CFA franc, a factor of marginalization of the former French colonies (expert)

AA / Tunis / Lassaad Ben Ahmed

The debate over the CFA franc as a factor in the marginalization of former French colonies is never closed, although changes have recently been made to the mechanism governing this system. To better understand the evolution of this file, the Anadolu Agency (AA) discussed certain issues related to the CFA franc with Demba Moussa Dembele, Senegalese research economist based in Dakar and who was kind enough to provide clarifications on the state of play. and issues of the CFA franc. Interview.

AA: Regarding the CFA franc, we would first like to know where things stand? There was a plan to replace it with the ecu, but apparently that hasn’t come to fruition so far. Why?

Demba Moussa Dembele: On the African side, things haven’t changed since. There was Covid-19 which forced African leaders to change their macroeconomic policies. They have thus suspended the convergence criteria and each country is first trying to get out of the economic difficulties caused by the pandemic.

But on the side of France, things have moved. In May 2020, the French government presented a bill to Parliament to modify the monetary agreements with African countries.

The highlights of this so-called “reform” are:

1. African countries no longer have the obligation to deposit 50% of their foreign exchange reserves with the French Treasury;

2. There will no longer be any representatives of France in the bodies of the BCEAO (Central Bank of West African States).

For us, these two “reforms” do not fundamentally change the relationship of domination between France and African countries. For example, if African countries no longer have the obligation to deposit half of their foreign currency assets in France, nothing prevents them from doing so. If the representatives of France will no longer be present in the bodies of the BCEAO, it is said that they will be replaced by international “experts”, chosen with the agreement of the Banque de France. Suffice to say that it will make sure to choose “experts” who will not call into question the interests of France.

Apart from these two “reforms”, there are above all two essential points that will not change:

1. Free movement of capital between African countries and France;

2. The exchange rate with the euro will remain fixed.

These two points are at the heart of the control mechanisms of African economies. Because the first opens the door wide to capital flight to France and Europe, while the second forces the BCEAO to align its monetary policy with that of the European Central Bank (ECB).

And France will be the “guarantor” of this “new” system. Which means that it will continue to have a say in the policies of African countries.

So monetary bondage will continue. Which leads us to say that the “reform” of the French government is cosmetic. It hardly questions French supervision over countries using the CFA franc.

– We know that behind the CFA, there is a whole mechanism allowing the 15 countries concerned to benefit from French coverage of all their imports in foreign currencies, if necessary, in return for depositing 50% of their reserves in the French treasure. France had said that it was returning this money to African countries. Has this promise been kept?

-The deposit of 50% of the foreign exchange reserves of African countries was supposed to be the counterpart of the “unlimited guarantee” of the convertibility of the CFA franc granted by the French Treasury. In reality, the “guarantee” only comes into play if the reserves of all African countries are exhausted or at an extremely low level, namely a coverage rate of 20% or less. This may have happened once, leading to the decision to devalue the CFA franc in January 1994.

A unilateral decision by the French government at the time, supported by the International Monetary Fund (IMF), whose Managing Director was a French citizen.

African leaders had been presented with a fait accompli! For the rest, it is the reserves deposited with the French Treasury which have always constituted the real guarantee of the convertibility of the CFA franc.

-No doubt the repercussions of this system are multiple, at the economic, social and political levels. Can you describe these impacts by citing a few examples?

-In economic terms, the countries using the CFA franc are among the “poorest” in the world, according to the United Nations. For example, of the 8 countries using this currency in West Africa, 7 are classified as “least developed countries” or LDCs! This is partly due to the monetary policies of the BCEAO, which takes the fight against inflation as a “priority”, just like the ECB, while our economies and those of the euro zone are at completely different levels of development.

The second consequence on the economic level is the domination of French companies and banks over our economies. In Senegal, Côte d’Ivoire, Niger, Togo, etc., the key sectors are in the hands of French companies and the banks are almost all subsidiaries of French banks. And they can freely repatriate their profits, without control over the amounts or exchange risk. So French companies have privileged access to our resources and loot them happily!

On the geopolitical level, the influence of France in our countries gives it the status of “great power” in Europe, even in the world. Without this influence, France would have the same status as Italy, probably less than that of Germany or Great Britain.

As for our countries, politically, the election of leaders is often influenced by France, which seeks to elect a president capable of protecting its economic and geostrategic interests.

– At the political level too, African countries are now marginalized internationally. To what extent does the monetary and financial aspect contribute to this marginalization?

-African countries, especially those known as former French colonies, are among the “poorest”, as indicated above. This naturally explains why they have a lower weight in international bodies. Several countries using the CFA franc depend on “international aid” to finance their development programs. Moreover, they all have their economic policies dictated by the World Bank, the IMF or the European Union. So, inevitably, they have a negligible influence in international debates.

-What would be the solutions according to you as an expert? And what prevents them from being implemented?

-One of the major problems in Africa today is that of leadership. Since the cowardly assassination of President Gaddafi of Libya, led by the United States, France and Great Britain, there is no great leader in Africa. The African Union has adopted a program called Agenda 2063, aimed at making Africa a developed and powerful continent. But there is a gap between the content of this Agenda 2063 and the policies pursued by the various African leaders.

What Africa needs to develop is:

  • Recover sovereignty over its resources instead of selling them off for the benefit of multinationals;
  • Reclaim sovereignty over its development policies instead of letting the World Bank, IMF and other institutions dictate what Africa should do;
  • Promote policies of food sovereignty, energy sovereignty, pharmaceuticals, in order to be able to feed themselves, to heal themselves, instead of always relying on others;
  • Mobilize internal resources to finance its development instead of continuing the liberalization policies which favor the massive flight of capital to the point of making Africa a net creditor to the rest of the world, as confirmed by several reports produced by the United Nations institutions;
  • Trust the expertise of its citizens in the development and implementation of development plans;
  • Establish states capable of driving development instead of states at the service of multinationals;
  • Prioritize South-South cooperation and solidarity

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