Central African nations will cease using French colonial currency
April 1, 2023 6:14 AM
The move comes in response to overwhelming requests for a currency change and the elimination of French participation in key decision-making organizations.
The Central African Economic and Monetary Community (CEMAC) has decided to discontinue usage of its colonial currency, the CFA franc. The decision, taken at a CEMAC Heads of State summit on March 17 in Cameroon, is a total departure from the union's earlier resolve to only make minor currency modifications.
According to a Camer.be report, the move will not only result in a change in the currency's name, but also in the total closure of the operating account at the Banque de France (France's central bank), giving the CEMAC full ownership of all its foreign assets, as opposed to the 50% it currently keeps with the French Treasury.
Also, officials of the French government will be withdrawn from the Bank of Central African States (BEAC), the central bank serving the CEMAC republics.
CEMAC is also considering joining West Africa in the development of a new regional currency known as the Eco.
With the current Euro/dollar crisis, which severely impacted the FCFA, experts see the effort to join West Africa as sensitive but vital.
CEMAC chiefs of state agreed that the decision be communicated to the economic and financial ministries of CEMAC member countries — Cameroon, Central African Republic, Chad, Equatorial Guinea, Gabon, and the Republic of Congo — as soon as possible.
The French colonial authority established the franc CFA as the currency of the French colonies in Africa on December 26, 1945. These colonies were divided into two groups: West Africa, which included eight countries and a shared currency known as the West African CFA franc, and Central Africa, which included six countries and the Central African CFA franc as currency.
With France's acceptance of the Bretton Woods Agreement in 1945, the franc CFA was founded. The French government mandated that each of the two colony blocs retain 50% of its foreign reserves in the French Treasury.
While some argue that the decision to hold half of the foreign deposits in the Bank de France was made to ensure currency stability, others feel it was simply a ploy to maintain French influence in these nations and impede their economic advancement.
The West African part of the former French colonies announced its intention to abandon the CFA Franc in favor of a new currency, the eco, in December 2019. But, as of this writing, this has not been officially established.
Many appeals have been made for CEMAC to follow suit. Several economic stakeholders asked for major reforms of the CFA franc during a summit in Gabon in 2022.
Professor Alain Kenmogne Simo, an associate professor of law, made the following remarks at the event:
"I believe our work clearly demonstrates that the monetary collaboration with France need change." "The vast majority [of symposium participants] agree that fundamental reforms are required, not merely a name change."
The calls for reform came because, according to the participants, France was no longer these countries' primary trading partner. The development of trade to China and other Asian nations brought with it the necessity for flexibility and the accumulation of reserves with the new trading partners.
During the conference, Dieudonné Mignamissi, associate professor of economics at the University of Yaoundé in Cameroon, stated:
"Reserves are utilized to ease trade with other countries." Thus, if we have savings in Chinese yuan, US dollars, Euros... I believe we would have a more flexible trade policy with international partners."
The Central African Republic, whose president Faustine-Archange Touadera is the new CEMAC leader, declared bitcoin legal money in the country in 2022, a move that the Bank of Central African States saw as a challenge to the French colonial currency system and a violation of the bank's statutes.