You could call it west Africa’s Brexit. In what amounts to be the biggest shift in the region’s relations with France since independence, eight west African countries will in 2020 ditch the CFA franc in favour of a new currency to be called the eco. It cannot be long before the six central African states, members of a separate CFA franc union, follow suit.
The symbolism is important, though the changes go beyond that. It is no small matter for eight nations, seven of them former French colonies, to rid themselves of a currency whose acronym originally stood for Colonies françaises d’Afrique, or “French colonies in Africa”.
Nor is it a trifle that the countries concerned — Ivory Coast, Senegal, Mali, Burkina Faso, Benin, Niger, Togo and Guinea-Bissau — no longer have to keep half their reserves in France or have a French emissary occupying a seat on their central bank.
As if to underline the message, Emmanuel Macron, president of France, chose the day he announced the end of the currency to declare French colonialism in Africa a “profound mistake”. The first French leader born after African independence, Mr Macron had already, during the 2017 election campaign, deemed France’s activities in Algeria a “crime against humanity”.
If there is symbolism in the dismantling of the CFA franc, there is also risk. Although the eco will remain pegged to the euro and guaranteed by France — prompting some to complain that the changes are little more than cosmetic — that peg will only be tested in a time of crisis.
The new arrangement has been presented as a smooth transition. France will nominate an “independent” representative to the regional central bank and will monitor reserves daily. Yet if there is a commodity shock or a political crisis, the eco could come under sustained pressure. Only then will France’s resolve to protect a currency that no longer bears its imprimatur be truly tested.
In the absence of French resolve, fiscal and monetary discipline by African states alone will preserve the peg. Not a few francophone commentators have looked warily at neighbouring countries, where high inflation, devaluation and depreciation have been the norm. When Nigeria’s currency replaced sterling in 1973 it was valued at two naira to the pound. Today you need roughly 470 naira to make the same transaction.
Alassane Ouattara, president of Ivory Coast and a former central banker himself, was a strong supporter of the CFA franc, ritually praising its stability and solidity. For a certain class of entrepreneur, the currency has indeed been excellent news. Large French companies — such as Bolloré, EDF, Orange, Total and Veolia — could invest knowing that they were protected against devaluation by the French state. For the African elites that did business with them, the overvalued CFA franc in their pocket could easily pay for imported luxuries.
The arrangement has arguably been less beneficial for those with ambitions to make things in Africa, particularly if they wanted to export them. The price for CFA stability may have been to smother industry in its crib.
The shift to the eco is more political than economic. African elites hope they can head off popular resentment, which focused on the currency as a talisman of French hegemony. Paris hopes that it can now be rid of the colonial taint that makes its omnipresence in west Africa the object of deep anger among many.
The end of the CFA franc is the most concrete sign yet that Mr Macron is serious about abandoning the vestiges of Françafrique, a murky arrangement that bound France’s business and political interests with those of the people who ran its former colonies.
Mr Macron has recognised that this system, already crumbling, needs jettisoning — paradoxically if only for the benefit of French business. Besides, the main commercial prizes in Africa are to be found outside the relatively unpopulated francophone zones. In 2019, Mr Macron visited Nigeria and Ethiopia, whose combined population of roughly 300m people is more than double that of all francophone west Africa.
France’s special relationship is far from over. As recently as 2013, France sent troops to northern Mali to dispatch jihadist militants who were occupying vast swaths of the country. Those troops are still there, fighting an Islamist threat that, if anything, has intensified right across the Sahel.
Like the CFA franc, French soldiers breed resentment. Some argue they help bring stability, others that they foster the very resentment they have been sent to quell. If the special relationship is over, more people could start asking what they are doing there.