Abidjan, Ivory Coast – Since Niger’s July 30 coup, fissures inside the Economic Community of West African States (ECOWAS) have develop into larger.
In September, Niger together with fellow ECOWAS members Burkina Faso and Mali fashioned a navy alliance referred to as the Association of Sahel States (AES). Four months later, the trio introduced their withdrawal from the bigger bloc for “illegal, illegitimate, inhumane and irresponsible sanctions” it imposed on them after coups.
This month, experiences emerged of a doable parting with their foreign money, the West African franc (CFA).
“Perhaps everything we’ve done has surprised you, hasn’t it?” Captain Ibrahim Traore, chief of the Burkinabe transitional authorities, stated in an interview in February. “More changes might still surprise you. And it’s not just about currency. We will break all ties that keep us in slavery.”
Within days, his Nigerien counterpart, Abdourahmane Tchiani, confirmed {that a} main fiscal shake-up may very well be within the offing. “Currency is a sign of sovereignty. … The AES member states are engaged in the process of recovering their full sovereignty. It is no longer acceptable for our states to be France’s cash cow,” he stated in an interview with the state broadcaster.
Their statements made headlines throughout a continent the place criticism of the continued use of the CFA, a remnant of the French colonial system, is on the rise.
While there isn’t any phrase on when the deliberate change will occur or if certainly it’s going to, the will to vary the foreign money is just not uniform but among the many three nations.
“It should be noted that Mali remains a member state of the UEMOA,” the West African Economic and Monetary Union, Economy and Finance Minister Alousseni Sanou stated on Monday in a broadcast on Mali’s nationwide tv whereas presenting the annual finances.
One of the nation’s distinguished businessmen grinned wryly as he watched.
The entrepreneur who spoke on the situation of anonymity to guard his enterprise operations in Mali and Senegal believes the brand new Sahel alliance is just not as cohesive because it has claimed to be.
“Niger’s military coup happened some seven months ago, ” he informed Al Jazeera. “I think Malian and Burkinabe leaders have been grappling with the realities of governing for longer and aren’t as spirited as they once were, … at least not when it comes to the UEMOA evidently.”
A measure of stability?
France created the CFA in 1945 as a foreign money for its African colonies. Indeed, the acronym CFA initially stood for “Colonies Francaises d’Afrique” (French Colonies of Africa). This system supplied France with important financial and political affect over its African territories as a result of it maintained management over the foreign money’s convertibility and financial coverage.
The colonies gained independence within the Sixties and ’70s, however many clung to the foreign money, which now’s named “Communaute Financiere Africaine” (African Financial Community).
Eight members of UEMOA – Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo – nonetheless use the CFA. An equal foreign money, the Central African franc (additionally referred to as the CFA) is being utilized by the six member states of the Economic and Monetary Community of Central Africa: Cameroon, the Central African Republic, Chad, Republic of Congo, Equatorial Guinea and Gabon.
Only Equatorial Guinea and Guinea-Bissau usually are not former French colonies, having been subjugated by Spain and Portugal respectively.
For years, the CFA was trumpeted by authorities officers as a mechanism for selling financial stability, facilitating financial integration and enhancing general financial efficiency.
Then coups occurred, and rising anti-French sentiments developed.
Since 2020, there have been six profitable coups in West Africa, all in UEMOA states. The navy took energy throughout a time of rising insecurity in these nations. It then accused French forces of not doing sufficient of their collaborations to battle armed teams.
As relations soured and states within the area turned to new companions like Russia, requires slicing ties with France and instituting a brand new foreign money have grown louder.
Supporters of the CFA say being pegged to the euro is a helpful buffer towards inflation, given the state of economies within the Sahel. Together, Burkina Faso, Mali and Niger contribute solely about 8 p.c of the $761bn gross home product (GDP) of ECOWAS.
Far larger economies like Nigeria and Ghana have struggled with recessions lately as the worth of their currencies – the naira and cedi, the world’s weakest foreign money in 2022, in line with Bloomberg News – continued to plummet.
But the counterargument from the CFA’s critics is that utilizing the perceived failure of some African financial insurance policies as an indicator of how substitute currencies would behave stems from outdated and reductive financial doctrines.
One of them is Senegalese economist Ndongo Samba Sylla, who’s head of analysis and coverage for Africa at International Development Economics Associates. He stated the CFA was created not for the good thing about African states however for France to guard itself towards the rise of the United States greenback.
The famed stability of the CFA, he stated, is synthetic as a result of the benchmark is exterior.
“From a purely practical economic standpoint, the CFA is not a beneficial currency or system for its user states,” he informed Al Jazeera.
“Long-term analysis of the GDP per capita indicator, which is used to assess income growth per person, proves that countries that have used the CFA since their independence have not recorded the development that they should have,” Sylla stated. “For example, Ivory Coast, the most economically significant country among the 14 nations of the CFA zone, reached its income per capita peak in 1978. Similarly, Niger, which experienced a military coup in 2023 and has recently decided to withdraw from the Economic Community of West African States recorded its highest income per capita in 1965. The list goes on.”
He famous that the CFA being pegged to the euro is detrimental to oil-producing African states as a result of the commodity is priced and traded in US {dollars}, a observe that dates again to the Nineteen Seventies when the petrodollar system was established.
To reform or to surrender?
In earlier years, there was speak of ending the foreign money system or at the least reforming it.
The most up-to-date – and consequential – one occurred after a December 2019 joint proclamation by Ivorian President Alassane Ouattara and his French counterpart, Emmanuel Macron, that the CFA because it had existed till then was no extra. Two years of negotiations with the UEMOA member states adopted with Paris ultimately loosening its grip on the West African franc.
The Central Bank of West African States is not required to deposit half of its overseas trade reserves with the French Treasury, an obligation that critics of the foreign money have lengthy denounced as a humiliating attachment to France. Before the reform, the central financial institution’s governor and the French finance minister met twice yearly.
Those reforms went largely unnoticed by mainstream society.
“The system has evolved, but it remains misunderstood by a lot of pundits and the public,” Mao Makalou, a Malian economist and former presidential adviser, informed Al Jazeera.
He stated the working account that held a part of the overseas reserves of UEMOA states supplied steady earnings for its members, which ended with the reform.
The West African central financial institution “tried to invest its foreign exchange reserves, which were previously paid at the interbank rate, and its profits decreased. It was more profitable in this operating account, which was a standard current account,” Makalou stated.
But he additionally admitted that the foreign money’s origins are tainted, which is why many are calling for it to be discarded. “You have to take the political environment into account,” he added. “We know that the UEMOA community is tied to France through a monetary cooperation agreement that includes an exit clause. It is, therefore, up to the member states to leave this system if they consider it disadvantageous. But we have to remain pragmatic.”
For the governments in these Sahel nations, the definition of pragmatism might differ from that of economists.
In the face of sanctions imposed by ECOWAS on the three Sahel nations and supported by the European Union, Niger seems to have launched into essentially the most radical route.
In October, the navy authorities introduced a 40 p.c minimize within the nationwide finances. Aid beforehand accounted for as much as 60 p.c of its finances funding.
The ECOWAS sanctions prevented Niger from accessing the UEMOA regional monetary market to finance its finances and conduct banking transactions. It has additionally missed a number of compensation deadlines as its exterior debt stands at 14.5 billion Central African francs ($519m) as of this month.
“With everything Niger has been going through, I understand Tiani’s position,” Makalou informed Al Jazeera. “It’s one thing to impose sanctions targeted at the military leader but to create such economic and social chaos? Medicine has run out. The borders have closed. It’s indiscriminate. And it’s giving reasons to the government to push regional integration to the side and find other alternatives to govern. I don’t see what other choice he has.”
https://www.aljazeera.com/features/2024/2/23/burkina-faso-mali-and-niger-debate-exiting-cfa-zone?traffic_source=rss
