Benin’s president, Patrice Talon, said that the foreign reserves of the West African CFA will be withdrawn from the French central bank in an interview with French media powerhouses RFI and France24.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.