From CFA to eco currency: France’s invisible empire
POLITICAL colonialists might have left Africa. Unfortunately, economic and financial colonialists are very much in control of Africa. And there is no former colonial occupier more embedded in their past colonies’ economies than France. A simple look at the postcolonial economic and financial landscapes of the former France West and Central Africa is enough to convince one how France is more embedded in the daily administration of the economies of these African countries once French colonies.
Unlike other european colonisers that have been a bit indirect in their involvements in postcolonial Africa, France still has full hands on the political decisions of its former colonies to the extent that it is an open secret that it selects political protégés who administer their countries on its behalf. And why they do so other than in order to keep promoting and protecting French economic and financial interests in these former colonies?
Understandably, France controls the former colonies’ economies through its control of their currencies through the currency union known as West African CFA and Central African CFA. Pegged to the French Franc, both give France directly controlled to their economies. Little wonder even with the emergence of the euro, rather than let go, in the absence of French Franc, the two CFA currencies became pegged to the euro and by so doing became directly tied to the French treasury that makes final exchange of the CFA to the Euro. As if not enough, the two CFA zone economies have continued to allow France to compulsorily retain 50% of all these countries’ euro foreign reserves.
Thus, France has been acting in its ‘former’ colonies in West and Central African the same way Mayer A. Rothschild acted across europe throughout the 18th and 19th centuries, which led to the Rothschild banking dynasty being known for causing and prolonging many wars across European states. This was because financing wars seemed to be a more profitable banking business than financing businesses. Little wonder, Mayer Rothschild was quoted as saying, “Give me control of a nation’s money supply and I care not who makes its laws,” meaning he who controls any country’s money supply automatically controls its political and economic well-being, especially because it enables it to always install the person’s protégés all the time with little or no opposition.
Just the same way the Rothschild banking dynasty had to keep in perpetuity his men ruling european kingdoms and states or overthrow and replace them should they fail to keep their promise, France too has since 1945, when it created the CFA currency and monetary union, kept its preferred political gatekeepers who maximise French interest in their countries through the status quo that only impoverishes the masses of these countries as economic slaves living in French economic satellite states in Africa. Because of this, former French African countries are ruled by life presidents, whose only reason in power is to keep protecting and promoting French interests and only hand over to another French gatekeepers, who in some cases are their own sons.
In their efforts to promote regional economic integration using the ease of movement of trade and investment, in 2003, the 15 ECOWAS member states agreed to replace their respective domestic currencies with the eco. In giving birth to the eco currency, they agreed that the
LIke before, uncertainties and tensions continue to envelope Nigerians as they throng churches and mosques to thank ‘God’ for making them “crossover” into 2020. Being thankful to the Supreme Being is anchored on the fact that only the living can hope to enjoy the basic goodness of life even when such goodness is perpetually scarce in the Nigeria’s socio-political space. Surviving a topsy-turvy 2019 is itself a feat as it was for the majority characterised by unemployment, unimpressive infrastructure, insecurity and deaths, culminating in hopeless docility.
In 2019, the minority ruling class commenced and devised means of narrowing civic spaces. Although there have been some movement in the anti-corruption drive (with recoveries by the EFCC, the ICPC etc.) and boosting homegrown economy, Nigeria’s socio-economic space remains murky for the pummelled hoi-polloi. We must recall that it is this similar poor and uncertain condition that led the philosophic Olanrewaju Fasasi, also known as Sound Sultan, to construct Nigeria as metaphoric Jagbajantis high school.
While ushering Nigeria into the new millennium in 2000, Sound Sultan (SS) X-rayed Nigeria’s higgledy-piggledy situation drawing similarities between our complex problems with the problems associated with solving mathematical equations. With other words, mathematical equations have solutions if the formula designed for it is appropriately applied. By that, SS moved away from seeking spiritual solutions to Nigeria’s problems but located the solution in observing basic ethics governing human conduct. As such, a country like Nigeria in 2020 needs a ‘Mathematical’ President who can apply the right formula to solve our numerous Jagbajantis problems. If we do not believe we have problems, then we deny exchange rate of the Eco should be based on a clean float, otherwise the eco currency value is to be always determined purely by the market supply and demand.
They went further to lay down some key conditions for all members joining the currency. These include keeping budget deficit below 3% of GDP, making sure that gross external reserves worth at least three months of imports are kept, and that national debt must be kept below 70%. In the case of inflation rate, they insisted on inflation rate not than 10% and budget deficit not exceeding 10% of the previous year’s tax revenue.
Without any of the countries able to meet these baseline conditions set by the West African Monetary Institute, it was obvious why all missed its takeoff in 2005, in 2010 and in 2014. But there was an air of optimism that it wouldn’t be missed in 2020. Suddenly, came the announcement by the President of France, emmanuel Macron, and his Ivorian counterpart, Allasane Quattara, that the eco will in 2020 replace the CFA and will be used among the former French colonies.
This sudden interest of France in the Eco only confirms the former’s dependency on these countries that it would be suicidal to let go its domination of its former colonies’ economies acting as de facto currency invisible imperial power in West Africa and Central Africa. For this reason, France has to disrupt the ongoing process of giving birth to the eco as agreed by the 15 member states of ECOWAS, including CFA West African members. By this move, France wants to go further to control the whole ECOWAS member states in the eco-zone currency. Hence, the disruption that now gives birth to two ecos. There is confusion as to which eco is the real and original eco; the CFA eco comprising eight countries in West Africa or the eco comprising all the 15 ECOWAS members.
While the CFA eco does not necessarily insist on 50% of member countries’ reserves be confiscated by France, in order to keep full control of the eco-zone money supply, France is insisting that the eco currency must be pegged to the euro. And guaranteed by France, it means French-backed eco will only remain euro convertible. Technically, the euro through France becomes the new reserve currency for the eco-zone economies and French treasury as the official Bureau de Change. As if this is not enough, reserves worth three months’ of imports must be kept idle in euro, also controlled by the French through its treasury. This means that benefits expected from the eco transactions will go to France rather than member eco-zone states.
Besides direct exposure of the eco-zone economies to monetary shocks caused by the euro-zone in some cases due to increasingly unsustainable unemployment and pension benefits, coming under French treasury control also makes the eco a direct extension of the euro-zone monetary policy decisions. Also, given that West African countries all rely on commodities, all their exports will be dependent commodities imports from the euro-zone. The fact that the prices of these commodities are internationally regulated and externally controlled further subjects the eco money supply, interest rates and exchange rates dependent on the euro. So, every effort in the diversification effort in the Eco-zone economies will be undermined by euro monetary policymakers whose only interest remains to use the monetary policy to indirectly keep the eco-zone economies as exporters of raw materials in the euro especially because most of the imports from the same the Eco-zone economies will have to officially pass through the euro.
This will mean permanent undermining of ECOWAS members’ industrialisation. It will also mean lack of job opportunities, economic prosperity and social inclusion. It will also mean low tax receipts for government which also means social and infrastructure needs unattended to. But we all know that high unemployment and social inequality will further trigger increased insecurity and ethno-religious conflicts. Without increased system liquidity to lower cost of borrowing, loanable funds will never be available to small businesses. Definitely, the eco-zone economies will remain agrarian without infant industry industrialisation.
even boosting economic growth using stimulus programs will be difficult to achieve since the Eco will never allow member states to pursue a expansionary monetary policy either collectively or individually. The dilemma here is that increased citizens’ purchasing power that would have triggered high demand of goods and services will remain a mirage. And without increasing system liquidity, there is no way social spending can grow. Another dilemma is that once the eco accepts to be pegged to the euro, should the euro-zone economies plunge into a financial crisis, it is the Eco-zone economies that will be the worst hit.
Avoiding this direct hit, most businesses operating in the eco-zone economies will, along with their foreign investor counterparts in the ecozone, prefer holding in stock the euro to the eco. Let us also not forget that based on the Quantity Theory of money, the more money supply multiplies by velocity, which is the rate at which money exchanges hands, the more goods and services are sold and the more productive and more prosperous citizens become. That is what the protégés of France have failed to note.
ECOWAS states as members of a Nigerian led eco have failed to take note of the fact that should the eco be dominated by Nigeria being the country with the highest economy (two-thirds of the eco-zone economies) and the largest population (200 million out of the region’s 380 million population) both Nigeria and the 14 member eco-zone economies would benefit hugely from Nigeria’s industrialisation. This is because such economic integration with Nigeria will mean Nigerian investors easily relocate their investments to neighbouring countries as its most investment-friendly destination. Like how China’s economic growth has continued to benefit its neighbours such as Japan, Singapore, Malaysia, Thailand, Indonesia, Vietnam, etc., Nigeria’s neighbours will become the eventual biggest beneficiaries.
But will Nigeria surrender its naira to the eco, especially the eco that has most of its monetary policy measures taken in both Munich and Paris? It is going to be most unlikely. The obvious are two. First, Nigeria cannot surrender its currency, which means surrendering its sovereignty, without first having to amend its constitution to accommodate that. Second, this will also require harmonising the country’s banking and financial legislation to match the Eco common currency realities. Given Nigeria’s peculiar economic and financial situation, which is far ahead of all the other eco-zone member states, these inevitable changes will definitely be easier said than done.
Enwegbara is an Abuja based economic analyst.