Book Review: Africa's Last Colonial Currency

Africa’s Last Colonial Currency: The CFA Franc Story by Fanny Pigeaud and Ndongo Samba Sylla

There have been sixteen successful coups and forty-one attempted coups in Africa since 2010. Nine of the successful coups happened between 2020 and 2023. Six of these were in West Africa, in four countries: Burkina Faso, Guinea, Mali, and Niger.

All four countries have a similar colonial history—they were once French colonies—have a history of coup d’états and military regimes, and are all now ruled by military juntas.

What the heck is wrong with Franceafrique?

Well, everything.

Africa is poor, but Franceafrique is stubbornly poor. Each time any of these coups happened, I was among those complaining about it. In the conversations, the issue of the CFA Franc came up many times. I thought it was exaggerated, so I set out to understand it. That's what led to this book. My condemnations of the coups still stand, but I better understand what's really going on in Francafrique.

The story is long. France didn't want to let go when African countries gained independence in the 1950s-1960s. First, it developed a scheme designed to keep African countries within France. Citizens of African countries colonised by France would have French citizenship, with representation in parliament. When this failed, they came up with another scheme. African countries were going to be independent, but they were going to have their foreign policy determined by France. France was going to have military bases in African countries. Most importantly, its currency was going to be controlled by France. Hence, the CFA Franc was born.

This succeeded spectacularly.

The CFA Franc became France's tool in controlling these supposed independent countries. How does it work? ‘

The CFA Franc is pegged to the Euro (previously the French Franc), with the French Treasury guaranteeing its convertibility. The fixed peg ensures stability in exchange rates. This is a good thing, stability of currency is important an economy. This has been the argument of those defending Francafrique. But is that all? Let's dig at the evil of this system.

Member countries must deposit 50% of their foreign exchange reserves in a special operations account held at the French Treasury, giving France significant control over their monetary policies. Just think about that for a moment.

A sovereign nation MUST deposit 50% of its foreign exchange reserves in a country it did not choose. Is this a sovereign nation anymore? The answer is no. But that's exactly what the CFA Franc has helped France do for nearly 70 years now.

We are not done. The countries that use the CFA Franc have central banks that were first located in France and then eventually in Africa, but they are still largely controlled by France. France runs the Central banks of different countries. Can you call these countries independent? Are they sovereign?

“It is just currency, it doesn’t matter much”, you might say. I thought so, too. But it is not just currency. Apart from the fact that it is an insult to the idea of the sovereignty of a nation, it has practical implications.

Take the issue of stability. A stable currency is good, but the value of a currency does not remain the same for all time. Not even the US dollars or British pounds have remained the same. Their value has changed over time. Guess what? The CFA Franc has remained the same since 1945. It has been devalued only once since 1945! What?

This is crazy.

It was founded on the ideology that it was to serve France, and France has ensured it served it only. For those African countries, they can rot in poverty. They are rotting.

Apart from the absurdness of having the same monetary policy for 15 countries, the monetary policy is not designed to help these countries develop. Listen. Developing countries usually adjust their currency depending on market conditions, especially in the global markets. Take China, for instance, in the 1970,s when it began its journey of development, it began devaluing its currency. Why? It was positioning itself for export. A strong currency would not make its product competitive in the international market. It devalued its currency so that when it sells its goods on the global market, it will be cheaper. This playbook of cheap products is the format of all countries that developed in the last 70 years. Japan, South Korea, Vietnam, etc and today’s India.

None of the CFA Franc countries can do this. Why? Because France cannot allow it. Its monetary policy is determined by France. If they cannot pursue this path, how then can they develop? In short, they can’t. They are designed not ever to develop. They can’t compete with other markets that have cheaper products.

There are other implications of the CFA Franc. During COVID-19, the US Government gave money to citizens and businesses to help them survive and stay in business. This money was made available by the Federal Reserve. It is a credit made available to the government by the Central Bank. Many other countries did the same, including Nigeria. You know what? The CFA Franc countries could not do this. Why? Because France does not allow it. They don’t control their currency.

If this is so bad, why haven’t African countries fought against it? Many reasons. But one is important.

Sekou Toure’s government in Guinea was the first to attempt creating its own currency while maintaining a peg to the French franc. After Guinea's overwhelming vote for independence in 1958, the French government retaliated by undermining the Guinean franc, printing and circulating counterfeit notes, and using the resulting economic turmoil as a cautionary example. Similarly, Modibo Keita’s government introduced the Malian franc but was ousted in a French-backed military coup in 1968, a recurring pattern in Françafrique. Mali eventually rejoined the West African Monetary Union in 1984. Togo’s first president, Sylvanus Olympio, was less radical than Keita and Toure. An LSE graduate and former Unilever executive, he sought stronger ties with the UK and Germany, Togo’s original colonizer. However, his attempt to establish a Togolese franc led to his assassination in a French-supported military coup in 1963.

Eventually, they stopped trying. Those who stayed in power, stayed because France accepted them. They became friends, at the expense of their citizens. France would support you no matter what, so far as you allow them to control their military bases and the currency.

As I read this book, I shrugged my head in disbelief. How can this still be happening? Well, it is still happening.

I’ve come to a more nuanced view of these countries and why citizens in these countries hate France. It is justified. Of course, none of this defends the failure of the leaders of these countries. They can do better. They should do better.

If you are interested in Africa, neocolonialism, development, or economics, this will be a good one. It will add to your knowledge.

And leave you angry. Which is the proper reaction.

Things have to change. But to change them, we must first understand them.