From CFA to Eco currency: France’s invisible empire

Political colonialists might have left Africa. Unfortunately, economic and financial colonialists are very in control of Africa. And there is no former colonial occupier more imbedded in their past colonies’ economies than France. A simple look at the postcolonial economic and financial landscapes of the former France West and Central Africa is enough to convince […]

Political colonialists might have left Africa. Unfortunately, economic and financial colonialists are very in control of Africa. And there is no former colonial occupier more imbedded in their past colonies’ economies than France. A simple look at the postcolonial economic and financial landscapes of the former France West and Central Africa is enough to convince one how France is more imbedded in the daily administration of the economies of these African countries once French colonies.

Unlike other European colonizers that have been a bit indirect in their involvements in postcolonial Africa, France is still has full hands political decision of its former colonies to the extent that it an open secret that it select political protégé who administer their countries on its behalf. And why they do so other than in order to keep promoting and protecting French economic and financial interests in these former colonies?

Understandably France controls the former colonies’ economies through its control of their currencies through currency union known as West African CFA and Central African CFA. Pegged to French franc, both give France directly controlled to their economies. Little wonder even with the emergence of euro, rather than let go, in the absence of French Franc the two CFA currencies became pegged to euro and by so doing became directly tied to French treasury that makes final exchange of CFA to euro. As if not enough the two CFA zone economies have continued to allow France to compulsorily retain 50% of all these countries’ euro foreign reserves.

Thus, France has been acting in its ‘former’ colonies in West and Central African the same way Mayer A. Rothschild acted across Europe throughout the 18th and 19th centuries, which led to the Rothschild banking dynasty being known for causing and prolonging many wars across European state. This was because financing wars seemed to be more profitable banking business than financing businesses. Little wonder Mayer Rothschild was quoted as saying, “Give me control of a nation’s money supply and I care not who makes its laws,” meaning he who controls any country’s money supply automatically controls its political and economic wellbeing, especially because it enables it to always install the person’s protégés all the time with little or no opposition.

Just the same way the Rothschild banking dynasty had to keep in perpetuity his men ruling European kingdoms and states or overthrow and replace them should they fail to keep their promise, France too has since 1945 when it created CFA currency and monetary union kept its preferred political gatekeepers who maximize French interest in their countries through the status quo that only impoverishes the masses of these countries as economic slaves living in French economic satellite states in Africa. Because of this, former French African countries are ruled by life presidents, whose only reason in power is keep protecting and promoting French interests and only hand over to another French gatekeepers, who in some cases are their own sons.

In their efforts to promote regional economic integration using the ease of movement of trade and investment, in 2003, the 15 ECOWAS member states agreed to replace their respective domestic currencies with eco. In giving birth to the eco currency, they agreement that the exchange rate of eco should be based on clean float, otherwise eco currency value to be always determined purely by the market supply and demand.

They went further to lay down some key conditions for all members joining the currency. These include keeping budget deficit below 3% of GDP, making sure that gross external reserves worth at least 3 months of imports is kept, and that national debt must be kept below 70%. In the case of inflation rate they insisted on inflation rate not than 10% and budget deficit not exceeding 10% of the previous year’s tax revenue.

Without any of the countries able to meet these baseline conditions set by the West African Monetary Institute, it was obvious why all missed its takeoff in 2005, in 2010 too and in 2014. But there was an air of optimism that it wouldn’t be missed in 2020. Suddenly came announcement by the President of France that his Ivorian counterpart that eco will in 2020 replace CFA and will be used among the former French colonies.

This sudden interest of France in eco only confirms France’s dependency on these countries that it would be suicidal to let go its domination of its former colonies’ economies acting as de facto currency invisible imperial power in West Africa and Central Africa. For this reason France has to disrupt the ongoing process of giving birth to eco as agreed by the 15 member states of ECOWAS, including CFA West African members. By this move France wants to go further to control the whole ECOWAS member states in the eco-zone currency. Hence, the disruption that now gives birth to two ecos, there is confusion as to which eco is the real and original eco; the CFA eco comprising 8 countries in West Africa or the eco comprising all the 15 ECOWAS members?

While the CFA eco does not necessarily insist on 50% of member countries’ reserves be confiscated by France, in order to keep full control of the eco-zone money supply, France is insisting that eco currency must be pegged to euro. And guaranteed by France, it means French backed eco will only remain euro convertible. Technically, euro through France becomes the new reserve currency for eco-zone economies and French treasury as the official bureau de change. As if not enough reserves worth three months’ of imports must be kept idle in euro also controlled by the French through its treasury. This means that benefits expected from eco transactions will go to France rather than member eco-zone states.

ECOWAS state as members of a Nigerian led eco have failed to take note of the fact that should eco be dominated by Nigeria being the country with the highest economy (two-thirds of the eco-zone economies) and the largest population (200 million out of the region’s 380 million population) both Nigeria and the 14 member eco-zone economies would benefit hugely from Nigeria’s industrialization. This is because such economic integration with Nigeria will mean Nigerian investors easily relocate their investments to neighbors as its most investment destination.

Will Nigeria surrender its naira to the eco, especially eco that has most of its monetary policy measures taken in both Munich and Paris? It is going to be most unlikely. The obvious are two. First, Nigeria cannot surrender its currency, which means surrendering its sovereignty, without first having to amend its constitution to accommodate that. Second, this will also require harmonizing the country’s banking and financial legislation to match the eco common currency realities. Given Nigeria’s peculiar economic and financial situation, which is far ahead of all the other eco-zone member states, these inevitable changes will definitely be easier said than done.

Enwegbara is an Abuja based economics analyst