Will France derail the common currency of West Africa? by Simplice A. Asongu
In 2019, Africa’s first monetary union looked set to become a reality – until an unexpected intervention by Emmanuel Macron disrupted the process. Macron has said he wants to examine France’s legacy in Africa and establish a new relationship with its former colonies, but his actions speak louder than his words.
YAOUNDÉ – An unprecedented Africa-France Mountain peak took place in early October in Montpellier, France. For the first time since the start of these summits in 1973, no African head of state has been invited. Instead, French President Emmanuel Macron had discussions with students, entrepreneurs, artists and athletes. The purpose of the meeting was to find ways to “rebuild”Relations between France and Africa, particularly in view of the growth anti-french feeling in many French-speaking countries on the continent.
But there are reasons to question the sincerity of France’s initiative to restore relations with its former African colonies, especially given Macron’s intervention in the creation of a new shared currency for France. West Africa.
In June 2019, after nearly 30 years of discussions and multiple missed deadlines, the 15 members of the Economic Community of West African States (ECOWAS) announcement that their planned new currency, dubbed the eco, would be introduced in 2020. But at a joint press conference in December with President Alassane Ouattara of Côte d’Ivoire, Macron declared that in 2020, the eight French-speaking countries of West Africa (Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo) would withdraw their common currency, the West African CFA franc , and replace it with a new currency – also called the eco. This statement surprised the seven other, predominantly English-speaking ECOWAS countries, as it directly contradicted the roadmap for a new currency set out only six months earlier.
On the surface, there is a certain logic to this course of events. The eight francophone countries already share a currency, so theoretically they would be better prepared to be part of a monetary union. After Macron’s statement, there was a discussion that the remaining seven countries should first form a monetary union on their own. Once this union has been proven to be functional, it would be much easier for these countries to join the eco. But in practice, the creation of the separate West African eco serves to link these countries more closely to France than to their African neighbors.
In addition to changing the name of the West African currency, Macron and Ouattara’s declaration stipulated that countries using the new eco would no longer be required to keep half of their reserves in France and that France would not be involved in the management of the new currency. But, while the ECOWAS eco plan provided for a flexible exchange rate, the new eco, like the CFA franc, would be pegged to the euro, and France would remain the guarantor of its convertibility.
Macron and Ouattara’s announcement created an uproar in the region. Shortly after the announcement, the President of Ghana, Nana Akufo-Addo, affirmed the will of his country to join a new monetary union – but not on the conditions set out by Macron and Ouattara. In January 2020, six predominantly English-speaking West African countries – The Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone – released a joint statement denounce the program of Macron and Ouattara. In June 2020, Nigerian President Muhammadu Bahari tweeted that the decision of the French-speaking countries to unilaterally create a new common currency implied a lack of confidence in the other ECOWAS partners and indicated that his country, which represents 70% of ECOWAS gross domestic product, would not adhere to it.
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As the COVID-19 pandemic continues to rage in West Africa, many economists argue the region must focus on economic recovery rather than on projects like a new currency. However, at the end of May 2021, a West African currency symposium, The States General of the Eco, was held in Lomé, Togo, to discuss the end of the CFA franc and the introduction of the eco. the declaration published at the end of the conference affirmed the plan presented for the first time by Macron and Ouattara in December 2019 and the intention of the French-speaking States of West Africa to move forward.
Then, in June 2021, the ECOWAS countries organized a Mountain peak in Accra, Ghana, where they announced a new schedule for their eco. Its implementation is now scheduled for 2027. Jean-Claude Kassi Brou, President of the ECOWAS Commission, blamed the pandemic for the deadline.
How the ECOWAS eco will interact with the eco used in French-speaking West Africa is a open question. And the answer may depend on France’s sincerity in rebalancing its relations with its former colonies.