Another move against French colonialism: The eco currency in Africa

One of the first details given about countries is their currency. In this sense, many African countries draw attention as the traces of colonialism are still visible in more than half of the continent.

Currently, there are 54 independent states and 41 different currencies on the continent. A total of 14 countries have two separate currencies which are printed and protected by the Bank of France – called the CFA franc. While the West African CFA franc is used in eight West African countries, the Central African CFA franc is used in six Central African countries

The first one is valid in the economic Community of West African States (ECOWAS) while the latter is valid in the Central African economic and Monetary Community (CEMAC). However, their circulation is not possible between the two regions.

The currencies of Burundi, Djibouti, Guinea, Comoros, the Democratic Republic of Congo and Rwanda are called “francs,” such as the Djibouti franc.

In addition, Kenya, Somalia, Tanzania and Uganda use the “shilling,” a term inherited from the British colonial era, while Liberia, Namibia and Zimbabwe use the term, “dollar.”

In Mozambique, a former Portuguese colony, the metical is used. A “euro” is in circulation in Mayotte and Reunion, which are considered to be islands of the African continent, as their French colonial status continues. There are 18 different units in Africa when it comes to local currencies.

In the 19th century, France colonized many regions in Africa and Asia and imposed new currencies in the regions in the 1940s. France chose that tactic as a way to make its colonial presence permanent.

However, it couldn’t escape from the reactions in the region. The Kingdom of Morocco adopted the currency of “dirham” in 1955, while Tunisia adopted “dinar” a year later.

On the other hand, the “Guinean franc” was in circulation in 1960, while the “Mali franc” entered into use in 1962.

Algeria was perceived as a part of France. That’s why it was called “New France” and the French franc was used in the country. After its independence in 1962, however, the country adopted the “dinar” as its currency.

Although Madagascar introduced its own currency, “ariary,” in 1963, it was only able to put an end to the use of the CFA franc in 1973. Mauritania also continued on its way in 1973 with the “ougiyya” currency.

Mali returned to the CFA franc in 1984. In 1985, the first Portuguese colony, Equatorial Guinea, adopted the CFA franc. Guinea Bissau followed this pattern in 1997 and joined the union.

The CFA franc is now about to mark its 75-year anniversary. Just after the independence days, 82% of the export revenues of the African countries were kept in the French Bank.

Later on, this rate was reduced to 60% and finally to 50% in 2012 with increasing pressure.

It was perceived as a humiliating attitude in terms of their society. Politicians, economists and especially new generations emphasized the issue in regard to the underdevelopment of the region.

When it was first put into circulation on Dec. 26, 1945, the first letters of the words of the African French Colonies Franc (Franc des Colonies Françaises d’Afrique) were abbreviated as the CFA franc to be used in the colonies of the western and central regions of Africa.

In 1960, the two words in the three-letter abbreviation were replaced with new ones. It was now called the African Finance Community Franc (Franc de la Communaute Financiere d’Afrique) in the west while it was the African Finance Cooperation Franc (Franc de la Cooperation Financiere d’Afrique or F CFA) in the inner part of the continent.

During the past 60 years, countries where this was imposed have struggled to fix the situation. They were also uncomfortable that they were subjected to a serious follow-up process, as the transfer of money to the other party in purchases can only be made through banks.

Moreover, the introduction of counterfeit currencies, destabilization of economic life, political pressures in each country and military coups were seen as games played to keep “the F CFA” in circulation.

France implemented a similar practice for its colonies in Southeast Asia. In Indochina, the Pacific French Colonies Franc (Franc des Colonies Francaises du Pacifique – F CFP) was in circulation.

The exact expression of the currency was changed to the Pacific Financial Community franc (Franc de la Communaute Financiere du Pacifique) in 1954.

However, the countries in this region that got their independence adopted currencies such as the Vietnam “dong,” Laos “kip” and Cambodia “riel.”

A need to rename the CFA franc emerged. For the first time, ECOWAS members took the final step toward this in May 2019. The following June, they decided to name the currency “eco.”

However, they also knew that it was impossible to abolish such a well-established currency by a decision.

A serious structuring process was required to bring the eco into circulation. In the political sense, it was important to involve the will of the opponents, economists and each group of respective societies as well as the ruling parties. Besides, it was also fundamental to prepare the economic structure. Moreover, a schedule was needed to handle a vital issue.

On the other hand, Nigeria, which is not among the countries using the CFA franc and has a currency called “naira,” must be among the 15 countries that will use the eco. However, it was a fact that Nigeria did not intend to engage in the process.

Although Paris would not manage the new currency, its existence as a guarantor brought various reactions. More importantly, just a few argue that the transition to the new currency will be a different process for consumers.

While their suffering from the CFA franc, which did not contribute to their welfare, was obvious and their poverty never ended, a sudden change in their lives was not expected anyway.

In the United Nations Development Programme’s (UNDP) Human Development Index (HDI) in 2016, 10 of the 14 countries that use the CFA francs were among the lowest-ranking 25 countries.

Again, the fact that the six countries that use the CFA franc were among the lowest 25 countries in the International Monetary Fund’s (IMF) gross domestic product (GDP) ranking was interpreted as France having had no intention of developing these countries.

Although they all are on the same continent, the CFA franc countries are behind the ones using English and Arabic currencies. Furthermore, just as it is hard to imagine the eurozone without Germany and France, the idea is that Nigeria and Ghana are vital for the ecoregion.