of France and Alassane Ouattara of Cote d’Ivoire, announced in Abidjan the disappearance of the Franc from the Financial Community in Africa. He was born in 1945 under the name of Franc of the French colonies of Africa. Another time.

“It was by hearing your youth that I wanted to initiate this reform. The CFA Franc crystallizes many criticisms of France. I see your youth which blames us for a relationship which it judges post-colonial. So let’s break the moorings, “said Emmanuel Macron, signifying that he had initiated this” historic “advance.

By his side, the Ivorian head of state, Alassane Ouattara, insisted that “it is a decision taken in full sovereignty”.

Disowned by a growing part of the opinions of the continent which saw in him one of the last slags of Françafrique, the political cost of this currency became too heavy for the French head of state who, since his arrival at the Elysee displays the will to build a new post-colonial relationship with African countries.

The “CFA” is dead. It must be replaced by 2020 by a new currency: the Eco. The change should currently concern only the eight countries of the West African Economic and Monetary Union (WAEMU): Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

Central Africa countries like Cameroon are staying out of the way for the time being.

If this change of name can in certain respects seem to play mainly symbolic, the transformation does not stop there. It is accompanied by two crucial technical reforms which should calm critics.

First, the operating account at the Banque de France is abolished, and French representatives sitting on the bodies of the Central Bank of West African States (BCEAO) will be withdrawn.

According to the monetary agreements so far in force, the WAEMU States are obliged to store at least 50% of their foreign exchange reserves at the Banque de France in return for a convertibility guarantee with the Euro.

In 2015, they transferred 19 billion euros to this account. “It fueled all the fantasies about African gold bars kept in coffers in Paris,” said the entourage of the French president.

That said, despite the disappearance of the CFA, some of its fundamentals will remain since the Eco will maintain a fixed parity with the Euro and its convertibility guarantee will still be provided by the Banque de France.

Negotiations

According to a good source, negotiations to bring about this reform had started in June with the highest confidentiality between MM.

Macron and Ouattara, President-in-Office of WAEMU. “They agreed that there was a window of opportunity before the election year in Côte d’Ivoire,” added the French source cited above.

In recent days, when the idea of ​​a major development on this currency was rumoured, Ivorian and French leaders have remained silent, engaging in a consummate art of the tongue of wood.

While voices ranging from African heads of state such as the Chadian Idriss Déby or the Beninese Patrice Talon to polemists like Kemi Seba called for a global challenge, Alassane Ouattara has always been reserved on major reform, considering that the “CFA” pegged to the Euro was the guarantee of controlled inflation.

“The acceleration of the dynamics of monetary integration in West Africa to acquire a single currency in 2020 was decisive for achieving this progress. Only, the operating account in Paris and the French presence in the banking authorities were a foil for the English-speaking countries of the Economic Community of West African States (ECOWAS) “comments a source at the Elysee. Ghana is clearly on target. Nigeria, on the other hand, appears to be a terrifying ogre for the fourteen other member states of the zone, since this giant of the region alone accounts for 60% of ECOWAS GDP. The idea developed by Paris and Abidjan is that the French-speaking countries, members of the UEMOA, are “the base of this monetary integration on which the English-speaking and Portuguese-speaking countries of the region can be grafted. “

Defender of the CFA, considering that it penalizes the industrialization and exports of African economies, the economist Carlos Lopes judges that “the change occurred is the fruit of welcome political expediency. It does not correspond to the initial idea of ​​a regional single currency, but it is the best way to evolve. “

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