The West African CFA franc is being reformed and renamed. Is this a positive step towards a single currency for West Africa or an attempt to hijack it?
West African states are divided over the future of currency union in the region after the announcement last December by the presidents of Cote d'Ivoire and France of far-reaching reforms to the West African CFA franc, which will be renamed the eco.
France has agreed to reduce its historical supervision of the former colonial currency, which is used in the eight member states of the West African Economic and Monetary Union (WAEMU). Seven of these countries--Benin, Burkina Faso, Guinea Bissau, Cote d'Ivoire, Mali, Niger, Senegal and Togo--were French colonies and have continued to use the currency since independence. They were joined in 1997 by Guinea Bissau, a former Portuguese colony.
The move marks an historic loosening of ties with France and has been presented as a major step towards the long-delayed single currency for West Africa promoted by the Economic Community of West African States (Ecowas), which includes Cape Verde, Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone in addition to the WAEMU countries.
However, it has been criticised in some quarters for not going far enough in removing French tutelage. At the same time, most non-WAEMU members of Ecowas have expressed concerns about its implications for the single currency. In June 2019, the leaders of Ecowas had decided to adopt the eco as the name for this currency and to introduce it in 2020.
Speaking in his capacity as the current head of WAEMU, President Alassane Ouattara of Cote d'Ivoire presented the three major reforms to the West African CFA franc at a joint press conference with President Emmanuel Macron of France in Abidjan. In addition to the renaming of the currency in 2020, there will no longer be a French representative on the board of the Central Bank of West African States (BCEAO), which acts as a central bank for all the WAEMU countries, and they will no longer have to keep half their exchange reserves in Paris.
The two latter points responded to popular demands in WAEMU countries. While France's role as the guarantor of the CFA franc has assured macroeconomic stability, its involvement in the management of the currency and holding of the reserves has provoked resentment from those who have seen this as preserving French political and corporate hegemony in its former colonies.