“France and the CFA: An Inconvertible Truth”

While European colonialism in Africa may be considered the stuff of history books, the fact of the matter is that it remains very much alive today, albeit in slightly less obvious forms.  Many would dismiss such claims as the mad ramblings of the political left, convinced by their own conspiracy theories and anti-capitalist sentiments.  In many cases, such a dismissal would be entirely justified.  African elites have far more agency than often accredited for, with their own agendas and ways of manipulating the international system.  In the wake of the Rwandan genocide, the RPF made good use of the sense of guilt felt by the international community to carry out their military operations in the neighbouring DRC.  It would be a fine feat to convince anyone that Paul Kagame is any man’s puppet.  Yet if colonialism is dead, no one seems to have told the French.

Image courtesy of Michael22, © 2009, some rights reserved.

Image courtesy of Michael22, © 2009, some rights reserved.

Today, French neo-imperialism tends to continue with a wink here and nudge there.  Those willing to kowtow to the French are offered support and security, while opposition leaders who dare to question French affairs on the continent reportedly receive late night phone calls from men with thick Parisian accents making threats that should not be taken lightly, given the serious allegations in French involvement in the assassination and overthrow of those that didn’t play ball.[1]  However, French control of monetary policy in their old colonies is clear for all to see and perhaps the most haunting spectre of French imperialism that still lingers on the continent.

In 1945, in the wake of the devastation left by war in Europe, two common currencies were created for French colonies in Africa, one for those in the West, and one for those in the centre of the continent.  These new currencies, the CFA francs, were pegged to the French franc at a rate of fifty CFA francs to one French franc, the conversion of which would be guaranteed by the French Treasury.  To ensure the convertibility of the CFA franc, France established a binding agreement with member states that entailed each state handing over at least 65% of their foreign reserves to the French Treasury.  A further 20% is given to cover ‘financial liabilities’.  This amounts to an enormous amount of money.  It is estimated that as much as $400bn sits in a French account, many times the GDP of the CFA’s largest economies.

However, questions rise when one begins to delve a little deeper into where this money goes.  The funds are transferred directly into an ‘operations account’ within the French Treasury, which is then invested, not back into African economies, but rather into the French bourse.  Even more controversial is the issue of exactly how much sits in this account.  The estimate of $400bn is only an estimate because the truth is, very few people know if any profits are made at all, and none of these people are African.  Only a handful of high-level French Treasury officials are granted access to the books, and none of them are allowed to share this information with the public or even the CFA states that fund it.  As such, not a single official of the central banks for the CFA countries would be able to tell you the actual quantity of their foreign reserves.

Not only is this hugely unethical, but it also has serious ramifications for African economies and their chances of development.  African states are left with virtually zero control over their monetary policy.[2]  In addition to control over their foreign reserves, a French representative sits on almost every major decision-making body within the central banks of each currency zone in the CFA.  In 1994, the French decided to devalue the CFA franc by 50% overnight to alleviate pressures of a fall in the price of raw materials and depreciation of the dollar.  Although it was perhaps necessary to adjust the overvalued CFA franc, the French did so without any consultation from the CFA states.  The results were fairly disastrous for CFA economies, as they now had to export twice the raw materials they exported to earn the same income.  When rumours circulated in 2012 of another potential devaluation of the CFA franc, rates of capital flight rocketed as savvy elites put their money in foreign accounts, hoping to profit off the currency’s devaluation.  Such devaluation would have certainly been in French interests.  The prospect of getting three barrels of Africa’s ‘sweet crude’ for the price of two would have gone a long way to help free French capital for the mounting Eurozone debt crisis.  Should the currency undergo another devaluation, the increase in import prices will see people starve, while Africa’s francophone elites hide away in their second (third, fourth, fifth – take your pick) homes on the Riviera.

Outside of academia and the occasional mention in the media, French manipulation of the CFA’s monetary policy goes largely below the radar of the international community.  When the Euro was introduced in 1999, the EU’s only questions surrounding France’s relationship with the CFA were whether it would harm the Euro’s exchange rate or smooth functioning of Europe’s monetary union.[3]  Despite being described as “a classic mechanism of neo-colonial control”, France’s control of the economies of CFA states is unlikely to change anytime soon.[4]  While international apathy continues, France’s consensual plunder of CFA’s foreign reserves will continue unabated.

[1] Schepers, Emile, 2013. http://peoplesworld.org/demand-for-inquiry-into-france-s-role-in-assassination-of-african-leader/

[2] Busch, Gary, 2011. http://thinkafricapress.com/economy/consensual-rape-francafrique-currency-markets

[3] Conac, Pierre, 2011. “Colonial Hangover: The Case of the CFA”. Journal of Asian and African Studies; 46(1).

[4] Comments made by Professor Ian Taylor, Professor of International Relations and African Studies at the University of St Andrews.