Benin’s president, Patrice Talon, said that the foreign reserves of the West African CFA will be withdrawn from the French central bank in an interview with French media powerhouses RFI and France24. According to him, the decision was based on “psychological” reasons and not “technical” reasons. Furthermore, he added that all the eight countries using the CFA franc in West Africa have jointly agreed on the move.
Who will now manage the currency reserves from the French?
According to the president The Central Bank of West African States (BCEAO) will now manage the reserves from the French central bank. BCEAO, headquartered in Dakar, Senegal, is the common currency issuing institution of the member States of the West African Monetary Union (WAMU). WAMU consists of the following countries: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.
What is the CFA franc?
The CFA franc is the name of two currencies, the West African
CFA franc, used in eight West African countries, and the Central African CFA
franc, used in six Central African countries. Although separate, the two CFA
franc currencies have always been at parity and are effectively
interchangeable. Both currencies are guaranteed by the French treasury.
The controversy surrounding the CFA
The CFA currency was initially pegged to the french Francs and
then to the Euros after the French adopted the Euros. Its reserves has been
kept in France since 1945. This means that the monetary policies is dependent
on the European Union’s monetary policies.
Hence these African countries have no say in the fiscal policies of their currencies. This is blatant neocolonialism at play. As a result, protest have have been held in many West African cities during the previous years. They were mostly led by famous Pan-Africanist Kemi Seba, a strong critic of Francafrique. He has consistently spoken against France influence in Africa. These grass root protests played a significant role in convincing the African leaders to plan the withdrawal of their countries reserves from France.
An agreement has been signed between the Dangote group and the Togolese government to process Phosphate into Phosphate fertilizers.
Togo is a major producer of phosphate in Africa and has reserves of over two billion. The country hopes that by partnering with Africa’s leading industrialist, they will tap into the manufacturing ability and financial power of Africa’s richest man.
Dangote is currently building the largest Petroleum refinery and fertilizer complex in Africa in Lagos, Nigeria. With its completion, the Dangote group will be the top producer of ammonia in the continent. The Dangote group will provide ammonia produced from its complex to the phosphate plant in Togo. In turn, Togo will use the fertilizers to sell to farmers in the country as well as export to other African countries.
The Togo national development plan aims to structurally transform the country’s economy and building this plant is in line with that objective. Mining work is expected to start before the end of the year. The project is expected to create several thousand jobs at a cost of about $2 billion.
The plant will be constructed in Lome and work is expected to
start early next year and commissioned before the end of the year.
Dangote further expands his Pan African move
This is not the first time that the business mogul is investing
in other African countries. For instance, he has set up cement plants in 14 African
countries. Dangote is a strong believer in transforming Africa’s economy by Africans.
Clearly, he is putting his money were his mouth is. More African businessmen
need to follow in his footsteps in order for African countries to industrialize
their economies. Industrialization will be a key pillar in providing jobs ad eradicating
poverty in the continent.
This partnership is a demonstration of what could be achieved
with the AFCTA
The Africa continental free trade area (AFCTA) was ratified this past July and came into effect. Dangotes’ partnership with the government of Togo shows what can be achieved if the AFCTA is implemented as designed.
Dangote will provide Ammonia from his Nigeria plant to the Togo Phospate plant he is constructing. The fertilizer produced in the Togo plant in turn will be consumed by farmers in Togo and other African countries.
Africa can be self-sufficient in most of the products she needs if the AFCTA is implemented as planned. The AU and ECA should make sure the rules of the AFCTA are applied to the letter to avoid it being abused by unscrupulous elements.