Home Business & Economics Vive le CFA Franc – The Leech That Is Draining Africa  

Vive le CFA Franc – The Leech That Is Draining Africa  

Written by Debanwita Paul

The relationship between French colonisation and economic dominance has always been intertwined. From the first trading ports in Senegal in the 17th century and the brutal expansion into sub-Saharan Africa during the 19th century came a clear intention to boost the French Empire. After abolishing the slave trade in 1848, the French state compensated the “loss of movable property” to former slave owners – “reparations,” which were used to set up monopolies in crucial resources and colonial banks in Africa. To this day, France continues to hold such a strong influence over its former colonies that the term Françafrique has become common to refer to West and Central African countries. It is also synonymously used to describe the corrupt activities of Franco-African political, economic, and military networks. Chad’s then-President Idriss Deby best described this situation in 2015, when he declared,  “We must have the courage to say there is a cord preventing development in Africa that must be severed.”

The Legacy of De Gaulle: From Sticks to Shackles

During the centuries of occupation, African people resisted the imposition of French currency in order to maintain some control over their trade and avoid economical subordination. To have agency over one’s money was to have authority over one’s production, consumption, and exchange, and therefore, to have autonomy over their resources, materials, and goods. Banning the local currencies was not always effective and did not guarantee a steady flow of excessive taxes. Hence,  the French resorted to violence and corporal punishment to bring the states to submission.

The end of the Second World War brought the need for palatable ways to exploit resources, economic structures, and political institutions without defaulting to bloody battles. After all, more than a million African soldiers had fought to defeat Nazism on behalf of the Allies. The fear of losing their former colonies against a weakened post-war military and economy stirred then-president Charles de Gaulle to establish the CFA Franc (Franc of the French Colonies in Africa) zone. It refers to the currency systems of the two currency unions in West and Central Africa, whose four pillars would ensure that the country would continue to thrive even after the independence of their colonies. Firstly, there is a fixed exchange rate with the French franc (now the Euro), set at 1 EUR to approximately 656 francs. Secondly, it offers a French guarantee of unlimited convertibility from CFA into EUR. Thirdly, it requires the centralisation of foreign exchange reserves. The Central Banks of West African States and Central African states are mandated to deposit a certain percentage of their reserves in the French Treasury. A clause stipulates that the foreign exchange reserves must exceed the money in circulation, with margins set by the French parties. The reserves today estimate about 50 per cent and up to 9.5 billion EUR. Finally, the fourth pillar refers to the principle of free capital transfer inside the franc zone.

Today, there are eight members of the West African Economic Monetary Union (WAEMU): Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. Six members compose the  Central African Economic and Monetary Community (CAEMC): Cameroon, Central African Republic, Republic of the Congo, Gabon, Equatorial Guinea, and Chad. Congo-Brazzaville and Gabon also joined this system with the promise of a stabilised economy for their countries. The two zones, while not inter-convertible, represented 11 per cent of the GDP each in sub-Saharan Africa in 2017.

Entre la Peste ou le Choléra 

In the last few decades, arguments have been made, especially with the adoption of the Euro in France, that the French government has adopted a laissez-faire approach towards the CFA countries. 20th century France was known for staging coups against pro-African presidents in the CFA zones. Gone are the days of vindictive and devastating backlash from the former imperial empire. The case of Guinea in 1958 is well-remembered where its independence spurred 3000 Frenchmen to abandon the territory but not before repossessing all they could of the locals’ resources and burning the rest. Indeed, President Emmanuel Macron’s France looks passive in comparison. However, it cannot be disputed that France remains active in creating financial detriments, stemming from the CFA favouring a particular political party within these countries – namely, a party whose allegiance is primarily to France. 

Renaming the “Franc of the French Colonies in Africa” to the “Franc of the Financial Communities in Africa” in the 1960s supposedly signified the independence of these colonies.  In 2019, Macron and President Alassane Ouattara of Côte d’Ivoire introduced ‘Eco’, the currency that the West African zone will adopt. The reality is that in 2021, the CFA system is a financial bleeder by design for WAEMU and CAEMC, as the French Treasury in Paris dictates the majority of the CFA reserves. Between 1970-2008, illicit financial flows enabled by the fourth pillar of free capital transfer led to the loss of 54 billion and 27 billion euros for Côte d’Ivoire and Cameroon respectively – 6 and 13 times higher than their stock of external debt. The colonial nature of the banking sector means that credits to the economy have short maturities and prohibitive interest rates. With the majority of the banking assets controlled by foreign interest groups towards the trade sector, there is a deficit in the growth of local agriculture, manufacturing, and regional development. Finally, due to the expansion of trade liberalisation policies, domestic production in CFA countries is further penalised by the inadequacies of the low-level credits to the economy. There are also caps put on credit for each member country, roughly equivalent to 20 per cent of the country’s public revenue in the preceding year. In the five largest CFA countries, average real incomes have not increased but rather declined in the long term.

The colonial pact and its ensuing treaties have evolved from military control to the political economy of Françafrique. By possessing the foreign currency reserves, setting limits on imports from outside the franc zone, and a minimum quantity of imports, France guarantees a constant supply-and-demand chain that allows for economic superiority while hindering the capacity for growth in the African countries. However, leaving the CFA is not an easy option for political leaders.  In the last 50 years, 16 of the 26 countries in Africa that suffered from coups were former French colonies whose presidents or political leaders were ousted by distinctly pro-French replacements. Most of these leaders were targeted either for refusing to pay the colonial debt required or for refusing to adhere to the four pillars of the CFA.  Ahmed Sékou Touré of Guinea resisted this system to his demise. Still, his slogan, “We prefer freedom in poverty to opulence in slavery” resonates with the youth of the CFA zone, particularly today.

All That Glitters…

The then-deputy Prime Minister of Italy, Luigi di Maio declared in 2019 that if today we still have people leaving Africa, it is due to several European countries, first of all, France, that didn’t finish colonizing Africa.” While the age of slave trade, brutal wars, and imperial atrocities have been neatly packed behind a banner of ‘liberté, égalité, fraternité’, Françafrique continues to be robbed in the daylight in a systemic cycle of gaslighting and victim-blaming. As the French election approaches, President Macron and his challengers continue the tradition of offering empty promises of justice and fairness. And yet, Africans struggle to climb up a ladder with discriminating policies that affect their social, political, and economic aspects of life.  One can catch more flies with honey than vinegar – controlling the economy under the guise of aiding is a far superior method of exploitation than guns and ships would ever be. 

 

Edited by Marta Wawrzyniak; Photo Credits to Frantisek Krejci