Quest for Economic Sovereignty in the CFA Zone Exposes Cracks in Françafrique
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Quest for Economic Sovereignty in the CFA Zone Exposes Cracks in Françafrique
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By Tito Mbathi, Botho Consultant
September 25, 2023
Françafrique, the popular expression used to define France’s contemporary relationship with Africa, was first coined in the aftermath of World War II. The expression has been more en vogue recently, commonly used to describe the European nation’s interest networks, commercial activities, and lasting influence in parts of the continent. France’s preeminence in its previous colonies is, unfortunately, not always positive. The country has been accused of complicity in several of the coups which have taken place in the continent over the past decades, trying to maintain economic control of its former colonies through the CFA franc currencies, and providing military support to uphold the political status quo. Considering the scale of its past influence, Françafrique in the 2020s is beginning to show cracks.
The latest spate of coups in the CFA zone will be viewed by many as a threat to democracy, but I argue that these coups are more of a rebellion against an unfair system and a push towards economic sovereignty. While strong democratic institutions are a key driver of social stability and long-term economic growth, in many parts of the CFA zone these systems have never truly existed to begin with.
CHANGING TIMES
The geopolitical landscape of Africa is shifting, and Europe in general no longer has the same influence it once held over the continent. “In the old days of ‘Françafrique,’ this coup (Gabon) would not have happened and, if it did, it would have been quickly reversed,” said Peter Pham, a former U.S. envoy for the Sahel. Paris is no longer the only global power available for trade for francophone African countries, and emboldened would-be leaders have found new partners on the world stage. These pseudo-revolutionaries take advantage of the growing disillusionment of their citizenry towards the West to gain ascendency. The new leaders have positioned themselves as anti-colonial heroes, resisting France and rebelling not only against its deep ties in government but also against its role in the economy. While coups are obviously not a remedy to the malaise of political and economic instability, if these coups are able to catalyze a shift in the established order, then they could also lead to important economic reform. Hence, the strong political winds in the CFA zone may gust towards transformational economic reform in the region.
The term CFA zone is used to describe the 14 former colonies which are still dependent on France through the use of a French-backed currency as official tender. This currency, the CFA franc, is pegged to the euro, and requires that member countries deposit at least 50% of their foreign reserves into the French treasury. The fixed parity with the euro shields foreign companies operating in euros from exchange rate risk and creates an artificial overvaluation of the CFA franc that favors imports over exports. This situation creates a kind of trade preference for the euro zone and strips the Central Banks of these monetary unions of their ability to use the exchange rate as a buffer for economic shocks. From its inception to the present day, this ‘monetary arrangement’ has built critical extensions of the French economy, which provide cheap sources of raw materials and wide consumer markets. Essentially, the French government continues to influence the economic policies of these countries in favor of La République.
All four of the African countries who have had recent coups, Mali, Burkina Faso, Niger, and Gabon, are members of the CFA zone. It is no surprise that the most recent rumors of a coup came from a country which is also integrated within the CFA zone. There is a clear pattern of rebellion in the region, and one obvious common denominator is the currency. The CFA franc is deeply unpopular with the masses, and it appears both the established and emerging political elite mirror the sentiments of Benin’s president, Patrice Talon, who directly stated, “it’s not good that this model continues”.
Catalyzing Collaboration
Moving away from the CFA franc does not necessarily mean the dissolution of the existing economic cohesion between the nations in the region. In reality, the currency has been a barrier to industrialisation, neither stimulating trade integration between neighboring nations, nor boosting bank lending to their economies. The credit-to-GDP ratio stands around 20% for the region, far below the average 60% for sub-Saharan Africa.
For all of its drawbacks, abandoning the currency pegged to the Euro would be a risky operation, presenting several obstacles for the CFA zone. Even so, the opportunities presented by monetary independence in the region are immense, and the timing is ideal to address them. The most obvious opportunity comes from increasing intra-regional trade, which accounts for only about 9% of all CFA countries’ total external trade. This figure is ridiculously low, especially when compared to the eurozone, whose intraregional trade is roughly 60% of total trade. Exports from the CFA zone to Europe fell from 50% to 25% in the last 20 years, a trend that speaks to the massive opportunity for intra-regional trade. Countries such as Nigeria and China have become more dominant trading partners, with Nigeria especially highlighting the potential of further localized trade.
As the CFA zone grapples with a history of political and economic turbulence, its countries are seizing the moment for transformative change. Closer collaboration is already on the cards for the newly ‘liberated’ states, with the Alliance des États du Sahel, an accord between Burkina Faso, Mali, & Niger to establish a framework of collective defense and mutual assistance to benefit their citizens. This is not just a rupture with Françafrique; it is potentially a first step for these nations to move towards true economic sovereignty.
Tito Mbathi is a Consultant at Botho Emerging Markets Group.