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France ratifies law ending use of CFA franc in West Africa

The French-speaking UMOA waves goodbye to a century and a half of a currency that symbolises an Africa joined at the hip to Paris

France on Wednesday ratified a law that terminates the use of the CFA franc by its colonies in West Africa.

In December 2019, after consultations with other leaders in West Africa, Presidents Alassane Ouattara of Côte d’Ivoire and Emmanuel Macron of France announced a historic reform of the monetary co-operation agreement which led to the adoption of the CFA franc.

The development means French colonies in Africa can proceed with their transition from the CFA franc to a new currency, the Eco. The plan is for the whole West African bloc, the Economic Community of West African States (ECOWAS), to adopt the Eco by the end of this year.

Pull away from France

At present, eight West African countries – Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo – are using the CFA franc.

The currency came into being in 1945 at the end of the Second World War. Initially pegged to the French franc, it has been pegged to the euro since European monetary union in 1999.

The transition from the CFA franc means these countries, whose reserves have been held in the French Treasury, will no longer be obliged by law to keep 50% of their reserves in France.

It also ends the centralising of foreign exchange reserves of eight francophone West African states with the French Treasury. And there will no longer be a French representative on the board of the West African currency union.

Francophone system

The CFA franc is used in 14 African countries with a combined population of about 150 million and total gross domestic product of US$235 billion.

But French officials say the changes will affect only the West African variant of the currency, used by Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. (Guinea, although a francophone country, opted out of the union in 1959 and uses the Guinean franc.) The changes will apply to all eight countries of the Union Monétaire Ouest Africaine (UMOA) served by the Banque Centrale des États de l’Afrique de l’Ouest with the exception of the lusophone Guinea-Bissau.

For nearly 150 years, in effect, francophone nations in West Africa have had their currency managed from France.

It is expected that the move away from the CFA franc will help fast-track the introduction and adoption of the Eco by ECOWAS across West Africa.

Fred Dzakpata

* Asaase Radio 99.5 FM. Coming to a dial near you.

* Twitter: @asaaseradio995

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