Eight West African countries have announced that they will rename their common currency and sever financial links with their former colonial ruler France.
Since the end of the Second World War, Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo – known collectively as the Economic Community of West African States (ECOWAS) – have all used the CFA franc as their currency.
For four decades, the CFA franc – named originally as the franc of the French Colonies in Africa – was pegged to the French franc, before being linked to the euro.
CNBC reports that the currency “compels participating African countries to deposit 50% of their foreign exchange reserves with the French treasury”, which “in turn guarantees payments into euros even if the CFA member state cannot meet import payments”.
This link has meant that the currency has been seen as an important stabilising financial force in the region.
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However, The Telegraph reports that critics of the CFA have “long seen it as a relic from colonial times”, with France24 adding that it is “seen by many as a sign of French interference in its former African colonies even after the countries became independent”.
The announcement that the CFA is to be ditched was made on Saturday during a visit by French President Emmanuel Macron to Ivory Coast.
The host country’s President Alassane Ouattara announced “three major changes” to the ECOWAS’s currency set-up. These are “a change of name” of the CFR franc to the eco, an end to “holding 50% of the reserves in the French Treasury” and the “withdrawal of French governance” in any aspect related to the newly renamed currency.
“This is a historic day for West Africa,” Ouattara said during a news conference with Macron, who hailed it as a “historic reform”.
“The eco will see the light of day in 2020,” Macron added.