The introduction of a common currency to promote regional trade and investment has been a major objective of the 15-nation Economic Community of West African States (ECOWAS) for more than thirty years.
Accordingly, the regional bloc had taken several steps towards the achievement of the goal, including giving it a name, the Eco, setting up a body, the West African Monetary Institute, to midwife the currency, and establishing a time plan for its adoption.
According to its latest time plan, the Eco was supposed to be introduced in 2020.
In a surprise move on 21 December, the eight West African countries using the CFA Franc announced their decision to rename their common currency as the Eco from 2020. The CFA Franc is used by Benin, Burkina Faso, Guinea Bissau, Côte d’Ivoire, Mali, Niger, Senegal and Togo – all former French colonies except Guinea Bissau.
As part of the historic decision, announced in Abidjan by Côte d’Ivoire’s President Alassane Ouattara at a joint press conference with French President Emmanuel Macron, the Eco will remain pegged to the Euro (currently at the fixed rate of 1 euro to 656 CFA francs) but the 8-country bloc will not have to keep 50% of their foreign reserves in the French Treasury like it has always done. In effect that Paris will no longer co-manage the currency.
Analysts initially interpreted the decision to rename the CFA Franc as a possible precursor to the introduction of the ECOWAS common currency, the Eco. However, events since then show that this may not be the case.
Ghana has issued a statement after the Abidjan announcement backing the renaming of the CFA Franc and expressing its desire to adopt the currency.
ECOWAS has also diplomatically praised the move but has not made any official statements on how it’s linked to its own plans, leading many critics in the region to accuse France of having hijacked the regional currency agenda.
First, that the decision to rename CFA Franc was jointly announced by Ouatarra and Macron shows that it was a decision jointly reached with France, say critics.
Two, the decision was announced on 21 December, when ECOWAS was also to meet in Abuja to decide on its own Eco. The 56th Ordinary Session of the Authority of the Heads of State and Government of ECOWAS took place without a time line on the all-important issue of common currency mentioned in their communiqué.
Moreover, France signed a new monetary cooperation agreement with the West African Monetary Union (WAMU), which manages the CFA Franc, that includes the same French monetary guarantees as before, says Ndongo Samba Sylla, Dakar-based economist and co-author of the book, “Françafrique’s Invisible Weapon: Story of the CFA Franc”.
“That means this neo-colonial link is still there… there should no longer be any monetary cooperation agreement between France and African countries,” he says. “The new Eco system is essentially a ‘copy-paste’ version of the Maastricht Treaty that established the Euro and the Eurozone”, says Sylla, which is problematic because West African economies are very different from each other, but most rely on the export of raw materials, which makes the market very volatile.
ECOWAS has laid out the ten convergence criteria to be fulfilled by member countries to participate in its common currency project. However, only Togo is said to have been able to fulfil these criteria in recent years. Yet, the 8 countries have now de facto set up their own common currency, which Ghana, an important regional player, has indicated interest in adopting. Essentially, the ECOWAS currency project seems to have been overtaken by new developments, critics say.
“The French move breaks up the 30-year struggle by ECOWAS to establish a regional currency to promote trade and development. What France has done is that it takes over the responsibility of establishing and even printing the new currency and presents the other countries in the region with a fait accompli,” writes Jibrin Ibrahim, an Abuja-based Nigerian professor of political science.
“France is also keeping the new currency attached to the Euro and therefore aligning it with its colonial interest as it has always done with the CFA. This means that the other seven West African countries can only join on conditions established by France,” Ibrahim, who is also a Senior Fellow at the Centre for Democracy and Development, Nigeria, added.
“What is interesting is that now, the CFA Franc countries, the eight countries in West Africa, are now launching the Eco.. when seven of them do not meet the [ECOWAS] criteria,” says Sylla.
“So that means that all the logistics behind the criteria…is somehow jeopardised. They don’t even respect what they agreed on to launch the Eco. So for me, this is a diplomatic way of saying that this [ECOWAS] project is dead,” he adds.
In effect, France has taken over the baby that ECOWAS has had great difficulty in delivering, in the words of Ibrahim, the Nigerian scholar.