SYDNEY and KUALA LUMPUR, August 30 (IPS) – Most of the French colonies in sub-Saharan Africa achieved formal independence in the 1960s. But their economies progressed little, leaving most people fell into poverty, and generally worse off than in other post-colonial African economies.
Pre-World War II colonial currency arrangements were incorporated in Colony Françaises d’Afrique (CFA) The franc zone was established on December 26, 1945. Decolonization became inevitable following the French defeat at Dien Bien Phu in 1954 and withdrawal from Algeria less than a decade later.
The CFA countries currently have two currency unions. Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo belong to UEMOA, the French acronym for the West African Economic and Monetary Union.
Its counterpart to CEMAC is the Central African Economic and Monetary Community, which includes Cameroon, Central African Republic, Republic of Congo, Gabon, Equatorial Guinea and Chad.
Both UEMOA and CEMAC use the CFA franc (FCFA). The former Spanish colony, Equatorial Guinea, joined in 1985, one of only two non-French colonies. In 1997, the former Portuguese colony, Guinea-Bissau was the last country to join.
Such requirements have ensured France’s continued exploitation. Eleven of the 14 former West African and Central African colonies are still least developed countries (LDCs), ranking at the bottom of the UNDP Human Development Index (HDI).
French colony of Africa
Guinea was the first to leave the CFA in 1960. Before the people of Guinea, President Sékou Touré said to President Charles de Gaulle, “We would rather be poor in freedom than rich in slavery“.
Guinea soon faced French destabilization efforts. Fake banknotes was printed and circulated for use in Guinea – with predictable consequences. This massive scam caused Guinea’s economy to collapse.
Service of providing old French spy documents (SDECE) head Maurice Robert later admitted, “France launched a series of armed operations using local mercenaries, with the aim of developing an atmosphere of insecurity and, if possible, overthrowing Sékou Touré.“.
In 1962, French Prime Minister Georges Pompidou warned African colonies considering leaving the franc zone: “Let us allow the experience of Sékou Touré to unfold. Many Africans are beginning to feel that Guinean politics are suicidal and against the interests of the whole of Africa“.
Togo independence leader President Sylvanus Olympio was assassinated in front of the US embassy on January 13, 1963. This happened a month after he established the central bank, issuing Togo francs under legal tender. Of course, Togo is still in the CFA.
Mali left the CFA in 1962, replacing the FCFA with the Malian franc. But a 1968 coup removed its first president, the radical independence leader Modibo Keita. No wonder Mali then joined the CFA again in 1984.
UEMOA’s eight economies are all oil importers, exporting agricultural commodities, such as cotton and cocoa, in addition to gold. In contrast, the six CEMAC economies, with the exception of the Central African Republic, are heavily dependent on oil exports.
CFA advocates claim that anchoring the FCFA to the French franc, and subsequently, the euro, has kept inflation low. But lower inflation also means “slower per capita growth and gradual decline in poverty” compared to other African countries.
Its oil boom ensured an average annual growth of 23.4% between 2000–08. But growth has plummeted since then, falling -5% annually between 2013–21! Its 2019 HDI is 0.592 rated 145 out of 189 countriesbelow the average of 0.631 for the middle-ranked countries.
With more than 70% of the population is poorand more than 40% in ‘extremely poor‘, inequality is very high in Equatorial Guinea. The top 1% have more than 17% of national income before taxes in 2021, while the bottom half is 11.5%!
Four out of ten children 6-12 years old in Equatorial Guinea did not attend school in 2012, more than in much poorer African countries. Half of the children who started primary school did not finish, while less than a quarter went on to lower secondary school.
Member of CFA Gabon, Africa’s fifth largest oil producer, is a high middle-income country. With petroleum accounting for 80% of exports, 45% of GDP and 60% of financial revenues, Gabon is very vulnerable to oil price fluctuations.
One in three Gabonese people live in povertywhile 1 in 10 people were in extreme poverty in 2017. More than half of its rural residents are poor, with poverty rates three times that of urban areas.
Côte d’Ivoire, a non-LDC CFA member, experienced strong growth, peaking at 10.8% in 2013. With lower cocoa prices and Covid-19, growth slowed down. 2% in 2020. About 46% of Ivoryians live on less than 750 FCFA (about $1.30) daily, with the HDI ranking 162/189 in 2019.
The New Colonial Role of CFA
Obviously, CFA”promote inertia and underdevelopment among member states“. Worse yet, it also Level credit is available for fiscal policy initiatives, including promoting industrialization.
Credit-GDP ratio in CFA countries as low as 10–25% – compared to more than 60% in other sub-Saharan African countries! A low credit-to-GDP ratio also indicates poor financial and banking facilitiesdoes not effectively finance investments.
By abandoning exchange rate and monetary policy, CFA members have little policy flexibility and space for development initiatives. They also cannot cope well with commodity prices and other challenges.
The CFA’s institutional requirements – particularly keeping 70% of their foreign exchange with the French Treasury – limit members’ ability to use their foreign exchange earnings for growth.
Recent fiscal regulations limiting government deficits and debt – for UEMOA since 2000 and CEMAC in 2002 – have also limited policy space, particularly for public investment.
CFA neither promote trade among members. After six decades, trade between CEMAC and UEMOA members has averaged 4.7% and 12% of their total trade corresponding. Worse, the fixed exchange rate has been aggravated fluctuating balance of payments.
Unlimited transfers to France triggered capital flight. FCFA’s unlimited euro convertibility is said to reduce foreign investment risk in the CFA. However, lower foreign investment compared to other developing countries.
Total net capital outflows from CFA countries over time 1970–2010 up to $83.5 billion – 117% of aggregate GDP! More capital flows from CFA economies than from other African countries during 1970–2015.
IPS UN Office
© Inter Press Service (2022) – All rights reservedOrigin: Inter Press Service