The Influence of France's Franc CFA Policy in Western and Central

張貼日期：Dec 01, 2016 2:11:16 PM

Kevin Swiecki

Out of former colonial powers, France has an outstanding history in Africa and is still interested in keeping its ties and its influence on policies of many African countries, among others, on monetary policy with the help of the Franc Communauté Financière D'Afrique Currency, known as Franc CFA, used in 14 Western and Central African countries. The adoption of the Franc CFA printed by France, its fixed exchange rate to the Euro, and this policy's negative economic impact are only some good illustrations of the lack of independence in African monetary policy and French ongoing influence on the continent.

First, one huge obstacle for the former French colonies is that the France CFA is still being issued and printed by France. Created in 1945 as a colonial currency by France, the Franc CFA is today used in 14 Western and Central African countries, including Niger, Burkina Faso and, Mali, and others. Although proponents see the currency as a guarantor of macroeconomic, regional stability and unity, allowing the countries concerned to trade with each other more easily, one needs to know that 65% of all currency reserves that exist are held in the Operation Account of Paris. This money could do more to African economies if they had immediate control and could command its use at short-notice. However, the countries themselves cannot be sure how much of the pool of foreign reserves held by the French Treasury belongs to them as a group or individually. What makes the matter worse is the bureaucracy involved to access this money.

Another more serious issue is the fixed exchange rate and convertibility of the Franc CFA to the European Euro which prevent the former colonies from achieving monetary independence. Originally pegged to the French franc and then to the Euro (655.957 per Euro), countries in Franc CFA zone are, automatically, concerned by decisions taken in the Euro zone. Due to this tie, even African politicians are unable to protect monetary sovereignty, relying on the European Union that, obviously, is mostly interested in taking measures which serve its own interests and not the African ones.

On top of that, the economic situation of the countries within the Franc CFA zone is negatively influenced by this policy. Countries in Franc CFA zone will remain vulnerable to inflations and deflations caused by fluctuations in the value of the Euro and are more likely to face rises in the cost of living and cost of imports, as happened in 1994 when France devalued the Franc CFA by 50%. Evidently, this weakens local economy but gives the impression that Franc CFA arrangements contribute to keeping West and Central African countries, to a large extent, in the same economic shape as in colonial times.

Considering the aforementioned aspects, one can conclude that the monetary policy of countries in Franc CFA zone is far from being sovereign, still largely dominated by French interests. Franc CFA must be modernized and adapted to the current needs and economic circumstances of the countries involved in order to be a fair and effective currency.