[Blog] In the context of Africa Day (25th May): Franc CFA – the lingering legacy of French Colonialism

Recently, I watched a podcast of a former French official of the Quai d'Orsay denouncing the perpetuation of French colonialism through the monetary instrument of the Franc CFA. This prompted me to do some research, which I am sharing on the occasion of Africa Day.

Africa Day was declared on May 25, 1963, when 32 independent African states met in Addis Ababa to found the Organisation of African Unity, now known as the African Union. The main objective was to accelerate the emancipation of African people, dismantle foreign rule and forge a shared Pan-African identity.

After 63 years of the founding of the OAU (now AU), can we say that the goal of total emancipation from foreign rule has been achieved? When we study the story of the Franc CFA, we can say that in practice it is hardly the case. The story of the Franc CFA is a story of how a former colonial power has manoeuvred to maintain its financial grip on its former colonies through a monetary mechanism called the Franc CFA. This currency was created by General Charles de Gaulle in December 1945. The appellation CFA meant, or still means, the 'Franc des Colonies Françaises d'Afrique', which was deliberately overvalued relative to the French Franc with a view to flooding the colonial markets with French manufactured products and, inversely, making African raw materials cheap for France, thus locking the colonies into "an exclusive economic monogamy with Paris".

In the 1960s, a string of African countries began to hanker for independence either through peaceful means or through military struggles, mostly through the latter. The movement was unstoppable. France had no alternative but to grudgingly acquiesce to the visceral aspirations for freedom of the native people as championed by a melee of liberation movements. But before giving independence, it crafted a sly strategy to keep the newly independent countries on a neo-colonial lease. It imposed on the freshly liberated nations the continued use of the Franc CFA as their national currency. The project was sugar-coated and sold to the African leaders as a means for the Francophone African countries to maintain financial stability with the provision of guaranteed convertibility to the French Franc (now the Euro).

However, many stringent strings were attached to the project as follows:

•    Francophone African central banks were legally required to deposit a huge percentage (65%, now reduced to 50%) of their foreign currency reserves into an operating account controlled by the French Treasury; 
•    French officials retained veto power and reserved seats on the boards of the African central banks; 
•    Francophone Africa was divided into two zones (West Africa and Central Africa), each using a different version of the CFA, not interchangeable with the other.

These neo-colonial arrangements formed the backbone of the Françafrique policy of Paris. It had, and still has, deleterious effects on the economies of the subservient nations. For example, according to the African economist Kako Nobukpo, as the Franc CFA is pegged to the Euro and as it is the core mandate of the European Central Bank to fight inflation at all costs by keeping a strong Euro, the African central banks are forced to mirror this "hyper-fixation" on low inflation by setting up high interest rates (the "high interest rate trap"). The consequence is that commercial banks charge high interest rates to local entrepreneurs, small businesses, local farmers, manufacturers and youth start-ups who are unable to borrow money to scale up.

Secondly, as the Franc CFA is tied to a strong currency like the Euro, it is therefore overvalued. This makes imports artificially cheap, with the result that European manufactured goods and products like French milk and consumer goods become suavely attractive while African-produced goods like processed cocoa, textiles and agricultural products become less competitive. Local industries die down and the nations are "locked into supplying basic raw materials while buying back finished goods from Europe".

Thirdly, while France touts the guaranteed convertibility of the Franc CFA to the Euro as an advantage, the reality is that this system serves as a "massive vacuum cleaner sucking wealth out of Africa". In fact, this enables French corporations to easily convert their massive profits into Euros and legally repatriate them "without friction or heavy taxes". Hence, wealth generated on African soil does not stay in Africa to foster development projects aimed at improving the lives of the people.

This neo-colonial and vampiristic policy continued until 2021, when in the West African zone the legal obligation of transferring 50% of reserves was dropped. But this is an illusion of freedom known as the "golden handcuff". As someone has put it, "the architectural habits have not changed". Since the CFA is still pegged to the Euro and international trade has to be settled in Euros, the BCEAO (the West African zone) still has to keep a massive part of its reserves in European commercial banks. France still acts as the guarantor of the currency. In such conditions, one can hardly speak of monetary sovereignty. Regarding the Central African zone, nothing has changed — the 50% reserves requirement and the French seats in the national banks are still intact.

But that does not mean that there have been no attempts to break away from this iniquitous system. In 1960, Sékou Touré of Guinea rejected the CFA and launched his own national currency. France sabotaged the endeavour by launching "Operation Persil". French secret services flooded the Guinean economy with counterfeit banknotes to destabilise and collapse the system. Furthermore, in 1963, Sylvanus Olympio, the President of Togo, was assassinated when he tried to establish a sovereign national currency.

Today, there is a dynamic movement by some leaders in the Sahel to break away from the shackles of French neo-colonialism. This movement is led by Ibrahim Traoré of Burkina Faso, on whose life several attempts have unfortunately already been made.

Azize Bankur

Sources:

(1) Africa's Last Colonial Legacy: The CFA Franc Story, Fanny Pigeaud and Ndongo Samba Sylla, 2021

(2) Decolonisation and the Legacy of Currency: The Case of France's Former Colonies, Suares Clovis Oukuomi Noutchie, 2025.