West Africa's New Currency in 2020: 'Plus ça change, plus c'est la même chose'
More than 75 years ago, a legendary French military officer turned politician created West Africa’s CFA franc. CFA stands for the “Communaute Financiere Africaine” (African Financial Community).
In 2017, Kemi Seba, a financial activist from Benin burnt a 5,000 CFA banknote (around 7.6 euros or $9.10) in Dakar, the headquarters of the Central Bank of West African States (BCEAO).
The franc of the African financial community, or CFA Franc, is issued by BCEAO. The West African Monetary Union (WAMU) currently comprises Benin, Burkina Faso, Côte-d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo.
Seba's actions reignited an old debate over the region's currency, DW said. After he was acquitted in court, Seba was reportedly expelled by the Senegalese government and is now living in France.
So will anything change? Here's what we know so far:
● In 2019, WAMU announced the renaming of its common currency the CFA franc to the Eco, and a weakening of financial ties to France.
● The new currency will be used in Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo, who have a combined GDP of around $108.5bn, and population of 101.8m, according to World Bank figures.
● The CFA economic bloc will keep its new currency pegged to the euro, but will no longer keep 50% of their reserves in the French Treasury.
Under the previous system, the French Ministry of Finance invested the 50% of reserves deposited in the French treasury in the French stock exchange with unknown returns, said former African Union ambassador to the United States, Arikana Chihombori-Quao, also a campaigner for France to end its “colonial relationship” with CFA zone West African countries.
“We are giving France over $500bn a year, and no-one is talking about it,” Chihombori-Quao said in a video posted to Twitter in April 2019. She was dismissed from her position as AU Ambassador to the US in October 2019.
The CFA Franc will remain in use, however, in former French colonies of Cameroon, Chad, Central African Republic, Congo Republic, and Gabon. It will also be used in Equatorial Guinea.
On its website, ECOWAS says regional trade policy is developed along the lines of boosting exports to member states as well as to the rest of the world.
But the regional body also states that to "some extent, trade, in Services, which ought to promote growth in West Africa is hampered by institutional, regulatory and infrastructural constraints."
The external trade of ECOWAS is dominated by Nigeria (73%). Cocoa and cocoa food preparations (5% of exports), precious stones (3%) and secondarily cotton, edible fruit, rubber, plastics, wood and wood products, fish and shellfish (about 1% each), form together with fuel, the major export products of the West African Economic Community, ECOWAS explains.
They went on to say that Europe accounts for about 28% of ECOWAS exports with 23% for the European Union.
The Americas account for 40 %, 34 % for the Free Trade Association of North America (NAFTA) 24 involving the United States, Canada, and Mexico.
Trade openness fostered by the development of South-South trade shows a substantial breakthrough in Asian Countries and those of Oceania, capturing 16% of exports, with 0.3% for the Near and Middle East.
ECOWAS exports are dominated by Nigeria and Ivory Coast/ Côte d'Ivoire that carry between them, 87% of these transactions.
Nigeria provides 77% of regional exports and Côte d’Ivoire 10%. For their part, Ghana and Senegal are placed third and fourth with 4% and 2% respectively. Mali following with 1.7% of regional exports. Five Countries (Benin, Burkina Faso, Guinea, Niger, and Togo) carry each 1% of regional exports.
As for exports, Nigeria is in a dominant position by making alone 41% of transactions against 18 % in Ghana, 10% each for Senegal and Côte d’Ivoire.
Nigeria and Ghana together perform 59 % of the Community imports against 36% for the eight countries of the West African Economic and Monetary Union (WAEMU). The other five countries of the ECOWAS Member States realize only 5 % of the Community imports.
“This decision shows our determination to create an integrated regional market, dynamic and a source of prosperity for us and for future generations,” said Ivory Coast/ Côte d'Ivoire President Alassane Ouattara during a press conference in Abidjan in December 2019.