Dear President Macron, it’s time to let go your outdated African policies!
For more than 50 years, the citizens of 14 francophone countries in Africa are using an outdated French monetary system. They pay the price of it with their democratic rights and wealth, leaving their own countries in poverty. Whereas France is still benefitting from a joint currency they introduced during colonial times. It’s about time for us to change.
The newly elected President of France — Emmanuel Macron — is to be a promise for change, “lifting France into the 21 stcentury’’: a more modern socio-economic system in France, a new role for France in uniting European Union countries and — as the 163 million inhabitants of francophone Africa hoped for — a more equal relationship with France.
Why? Please, continue reading.
France controls francophone African economies after more than 50 years of independence
In the early 1960’s, 14 French former colonies in West and Central Africa gained independence:
To this day, it is this currency that all these French-speaking countries are using: the CFA-franc, introduced over 70 years ago. Ndongo Samba Sylla, a Senegalese development economist, says: “It is a mechanism of the colonial era that is still in place.” At the Review of African Political Economy Sylla adds: “Membership of the franc-zone is synonymous with poverty and under-employment.”
Regulations around the CFA-franc are determined in the so-called Monetary Cooperation Agreement. An agreement between France and the West and Central African francophone countries which was established immediately following independence. In a Skype-interview, Ndongo Samba Sylla explains the four core principles of the Monetary Cooperation Agreement and the influence it has on francophone Africa’s finances, economies and sovereignty:
1) A fixed exchange rate with the euro.
The French-speaking African countries are using the CFA-franc. A currency that has a fixed exchange rate to the euro (and previously the French franc). For instance, from 1972 to 1994 1 French franc was always 0.02 CFA.
Decisions of the French Central Bank and the European Central Bank (since 1999 the very start of the introduction of the euro) affects the economy of all francophone African countries. Whereas the fast-developing Southeast Asian countries could decide for themselves to protect or open their markets by increasing or decreasing the value of their money, these African countries can’t. Ndongo Samba Sylla says: “The African central banks are always dependent on the European Central Bank and thus have no monetary autonomy.”
Sylla explains further: “And since the CFA-currency is strong — because linked to the euro — it means that importing is relatively cheap, while exporting is expensive. So, it makes it more difficult to export, which does not help our industrialisation.”
2) A centralisation of foreign exchange reserves in an account of the French Treasury.
The French Treasury in Paris holds 50% of each of the CFA-member countries’ foreign exchange reserves. (Immediately following independence, this was a 100% and from 1973 to 2005, it was 65%).
Moreover, every CFA in the African Central Banks must be backed with 20 CFA cents in foreign exchange reserves (which is a ratio of 20%). It means that African countries cannot access their foreign exchange reserves stocked in Paris, when the total amount at the Central Bank equals 20% of the total number of euros in Paris, which is almost always the case.
Consequently, it puts a pressure on the amount the banks can use for lending credits to entrepreneurs and citizens, the economist Sylla explains. “In CFA-countries credits involve 25% of the national yearly income (GDP), whereas in non-CFA countries this is 60%! Without credit, there is no economic growth and no jobs.”
3) A French guarantee of the unlimited convertibility of CFA francs into euros.
France agreed to pay the difference whenever the amount of foreign exchange reserves is below the 20%. But France never did.
It happened once that the African franc-zone came below the agreed 20% line. The Central Bank of France — Banque de France — mentions in its publication that on 11 thJanuary 1994 the CFA-franc was only worth 50% of its former value. Banque de France devaluated the currency (and so automatically the reserves are higher). Ndongo Samba Sylla says: “[So] France didn’t guarantee anything! In fact, Africa guaranteed itself.”
Imagine that all of a sudden, your savings and cash are cut in half. Sylla: “Devaluation is harmful for the population. The price of imported products will explode — as will the foreign debt — and so the purchasing power of consumers will be weakened.” Serious devaluation can easily generate uprisings.
4) The principle of free capital transfer within the franc zone.
Within the franc zone “capital can come and go when it wants”, Ndongo Samba Sylla says. The official aim is to facilitate trade between the franc-zone countries. However, only 15% of the total trade is among the West African franc-zone and less than 10% in the Central African franc-zone, according to the Togolese economist Kako Nubukpo in Le Monde.
Correction: Export from francophone Africa to France used to be around 60%, like Nubukpo says, however nowadays it has declined to on average 5,3% only. Import from France is on average 13,9%. See new graphic:
Besides, the free flow of capital “means no capital control, which destabilizes the economy,” Sylla explains. French enterprises can freely transfer their profits to Europe and secure it by converting it into euros. It is revealing, Nubukpo adds, that on average, 60% of the franc-zone’s export is going to France.
Ndongo Samba Sylla concludes that in reality the monetary system means: “France controls the francophone African economies over controlling their money supply.”
The French monetary system has “No equivalent in the world,” as Banque de France says proudly in its publication. It’s true and there’s nothing secret about these monetary agreement and practices. It’s out in the open that it leaves the countries concerned without monetary control.
But why? Who is benefitting?
The beneficiaries are France, French companies and the African elite
Nobody knows the exact benefits in euros. An overview of what I know and checked:
- The French Treasury holds around 9,5 billion euros of foreign exchange reserves of the 14 African countries, according to the annual reports of the West African Central Bank and the Central African one. Although many articles say otherwise (unfortunately without mentioning sources), newspaper Le Monde mentions that the money is not used for investments.
- For over 50 years, the interest of all these foreign reserves has accumulated. Chimurenga Chronic found a report stating that in 2005 the total amount equals €72 billion (which would be a coverage rate of around 400%, instead of the obliged 20%.)
A pressing question remains: Where are these billions of euros?
NB: There is no such thing as a colonial tax. There are myths going around at the internet, saying that francophone countries are ‘repaying’ infrastructure that was put in place during colonial times. This, if true, would be against International Law. French political interference through secret ‘diplomacy’
In this story, I focus on economic facts more than the political ones. But I must mention the role of politics since it has an enormous impact on the room to manoeuvre of African leaders and African citizens. In an article at Al Jazeera, professor Lansine Kaba — expert on politics in Africa — explains that the monetary system goes together with secret diplomacy called Françafrique:
“Françafrique builds relations that rely on close personal connections woven between the French leadership (the president and his close aides) and individual African leaders who depended on French assistance and security forces. […] Françafrique has operated in secrecy. […] Its goal, consistent from 1960 to 2013, has been to promote and protect French interests in Africa, by all means necessary.”
To this date, the President at the Élysée is closely advised by experts on France-African relations. Franck Paris is the newest so-called ‘Mr. Africa’ and advisor to Emmanuel Macron.
Stories about French political interference in African politics are widely spread. From the 1960’s up to at least 2011, during the elections in Ivory Coast: like blocking the payment of civil servants, supporting pro-franc-zone leaders, and orchestrating coups and even killings.
At the Review of African Political Economy Sylla analyses: “Economic development — as in the creation of a political system that meets the preoccupations of the majority of citizens — is impossible in such circumstances.”
Commercial benefits for French companies …
So, we must conclude there is a lot at stake. Since the benefits from the CFA-monetary system itself aren’t huge, compared to the French GDP (0.4 or 3.9%), the largest part of the French benefits must be for the French companies.
Many speak of huge commercial benefits for French companies “Having access to raw materials on cheaper terms and possibility to repatriate currencies,” provided by the CFA-system Ndongo Samba Sylla explains. (it will be the topic of a follow-up story).
… and the African elite
Another beneficiary of the system is the African elite in the 14 countries. At the Review of African Political Economy Sylla says: “Elites [who] acquired their wealth legally or otherwise.” Since CFA’s can move freely through the franc-zone, they stock their money in foreign banks or invest it in apartments in Paris. For example, half of the GDP of Equatorial Guinea goes abroad, according to Kako Nubukpo.
The price is paid by the franc-zone citizens
The citizens of 14 francophone countries in Africa are paying the price of this monetary system. Their countries are poor and under-developed:
Kako Nubukpo in Le Monde adds: “We have dramatic records: over the last 70 years the franc-zone has low productivity, 11 out of 14 countries are among the least developed countries in the world and except for Ivory Coast — having steady income from cacao-trade — all CFA-countries have a deficit balance.” At the Review of African Political Economy Sylla adds: The CFA-system hinders “those hoping to export competitive products, obtain affordable credit [or] find work.
The monetary system denies citizens’ democratic rights and participation
In addition, the citizens of the 14 francophone African countries cannot hold their own (financial) leaders to account since francophone Africa lacks financial control and sovereignty (As it shows from “the devaluation of 1994 and the status of African Central Banks,” says Nubukpo in Le Monde). And since the European Central Bank decides over African citizens, but does not provide accountability whatsoever towards them. In the end, it means that citizens are denied a chance to democratic rights and participation by an outdated ancient currency.
Times are changing: citizens demand change
More and more citizens are aware they are still using a colonial currency. “It used to be known and discussed between intellectuals. Now ordinary people talk about it, although not everyone might be familiar with all the technical details,” Ndongo Samba Sylla tells.
Social movements are coming up that ask for change and reform. Sylla: “We want sovereignty: political space to take decisions and actions serving the public. Policies that are beneficial to the majority of our citizens.” One of the more controversial movements is Urgence Panafricanistes. The leading organiser Kemi Seba, risks 5 years in a Senegalese prison for burning a CFA-note in public. They have organised two manifestations this year on 17 January and 19 August in 10 different countries. Sometimes dozens, sometimes thousands participated.
Sylla explains why change is hard to achieve: “It’s complicated. No government will change by itself: In Central Africa, there are more dictatorships — like Chad and Congo — and those leaders won’t change. They are benefiting from the monetary system too. West Africa is more democratic, but leaders have short mandates only and different priorities, because it is beneficial to be on good terms with France.”
Although it’s not always easy, many believe that we are on the brink of change, since:
- A shift of power towards francophone African countries, for instance because they found new allies like China (Al Jazeera and Le Monde).
- France is less powerful now than it was 50 or 70 years ago and perhaps wonders if and why it should continue this monetary system. It shows from recent statements, as well as a questionnaire on the topic among African political science students in Paris (Chimurenga Chronic).
- French interests changed since its main African trade-partners are currently non-CFA countries: Nigeria, Angola and South Africa. So, they now know how to do without the CFA. (Kako Nubukpo).
- The Economic Community of West African States (ECOWAS) is working on an alternative currency for ECOWAS-members. “The new currency was due to enter circulation in 2015, but this has since been deferred until 2020” or later. (Review of African Political Economy).
Ndongo Samba Sylla concludes: “France cannot maintain these relationships. France knows it is no longer defendable. And it is no longer accepted.”
EU-citizens must know before they can help to accelerate change…
While working on this story, I noticed that my colleagues working in development cooperation hardly know anything about the relation between France and the francophone countries in Africa. Sylla adds: “Many EU-citizens just don’t know! My friends in Europe even portray my vision as no longer relevant.” Anneke Verbraeken, a Dutch journalist and living half the time in France, agrees that many French don’t seem to know much about the topic: “In France, there is hardly any critique about their relationship with the former colonies.”
Ndongo Samba Sylla calls for action: “Being world citizens, Europeans have to take a share in the fight too! If you cut the rules that are harming us, we do our part of the job here also. Here, we’ll fight for more democracy to hold our leaders to account.”
As European citizens, we can hold our leaders to account too. How? We can figure out. But the first step towards change is: getting the topic public, for as many people as possible to know. Sylla: “We do want more people to know, because it accelerates change.”
…and explain their leaders
Once we know, we can explain our leaders. And explanation is needed, the latest statements of the French President shows:
Dear President Macron, please show us, that you cannot only lift France into the 21 stCentury, but also the French African policies. The citizens of francophone Africa deserve better. They already gained independence 50 years ago!
You may help me by gathering facts and submitting supporting documents for the follow-up stories I am working on:
- What can citizens (and NGOs) do to generate change?
- What are the specific benefits of French companies?
- What can politicians (French, EU and African) do to create change?
Please share your information and contact me through inemarie[@]svikaworks.nl.
Special thanks to Ndongo Samba Sylla in Senegal, for helping me separate facts from myths with both explanations and links to valuable factual information, Abdal-Sulleyman Hafiz in Ghana for the English editing and Boubacar Sy in Mali for the French translations.
Originally published at https://svikaworks.nl.