Ines Aissani
In Africa, the CFA franc has a complex and increasingly controversial history. Originally the acronym CFA meant “franc of the French Colonies of Africa” before taking a new name for “franc of the African Financial Community”. Although the name has changed, the reality of this currency continues to recall the French colonial heritage.
The CFA Franc, created in 1945, is a currency that is increasingly contested today, due to the neo-colonial character that it evokes. Vestige of what we call the “françafrique“, the currency still printed in France in 2024 echoes the political interventionism and the economic dependence of certain African countries on France.
At the same time, some supporters claim that it provides the countries that use it with a stable currency while participating in the economic development of the region.
In this article, we will explore the origins of the CFA Franc, its evolution over time and the debates that still remain today. Even more, we will see how Bitcoin can be an alternative to consider.
A currency created at the end of World War II
The CFA Franc was born out of the economic necessity to control capital flows in the French colonial empire and to rationalize the issuance of currency in African colonies. By signing the Bretton Woods agreements in 1945, France created the Franc of the French Colonies of Africa (CFA) by setting its parity at the French Franc of the time. While France abandoned the franc in 1999, the CFA franc was linked to the euro the same year.
Today, the CFA Franc – whose exchange rate is fixed – sees its value evolve in parallel with the European currency and it is in Paris that its convertibility is controlled.
This decision allowed France to restore its monetary authority in the colonies and to be able to control trade. Indeed, the use of the CFA franc has greatly facilitated financial and commercial transactions for French companies operating in franc zone countries.
The time of independence and the rejection of the CFA Franc for certain countries
During the 50s and 60s, the colonized territories gradually gained independence and became sovereign states. However, most countries in the Franc zone have chosen to maintain the CFA Franc as their national currency. This choice is explained by the lack of a structure adapted at that time for the creation of a national currency. In fact, only four countries withdrew from the Franc zone at the time of their independence, notably Guinea in 1960 then chaired by Ahmed Sékou Touré and Mauritania in 1973, which claimed full sovereignty conditioned by monetary independence.
During their exit towards independence, the countries of Mabreb (Algeria, Tunisia and Morocco) were all unanimous in creating their own national currencies, “one of the most explicit symbols of sovereignty”, as Fanny Pigeaud recalls. and Samba Sylla in ” The invisible weapon of Françafrique".
The countries that remained in the Franc zone grouped themselves into two independent monetary unions: the UMOA (Monetary Union of West African States), created in 1962, and the UMAC (African Monetary Union). Centrale), created in 1972.
At that time, the CFA Franc's institutional center of gravity was anchored in Paris, with the headquarters of the two central banks and the biannual meetings of Franc zone finance ministers being held in the French capital.
This is, for many experts, a blatant sign of Africa's lack of economic and financial sovereignty, despite independence.
The question of state sovereignty
Patrice Lumumba, former Prime Minister of the Democratic Republic of Congo raised the issue of Africa's economic sovereignty, including control of currencies and natural resources indirectly implied by the CFA Franc.
From the same perspective, the Malian writer and activist Aminata Dramane Traoré has often criticized the CFA franc and its impact on Africa's economic sovereignty. In his work “humiliated Africa“, she advocates for monetary reforms aimed at strengthening the economic autonomy of African countries.
Senegalese economist Demba Moussa asks the question about the Ouest France newspaper “Can you imagine the European Central Bank depositing 50% of its reserves in Washington? This seems unthinkable. The fate of the CFA franc is decided in Paris and Frankfurt. However, the priorities for Europe are not those of African countries. »
Remember that CFA franc notes are printed by the Banque de France in Chamalières, near Clermont-Ferrand, in France.
The ever more heated protest against the CFA Franc, denounced for “serving the interests of France”.
The CFA Franc has long been criticized in Africa for its link with the former French colonial regime and its impact on the sovereignty of member states of the Franc zone. Political voices have long been indignant against the CFA Franc, such as those of Thomas Sankara (former president of Burkina Faso) or Félix Houphouët-Boigny (former president of Côte d'Ivoire). The protest is still active today, among activists and members of the civilian population. Economists like Kako Nubukpo claim that the CFA Franc demonstrates the “voluntary servitude” of governments towards France.
Some activists and economists believe that the CFA Franc limits economic development and hinders the autonomy of African countries. They particularly highlight the control exercised by France over the monetary policy of the Franc zone and the centralization of foreign currency reserves with the French Public Treasury.
Other mechanisms resulting from the establishment of the CFA Franc seem to “serve the interests of France” such as the principle of free transfer. This “in fact allows French (and now European) companies to repatriate their profits (or even their investments, when the situation becomes unfavorable) free of charge, which are at the same time protected from exchange risks. A small number of French companies have benefited greatly from this mechanism. Africa thus represents 25% of the turnover of the Bolloré group and 80% of its profits”, as we point out Dygest.
International organizations such as the Economic Commission for Africa (ECA) or institutions such as the UN have also examined and sometimes criticized the CFA franc system, highlighting the challenges it poses in terms of economic development and monetary sovereignty. for African countries.
“In all countries where CFA and Comorian francs circulate, the underdevelopment of human potential and productive capacities is the norm”
Fanny Pigeaud, Ndongo Samba Sylla, “The invisible weapon of Françafrique”
The CFA Franc debate is complex because some authors argue that the CFA Franc has played a positive role in ensuring economic stability and facilitating trade within the Franc zone. They highlight the advantages of convertibility and the guarantee of fixed parity with the euro. On this point, authors Fanny Pigeaud and Samba Sylla conclude that “the CFA system has not stimulated commercial integration between its members, nor their economic development, nor their economic attractiveness”.
Towards an alternative to the CFA Franc: ECO
Faced with criticism and contestation of the CFA Franc, the governments of UEMOA countries decided to find an alternative by creating the currency called '”Eco“. This new currency, which will also compete with the ECOWAS (Economic Community of West African States) project, aims to ease tensions and respond to the concerns of activists and African civil society.
The Eco represents an attempt to break with the colonial heritage and economic domination of France. It should allow African countries to strengthen their monetary sovereignty and take more autonomous decisions in terms of economic policy.
However, due to the complexity of the current economic and financial structure of member countries, the implementation of the eco is delayed.
Bitcoin, an alternative currency in Africa
Bitcoin adoption on the continent is one of the highest in the world according to a study by Chainalysis. African populations are particularly interested in bitcoin because it responds to the failures of the banking system. Through bitcoin, individuals can benefit from a financial system accessible to all in which they can control their assets (and avoid inflation of national currencies) while carrying out financial transactions around the world. This is also an option widely used by the Diaspora who prefer to use bitcoin to send money to their family members. In terms of economic development, bitcoin could also open up new opportunities for countries that adopt it.
Faced with this observation, many people claim that bitcoin could be legalized on the continent and serve as a reserve currency. This is notably the opinion of the President of the Central African Republic, Faustin-Archange Touadéra, who decided to legalize bitcoin in the country, in 2022. However, the decision was somewhat hampered by the BEAC in particular, which is the central institution responsible for the monetary policy of the CEMAC member countries of which the Central African Republic is a part…
However, other countries like Nigeria which has significantly relaxed its regulations towards cryptocurrencies, could inspire new hope regarding the future legalization of bitcoin. In view of the statistics and the prodigious rise of bitcoin on the continent, it seems that this is indeed inevitable.
Conclusion
The history of the CFA Franc in Africa is marked by debates which are increasingly intensifying in the region. Criticisms concerning the sovereignty of African countries and the economic domination of France are standards of political revolt, as we have seen recently with the coup d'état in Niger. Even closer, the new president of Senegal, Bassirou Diomaye, declared wanting to break away from the CFA franc, and opt for the ECO.
Faced with the demands which are multiplying in many countries and in particular in Niger, Burkina Faso and Mali, some voices claim that bitcoin could be a currency to consider. This would then be an opportunity for countries using the CFA franc to regain monetary sovereignty and expand their commercial opportunities with the rest of the world.
The emergence of the Eco as an alternative to the CFA Franc demonstrates the desire of African countries to take control of their economic destiny and strengthen their autonomy. The future of the Franc zone and the Eco remains to be defined, but it is clear that the question of monetary sovereignty and the consideration of bitcoin in this regard continues to grow.
