The Oasis Reporters
December 24, 2019
Even when eight West African countries who rarely get along with each other agreed on Saturday to change the name of their common currency to Eco and sever the CFA franc’s links to former colonial ruler France, what is commonly known as famous last words had been enacted.
The CFA franc was initially pegged to the French franc and has been linked to the euro for about two decades.
Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo currently use the currency. All the countries are former French colonies with the exception of Guinea-Bissau.
The announcement was made Saturday during a visit by French President Emmanuel Macron to Ivory Coast, the world’s top cocoa producer and France’s former main colony in West Africa.
The Oasis Reporters crew were at Malufe Hotel, Ofagbe in Isoko North LGA monitoring the 56th Ordinary summit of ECOWAS on cable TV. We observed comments and analyses by Nigeria’s Foreign minister, Geoffrey Onyema as each West African president came to have audience with Nigeria’s president Muhammadu Buhari. Beyond the commentaries, we all wondered what notable agreements they may have reached or failed to agree upon.
This is in the face of the tight border closure that Nigeria has imposed against angry in the face, neighbors.
President Patrice Talon of Benin Republic had angrily shut his country’s borders against Nigeria’s biggest cement producer, Dangote Cement, just 27 kilometers across the border. Benin Republic prefers to import cement from China than buy from Nigeria.
Ghanaian traders go from shop to shop, locking shops of Nigerian traders because they are angry with Nigeria over the closed land borders.
Therefore discuss as much as they want, the feeling is that privately, the leaders seem to have very little to admire in each other. Therefore, where’s the echo in the ECO currency? How loud is it ?
However, Ivory Coast President Alassane Ouattara, spoke in the country’s economic capital Abidjan, by announcing “three major changes”.
These included “a change of name” of the currency, he said, adding that the others would be “stopping the holding of 50 percent of their reserves in the French Treasury” and the “withdrawal of French governance” in any aspect related to the currency.
Macron hailed it as a “historic reform”, adding: “The Eco will see the light of day in 2020″, which is a slight surprise, coming from the French who know very well how to be sarcastic.
The deal took six months in the making, a French source said.
The CFA franc’s value was tied to the euro after its introduction two decades ago, at a fixed rate of 655.96 CFA francs to one euro.
The Bank of France holds half of the currency’s total reserves, but France does not make money on its deposits stewardship, annually paying a ceiling interest rate of 0.75 percent to member states.
The arrangement guarantees unlimited convertibility of CFA francs into euros and facilitates inter-zone transfers.
CFA notes and coins are printed and minted at a Bank of France facility in the southern town of Chamalieres.
The CFA franc, created in 1945, was seen by many as a sign of French interference in its former African colonies even after the countries became independent.
The Economic Community of West African States regional bloc, known as ECOWAS, earlier Saturday urged members to push on with efforts to establish a common currency, optimistically slated to launch next year.
The bloc insists it is aiming to have the Eco in place in 2020, but almost none of the 15 countries in the group currently meet criteria to join.
ECOWAS “urges member states to continue efforts to meet the convergence criteria”, commission chief Jean-Claude Kassi Brou said after a summit of regional leaders in the Nigerian capital, Abuja.
The key demands for entry are to have a deficit of less than 3 percent of gross domestic product, inflation of 10 percent or under and debts worth less than 70 percent of GDP.
Economists say they understand the thinking behind the currency plan but believe it is unrealistic and could even be dangerous for the region’s economies which are dominated by one single country, Nigeria, which accounts for two-thirds of the region’s economic output.
Nigeria’s Finance Minister Zainab Ahmed told AFP “there’s still more work that we need to do individually to meet the convergence criteria”.
ECOWAS was set up in 1975 and comprises Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo — representing a total population of around 385 million.
Eight of them currently use the CFA franc, moored to the single European currency and gathered in an organisation called the West African Monetary Union, or WAMU.
But the seven other ECOWAS countries have their own currencies, none of them freely convertible, according to a report from the GUARDIAN.
Currently, Nigeria’s inflation rate is in double digits, up from the single digit former president Goodluck Jonathan maintained it at. Ex President Olusegun Obasanjo had cleared all of Nigeria’s external debts from the Paris Club and other multilateral agencies, but Nigeria has gone into a borrowing binge without appreciable sources of paying it back while the country continues to wallow in infrastructural deficits. It raises the question: Beyond prosecuting the Boko Haram insurgency war, where else did all the borrowed funds enter ?
France would be waiting for West African presidents who often fly into Paris to cure all their ailments because hospitals in West Africa largely remain derelict. Hence the leaders avoid them like plague, as home trained doctors flee abroad to practice under lucrative and deeply satisfying conditions that are not available at home. 30,000 Nigerian doctors live and practice in the United States alone.
Unless West Africa fixes its infrastructure, liberalizes its democracy and sets its economy on the path of growth, the common currency would look like a basket case.