A Nigerian political economist and Professor in International business and public policy, Kingsley Moghalu has congratulated French speaking West African countries for finally cutting ties with the CFA franc which linked their currency to former colonial ruler, France.
Recall that eight West Africa countries recently agreed to change the name of their common currency from CFA franc to the Eco. The Eco will still be pegged to the Euro but the rule that member states keep 50 percent of reserves with French treasury will be removed.
Since 1945, the CFA franc has been the currency used by French colonies, and the usage of the currency continued after independence.
Commenting on the development on his twitter handle, Moghalu, a former deputy governor of the Central Bank of Nigeria (CBN), said the Francophone countries are finally taking hold of their economies which have so long being controlled by France.
“Good thing the Francophone countries of the CFA currency zone have ended the colonial arrangement in which 50% of their reserves had to be deposited with the French Treasury (nearly 60 years after independence!) and renamed their currency the Eco.”
He said the argument that France have had to carry the burden of backing up the CFA with its reserves is simply not strong enough. “Some will criticize the Francophones in West Africa for the decision to still peg their currency to the Euro but I will not. It ensures currency stability even if monetary.”
The CFA franc was created in 1945 after the 1944 Brettons Wood Agreement which saw the world usher in a new global monetary system with the U.S dollar replacing the gold standard.
The Brettons Wood agreement cemented America’s dominance as a world economic power. The CFA franc is tied to the Euro, and follows the fluctuation of the Euro. The creation of Eco, the newly proposed West African currency designed to replace the CFA franc by 2020 led to an official separation with the Euro.
Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo currently use the currency. All the countries are former French colonies except Guinea-Bissau.
The proposed changes will only affect the West African form of the currency, and not the Central African CFA .
This latest announcement has been received with positive reactions and paves the way for further integration of the continent.
The Eco is expected to be adopted in 2020.The target launch date for the regional bloc of countries in West Africa’s single currency has been postponed several times; in 2005, 2010 and 2014; since the concept first arose in 2003.