Does the Franc CFA affects the People of the Franc Zone in Africa ?
TV RAI TG3Mondo
International News Program in Italy
Journalist : Ms. Maria Cuffaro (MC)
On air every Saturday and Sunday at 11.00 p.m. on RAITRE
Guest: Dr Yves Ekoué AMAÏZO (YEA)
Director Afrocentricity Think Tank, Expert on Africa Economics and Migration
Technical services : Ms Valentino Tocchi.
Thursday 31st January 2019. Recording 5:20 P.M.
Available on air on 2nd and 3rd of February 2019.
Issue: Africa in 2019: Colonial Franc, Economy, Elections, African People
Subject: Does the Franc CFA affects the People of the Franc Zone in Africa?
MC. 1. How the Franc CFA affects the economies and people daily lives of the 14 States involved in this currency system?
- Let be clear that there are three (3) CFA franc Zone (West Africa, Central Africa and Comoros) with limited convertibility between these 3 zones. Of courses, the two main CFA Franc zones are West and Central Africa.
Although claiming a long-term stability and a lower inflation which does not mean people’s purchasing power, The Franc CFA is affecting negatively directly and indirectly the concerned 14 States and their economies and people at all levels. At least 14 key issues must be raised that affecting the FCFA Zone economies as well as the real purchasing power of more than 70% of the population who are being bypassed by the trickle-down policy effect (effet de la théorie du ruissellement).
I will explain later whether the Franc CFA zone is growing better than the World Average. But to reply to your question, this currency system is related to the German Nazi system in 1945 and therefore kept some of its problems namely:
- A colonial currency which is now acknowledged as a Post-colonial monetary sign for the concerned countries; The name was changed several times from (Franc of the French colonies of Africa to Franc of the African financial community (Franc des colonies françaises d’Afrique to Franc de la communauté financière africaine));
- The Franc CFA is an inclusive part of the secret defense agreements between France and the franc zone countries (assistance to dictators and autocrats which are feeding the migration of millions of Africans looking for a better future outside their countries…);
- A formal prohibition after the establishment of the Euro as an European Single currency, to evolve into an Euro CFA as the Euro of the African Financial Community;
- A dual financial and monetary tyranny based on the fixed parity between the Euro and the FCFA (1 Euro – 655,95 FCFA) slowing down and often prevent the economies of the Franc zone to access financing directly on the international market and condemned them to request low-interest financing from International financial institutions (IMF, WBG, AfDBG, EIB and mainly France bilateral institutions) (the debt syndrome)
- A network of decision-making system (tied top-down remote-control system of decision-making known as françafrique)) stabilizing a real dependency and a restriction over 80 years (creation on December 26, 1945) of economic and political sovereignty of concerned African states;
- The physical production of the Franc CFA coins and banknotes in France (mainly in Chamalières/Auvergne since 1921 with 981 workers and producing 20% of Euro notes);
- A scheme contributing to a massive unemployment, an absence of fair democracy, freedom and space for political and societal expression and ownership of the countries’ development direction;
- A structure forcing the entire local economy to enter the global trade market only from the raw materials’ perspective, meaning that its basically stops the industrialization of those countries;
- A Fee-based money transfer between France, Eurozone countries and the Franc CFA zone while a transfer using IBAN system between Euro Zone is free;
- A system of payment depending exclusively on France Treasury Office (Treasury Operation Account) meaning that France is providing credit to those countries and none of the European Union, nor any other country in the world accept the FCFA currency for payment, for accounting, for savings/reserve, nor for investment;
- Non-written Ban for western and central banks of the Franc zone (BCEAO – West Africa) and BEAC – Central Africa) to operate directly with the European Union Central Bank based in Frankfurt, although the CFA Franc is directly linked with a fix parity to the Euro;
- By imposing the High-income advanced economies’ financial conditions to Developing African Low-income economies, the FCFA is perpetuating an unequal, unfair and predatory trading system insuring with a world competitive system that unprocessed as well as processed goods from Franc Zone economies are cheap while intermediaries’ technologies, equipment, goods, capital, human capital, services as well as spare parts from High income economies are expensive;
- France has an interest in devaluating the FCFA (up to 100 % 11 January 1994) and use that argument to blackmail top officials from the Ministry of finance and the Presidential office (the number of coup d’Etat or fake elections with no truth of the ballots, and no real democracy in those countries are often related to the “economic revitalization” of the French economy as well as to the French multinational companies, thanks to the Franc CFA zone foreign exchange reserve (up to 50 % today and up to 100% with the colonial currency). One of the reasons is that many French multinational companies are not competitive in Africa anymore and cannot be selected when entering an official and fair bidding (Infrastructure in general: Port, Airport, Road, Rail, Telecommunication, agro-industry, industries, mining, Oil and gas, etc.
- Last but not least, the FCFA zone System contributes to move a large part of the countries’ wealth outside the zone. Besides, income-generating and employment-generating activities for the increasing local populations are limited to non-productive agriculture valued added, non-processing mining outputs, low local content industry and services.
MC. 2. What the Franc CFA steals from African people and what it gives to European countries, especially France?
YEA. The Franc CFA steals the power of African people to decide about their future: economically, politically and negative effects on their planning future new opportunities which could generate value added and wealth.
The Franc CFA gives to France a post-colonial power subcontracted to Sub-Saharan African decision-makers often remote-controlled by political or multinational companies’ CEOs. At the United Nations and many other international arenas, France is benefitting from the unsolicited support of the Franc CFA zone heads of States.
Simply try to double the price of African products at breakfast on the European table (Coffee, cocoa as an example) and you will see what Africa is losing and what Europe is gaining. As a simple comparison, the price of a tractor in 1965 could be bought with roughly one ton of coffee or cocoa. Today, you may not be able to buy one single tire of this tractor. This is an effective deterioration of the terms of trade. The Franc CFA simply make it worse.
MC. 3. Can you do some very practical, down to earth, examples?
- New employment and decent job opportunities are simply lost due to the bad governance, corruption related among others to the dependency from those countries towards France. You should know that according to the International Labour Organization (ILO) and the International Monetary Fund (IMF), the average increase in Employment in Sub-Saharan Africa between 2013 and 2017 was zero, with an average of 10 million per year. But the long-term increase needed and required in Employment should be above 20 million per year. To lift living standards faster, those countries as well as Sub-Saharan Africa should grow above 7% and achieve at least 17% of Manufactured Value Added (MVA). Unfortunately, the medium-term growth of 4% of Sub-Saharan Africa and 4.5% for the Franc CFA zone is too low to create the additional 20 million jobs per year needed to absorb new entrants to labor markets.
- FCFA favors the importation of goods from France instead of producing locally (exchange rate to high) … more champagne imported in Francophone countries… with high level of local taxes on equipment for production, industrialization is simply stopped (preferable to import tomato can than creating a tomato plant… problem faced by Italian business people);
- According to the global financial integrity index, the annual tax evasion and tax evasion charged to multinational corporations in Africa is more important than the official development assistance (ODA) received each year by the countries of the continent. Over the last fifty years, the African continent has lost more than 1 trillion US dollars due to illicit financial flows.
MC4. Which are the opportunities for Africa right now?
YEA. Three points:
4.1 According to the African Heads of States and as planned since 1963, Africa was supposed to evolve and create one common African Currency, one common Central Bank (Planned in Abuja/Nigeria, One Common African Monetary Fund (Planned in Yaoundé/Cameroon) and One African Commercial Bank (planned in Tripoli/Libya) based on an important financial input from the former Libyan Moammar Gaddafi. Unfortunately, till now, none of those institutions were created. It was agreed that each of those institutions could be structured at the regional level starting with a common or single regional currency. Unfortunately, till now, African Heads of States were postponing the deadline to each of their next meetings. So, nothing has been done on the ground. From the population’s side, there is clear request to stop the French Post-colonial currency and move into a new currency, not based on the Euro but on a basket of currency namely (US dollar, Euro and Yuan/Remindi of China)
4.2 Regarding the Franc CFA, various options: changing simply the name with no major changes to the system meaning a window dressing arrangement or moving to a regional currency but the opposition of Nigeria to the domination of France in West Africa may not push quickly to an acceptable solution.
Nevertheless, the position of the population is quite different from those of the decision-makers in the Franc CFA Zone. Kindly note as well that in the Board (Decision-making organ) of the Franc CFA Zone, the French government has two representatives who basically have a “veto” decision power and could easily sanction any of the Ministry of finance or even the President of one of the participating countries if they question any substantial change to the Franc CFA. As you can see those days, many Presidents of the 14 Franc CFA zone (Côte d’Ivoire, Niger, Senegal, Mali) do support officially the status quo. Even the President of Chad who questioned the Franc CFA zone is very quiet when it comes to his political future or reelection in the country. 4.3 Besides, there is an unwritten blackmail system in place favoring France and its multinational companies. Otherwise, the minister could easily be replaced and even find himself or herself in jail.
MC5. Which are the strengths, which the flaws of African economy?
5.1 Strengths of African economy: A large number of raw materials which requires simply to be transformed and generate value addition through industrialization and decent job creation. African is the next emerging economies and need wise decision-makers who are not supporting post-colonial masters’ interests in Africa.
5.2 Flaws of African economy: Dependency on post-colonial decision-makers at the head of the country and not defending the population’s interests. Many of them prefer to support external forces in order to keep their power. This is deal. This is why democratically changes in Africa are often subject to controversy elections or finishing in a blood bad (coup d’Etat). The military personnel are getting more power in politics and are quite busy with corruption. They often get elected after serious fraud and get the immunity as politicians.
5.3 Africa is supporting the world economic growth contrary to Europe. The global economy is projected to grow at 3.5 % in 2019 while the Franc Zone of the 14 States sharing the FCFA is projected to grow at 5%. On paper, it is better than the world average and even better than the Sub-Saharan average expected to reach 3.8% in 2019.
From a longer perspective, SSA is recovering (as compared to 1.4% in 2016) although not able to reach 6.4% on average between 2004-08 just before the last financial crisis. The CFA Franc zone is also recovering (3,5% in 2016) but below SSA average between 2004-08.
The Franc Zone of the 14 States sharing the FCFA is recovering with GDP growth at 4.4% in 2018. West Africa Franc Zone (WAEMU – West Africa Economic Monetary Union) is doing better (6,4% GDP growth in 2018 – than the Central Africa Franc Zone (1,7% GDP Growth in 2018 – CEMAC – Economic and Monetary Community of Central Africa /Communauté Economique et Monétaire de l’Afrique Centrale).
The West Africa Franc Zone grew on average around 6 % of Gross Domestic Product (GDP) as of 2012 and the Central Africa Franc Zone grew on average around 3 %. Basically, West Africa is simply growing twice quicker than the Central Africa, resulting in a risk of devaluating separately or together the two zones. Comoros was always marginal and grew on average between 2004-08 at 1.3% and between 2005-2018 at 2%.
MC. 6. Is China a reliable economic and commercial partner?
6.1 The problem in not China. The problem is with selected African Decision-makers opting for their own interest, or the interest of external parties instead of the interest of the African citizen.
6.2 Please compare what China has done in Africa in terms of Infrastructure in 15 years as compared to Europe Union in 60 years, there is no comparison. You can show results. But the problem is the centralized system with state-own company and the lack of fair competition. Besides, African investment in China or entrepreneurs are often paid in Remindi (local currency) and basically forced to “reinvest in China” … In the future, China should engage in paying in Yuan African entrepreneurs and revise its policy in support of autocracy in Africa. But entering a commercial partnership means that the African counterparts improved their expertise in negotiation. China is also supplying human resources which could be part of the problems of migration.
6.3 After 3-5 years, when those who opt for Chinese cheap equipment must face the problem of quality and sustainability and maintenance, it is clear that in the future more African decision-makers may think twice before entering a contract with China.
6.4 Finally, it should be highlighted that often there is two contracts signed: one official contract selling off African interests and one informal contract and not publicized where the real deal is operated. There is nothing new as this was already the practice with selected western countries as well.
MC. 7. Are we facing a new form of colonialism played by different actors?
The meaning of colonialism is as follows:
7.1 In fact I will not call it colonialism but a new dependency
In fact, China does not provide a large amount of foreign direct investment. I do not have the latest figures but basically, the share of FDI that goes into sub-Saharan Africa from China is less than 10% of the total FDI that sub-Saharan Africa receive. The development aid percentage is higher but less than 20%. But the main problem is that China was offering a some 60 % of loan to African on a concessional basis. But unfortunately, recent China’s loans to Africa tend to be more and more non-concessional. So, China state-owned companies are more and more tied to more market-oriented projects and business people.
was even smaller.
7.2 The loan percentage is more robust, however, constituting about 13% of what Africa received in 2014, Chen said. But she commented that China’s loans to Africa tend to be non-concessional, meaning they are tied to more market-based interest rates. China may become less attractive for Africa in terms of accessing loans.
7.3 Labor costs in China itself are rising and the reason for Chinese companies to move to Africa is still based on cheap labor but on solving the import-substitution problem.
MC. 8. Next weeks will see many elections dates (16th February in Nigeria, 24th February in Senegal) while we are witnessing many protests in so many African states, from Senegal to Sudan, from Mali to Liberia, also in Togo…What is happening in Africa right now?
8.1 It is the same problem: How to keep power is the main leitmotiv and the power is kept by a mix of military-civil and esoteric forces. What is happening in 2019 is the raising request of the population for more transparency and the right to chose their leaders freely and based on a fair, secure and true democracy. People are fed up of corruption by local, often black representatives of post-colonial masters.
8.2 So, all technics, legal or illegal are used to keep this power. Besides multinational companies have interest in financially supporting selected candidates or the so-called opposition to act or not to act. The increasing number of African Population who are protesting are those who does not want to join the migration flows and try to ensure that free, secure and faire elections take place in their country. Do they get the support of the Western decision-makers? In fact, yes if it is in the interest of both public and private western decision-makers, especially multinational companies. Togo just experienced a fake parliamentary election (20 December 2018) after almost a demonstration per months since the 19th of August 2017. The opposition parties (14 of them) refused to participate in an electoral process which was simply illegal. It was mentioned in the 1992 Constitution (art. 59) accepted by the Togolese population that “in no case can no one exercise more than two consecutive presidential terms”. This point was illegally changed and since then part of the Togolese population are contesting the president who is in his 3rd “illegal” terms and want to stay for 3 other terms. It is a fake democracy because the military-civil regime got the support of the so-called G5 (France, Germany, United States of America, European Union and United Nations) as well as the 14 Heads of States of the West African Economic Community. If you see more Togolese citizens flying to Europe, please give a call the Ambassador of those countries.
8.3 In Senegal, two main candidates were simply put aside based on a more elaborated argument (corruption);
8.4 In Mali, nobody is able to provide the official outcome of the presidential elections at the level of the polling station.
8.5 In Sudan, after more than 20 years, no changes at the top of the country, etc.
8.6 In Liberia, it is times to demonstrate how to create value. It seems that being dedicated to the people does not necessary mean that the ruling team is structure with knowledgeable people on value creation and decent job creation…
MC. 9. Why there is such disappointment toward the African establishment?
9.1 This is very simple question The African political elite as well as private sector decision-makers are too often not efficient in delivering value addition and offering decent job opportunities with decent wages.
9.2 Besides, there is room for impunity and a network of decision-makers are fooling the tax payers who want now transparency.
9.3 People are not scare anymore. People are ready to die for a better life for their children.
MC. 10. What is the people of Africa asking for?
African citizens want peace, fair democracy meaning choosing their true leader without external interference from Western powerful countries or multinational companies, or other regions including China, Japan, etc. The overall objective is to improve their well-being starting with basics: infrastructure (electricity, road, healthcare system, education, better living conditions, improved purchasing power and freedom, etc.)
MC. 11. And What they could reasonably think to get?
11.1 Not much is they are not organized and take advantage of their respective Diaspora.
In country where fair democracy is now an effective reality, life is getting better (Botswana, Cap Verde…).
11.2 The case of Rwanda is special as development appears are a priority and democracy and addendum to it.
11.3 Africa needs to diversify its productive capacity and production structures and get out of the its commodity-dependent economies. From the currency side, post-colonial Franc CFA may simply die from its normal death if Africa’s decision-makers are not paying lip service to panafricanism but create their own regional and later on continental common currency tied to a basket of currency, and later on their assets such as building their raw material cartels and moving towards producing in Africa processed goods for self-reliance in a global context of an escalation of trade tensions. Inclusiveness, transforming fiscal and financial assets into social buffers, protect their environment and get together to avoid being dependent on other to finance the development process of their population taking advantage of leapfrog and disruptive technologies and share knowledge. African private sector activities might be more useful to Africa people than the usual bureaucratic approach to problem solving on the continent.
11.4 To conclude, Mrs. Luigi di Maio and Matteo Salvani, both vice-presidents of the Italian Conseil helped to bring to light the Franc CFA latent problem known to Africans but subject to embargo by France as part of their “Françafrique” networking dependency system and even the European Union. The entry point was the migration dilemma. But the Franc CFA is a multi-dilemma issue.
Thank You. It was a pleasure to talk to you.
Source: TV RAI TG3 Mondo Africa
© Afrocentricity Think Tank
Keywords: Africa, Lack of democracy, Franc CFA zone, Inequality, Migration, Post-colonial currency – Poverty
IMF (2018). REO. SSA. Oct. 2018. Regional Economic Outlook: Capital Flows and The Future of Work. IMF & ILO: Washington D.C.
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