the CFA franc at the origin of migration?

The shooting dates back to 2019, but since November 20, 2022 the video has been inflaming social media again. Giorgia Meloni, the current far-right Italian premier, is seen showing a CFA franc banknote, a currency inherited from French colonization and common to fourteen African countries spread over two zones, West Africa and Central Africa. He accuses the French state, through this currency, of being at the origin of the impoverishment of the populations of sub-Saharan Africa and therefore of their exile in Europe.

This is called the CFA franc. It is the colonial currency that France prints for 14 African nations, to which it applies seigniorage and by virtue of which it exploits the resources of these nations.“, says Giorgia Meloni, at the time already head of the far-right Italian party Fratelli d’Italia.

Africa must be freed from certain Europeans who print money for fourteen ‘sovereign’ African nations”, he adds. A rhetoric often taken up by the Italian extreme right. Luigi Di Maio, in the person of the Italian Deputy Prime Minister, has already accused the CFA franc of being the source of immigration in Europe.

People who move to sub-Saharan Africa, for the most part, stay on the continent.Foly Ananou, economist at the Africa of Ideas think tank.

People who move to sub-Saharan Africa, for the most part, stay on the continent.”recalls economic analyst Foly Ananou of the think tank of theThe Africa of ideas. According to a United Nations report, in 2019, international migration affects 272 million people and only 8.7% of Africans. Of these, 70% remain on the African continent. However, can this migratory movement towards Europe be linked to the currency itself? This remains to be proven.

To (re)see: is the CFA franc a cause of the emigration of certain Africans?

The CFA franc, a factor in the formation of French companies?

According to Giorgia Meloni’s argument, emigration can be explained by the establishment of French companies which plunder Africa’s resources, forcing people to leave.

It is true that the CFA franc is an opportunity for the establishment of these companies. The CFA franc is aligned with the euro, this is its specificity. If the euro depreciates, the CFA franc also depreciates and vice versa. A French company that would like to establish itself in Africa will juggle euros and CFA francs to manage its finances. If the exchange rate between the two currencies does not move, this presents an obvious opportunity for French companies. “Since the exchange rate does not fluctuate, there is no exchange rate risk to bear.”, emphasizes Foly Ananou.

But despite everything, the presence of foreign companies that exploit natural resources can be an opportunity, observes this economist. For Foly Ananou, everything is played out at the state level. For instance, “Gulf countries, such as Qatar, have managed to redistribute this wealth to their populations. The missing point of these African countries is the ability of states to benefit from the establishment of these companies“, analyze. However, when contracts are made, “there is still a lack of economic governance of African states themselves.”

On the other hand, the CFA franc was aligned with the French franc at the time. Only French companies could benefit from this alignment. Today all the countries of the European Union whose currency is the euro can invest without exchange rate risk in these countries, including Italian companies. The CFA franc is therefore no longer what it was in its infancy.

To (re)see: Cameroon: growing rejection of the CFA franc

A strong currency, but one that does not benefit the populations enough

The argument defended by France is that of the stability of this currency. According to the France Diplomatie website, it would have made it possible to maintain growth of +0.3% in 2020, in the midst of the Covid-19 pandemic, in the countries of the Franc Zone against the -1.7% recession in sub-Saharan Africa ( IMF, October 2021).

The euro-CFA franc parity undermines the competitiveness of African economies, which means that our exports are very low.Kako Nubukpo, economist, co-author of the book “Exiting Africa from Monetary Slavery: Who Benefits from the CFA Franc”

But that does not mean that the CFA franc benefits the populations themselves. Co-author of the book “Exiting Africa from monetary servitude: who benefits from the CFA franc”, La Dispute editions published in 2016, the Togolese economist Kako Nubukpo is particularly critical during an interview with the Journal Afrique de TV5MONDE. “This undermines the competitiveness of African economies, which means that our exports are very low“, underlines the economist. Among the other disadvantages of this currency, he cites the difficulties of the Franc Zone to get into debt, faced with double-digit interest rates, the weakness of intra-community exchanges between States of the Franc Zone (about 15% ) and finally the absence of a growth target in central bank missions.Yet through it all, the autonomy of these countries is at stake.

No French tax on the CFA franc, but African reserves in the French Treasury until 2019

Originally, after World War II, the new CFA franc meant “franc from the French colonies in Africa”. Today means “African Financial Community”. There has never been a tax or levy on the currency that would benefit France. The President of the Italian Council Giorgia Meloni speaks of “seigniorage“and of”colonial currency”, because African states had to keep 50% of their foreign exchange reserves in the coffers of the Banque de France: this is called an escrow account.

The escrow account was like an operation to make sure these states did nothing else with their coins. Foly Ananou, economist at the Africa of Ideas think tank

This constraint has long been debated. “The escrow account was like an operation to make sure these states did nothing else with their coins”, says Foly Ananou. These currencies could not be invested in the economy.

But as of 2019, these collateral accounts no longer exist in West Africa. This obligation was repealed for the eight countries of the West African Economic and Monetary Union (WAEMU) following a reform announced by Alassane Ouattara, president of Côte d’Ivoire and Emmanuel Macron, president of France. France is no longer present in the governing bodies of the Central Bank of West African States (BCEAO).

To (re)read: Africa: should we abandon the CFA franc?

However, France continues to print the CFA franc. African central banks issue printing orders for banknotes and coins under a contract with the Banque de France. According to the economist Foly Ananou, critical of the interference of European countries in Africa, “it is more geopolitical in nature than the currency itself.

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