The Finance and Economy Ministers, as well as Governors of central banks in West Africa, have denounced the recent decision by the Ivorian President, Alassane Ouattara, to rename the CFA franc as the ECO — the name of the single currency planned for the sub-region.
A communique issued after an extraordinary meeting of the group in Abuja described Mr. Ouattara’s pronouncement as “unilateral” which was made without recourse to any relevant authority within the ECOWAS structure.
“The meeting noted with concern, the declaration by His Excellency Alassane Ouattara, Chairman of the Authority of Heads of State and Government of the West Africa Economic and Monetary Union (WAEMU) on December 21, 2019, to rename the CFA franc as ECO by 2020,” the group said.
The West Africa Monetary Zone (WAMZ) Convergence Council, which is to ensure that a number of macroeconomic criteria are met by member countries for the introduction of the ECO, said Mr. Ouattara’s pronouncement is not inline with Authority of Heads of State and Government of ECOWAS for the adoption of ECO as the name of an independent ECOWAS single currency.
The meeting which had in attendance Ghana’s Finance Minister Ken Ofori-Atta and Governor of the Bank of Ghana, Dr. Ernest Addison, further called for an extraordinary meeting of the Authority of Heads of State and Government of the WAMZ member countries to discuss the Ivorian President’s unilateral decision.
The Ivory Coast’s President Alassane Ouattara announced during a news conference with French President Emmanuel Macron last December that a deal has been agreed with France to rename its CFA franc the Eco and cut some of the financial links with Paris that have underpinned the region’s common currency.
Under the deal, the Eco will remain pegged to the euro but the African countries in the bloc won’t have to keep 50 percent of their reserves in the French Treasury and there will no longer be a French representative on the currency union’s board.
Critics of the CFA have long seen it as a relic from colonial times while proponents of the currency say it has provided financial stability in a sometimes turbulent region.
“This is a historic day for West Africa,” Ivory Coast’s President Alassane Ouattara said.
In 2017, Macron highlighted the stabilizing benefits of the CFA but said it was up to African governments to determine the future of the currency.
“Yes, it’s the end of certain relics of the past. Yes, it’s progress … I do not want influence through guardianship, I do not want influence through intrusion. That’s not the century that’s being built today,” said Macron.
The CFA is used in 14 African countries with a combined population of about 150 million and $235 billion of gross domestic product.
However, the changes will only affect the West African form of the currency used by Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal and Togo – all former French colonies except Guinea Bissau.
The six countries using the Central African CFA are Cameroon, Chad, Central African Republic, Congo Republic, Equatorial Guinea and Gabon, – all former French colonies with the exception of Equatorial Guinea.
The CFA’s value relative to the French franc remained unchanged from 1948 through to 1994 when it was devalued by 50% to boost exports from the region.
After the devaluation, 1 French franc was worth 100 CFA and when the French currency joined the eurozone, the fixed rate became 1 euro to 656 CFA francs.
The agreement follows talks in Nigeria’s capital Abuja on Saturday between West African leaders. Countries in the CFA bloc and other West African nations such as Nigeria and Ghana have for decades debated creating their own currency to promote regional trade and investment.
The CFA franc was born in 1945 and at the time stood for “Colonies Francaises d’Afrique” (French Colonies in Africa).
It now stands for “Communaute Financiere Africaine” (African Financial Community) in West Africa and in Central Africa it means “Cooperation Financiere en Afrique Centrale” (Financial Cooperation in Central Africa).