From CFA to eco cur­rency: France’s in­vis­i­ble em­pire

The Punch - - MY NEWS.COM - Odilim En­weg­bara

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.

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.