In 1962, Mali became the first country in Francophone Africa to ditch the CFA franc and create its own currency, the Malian franc. Unfortunately due to internal divisions and France’s fierce determination not to allow any of its former colonies to have complete independence, the Malian franc was abandoned, and Mali integrated into the CFA zone in 1984. Since then, no Francophone country has toyed with the idea of ditching the CFA franc and creating its own currency, until now. After announcing their withdrawal from the ECOWAS bloc, the military juntas of Niger and Burkina Faso have revealed that the next thing on their agenda is to create a single regional currency. According to President Traore, “It’s not just the currency. Anything that maintains us in slavery, we’ll break those bonds,” The head of the Niger’s junta, Abdourahamane Tiani, also echoed the same views during an interview on state television, saying that abandoning the CFA Frank would be a sign of sovereignty and a necessary step and move from French colonization.

General Tiani further stated that “Money is a sign of sovereignty, and we are engaged in a process of recovering our total sovereignty. It is no longer a question of our states being the cash cow of France. France has robbed us of more than 107 years. We must work together to find the mechanisms that allow us to strengthen exchanges within our alliance,” This is a bold move, and as we said, it is the first time ever since Mali abandoned its currency that any Francophone country has decided to consider and make plans towards ditching the CFA franc. Now, unlike other African politicians who are famous for saying something and never putting them into action, the military juntas of Mali, Niger, and Burkina Faso are notable for doing what they say. Even though it was recently revealed that the idea of creating a common currency had been in the works, even before they decided to withdraw from the regional bloc, the ECOWAS.

Recall that in September 2023, Mali, Niger, and Burkina Faso signed the Liptako-Gourma Charter, establishing a new alliance called the Alliance of the Sahel State which laid the foundation of establishing a confederation between the three countries. Initially, it was established as a defence pact for the three countries to pool their military resources to fight rebel or jihadist groups. However, it was later revealed by President Traore that the alliance wiould evolve from a defense union to a true economic, monetary, and political union, that counters the ECOWAS bloc. In November of the same year, the finance ministers of the three states issued a joint statement recommending the creation of a committee of experts to study the issue of economic union and monetary union. This was a historic initiative to re-establish their monetary sovereignty by creating a common currency called “Sahel”. So, as you can see, the idea of creating a common currency is not a farce, Mali, Niger, and Burkina Faso are completely serious about it.

Now, since Mali, Niger, and Burkina Faso revealed their news to the world, there have been huge debates about the implications of this decision. Some experts have warned that dumping the CFA franc is a mistake and it will be risky and significantly complicated because apparently the CFA franc, a currency pegged to the euro, provides macroeconomic stability to every Francophone country that uses it. But is this really true? The CFA franc was officially created on 26 December 1945 by a decree of General de Gaulle. It is a colonial currency, born of France’s need to foster economic integration among the colonies under its administration, and thus control their resources, economic structures and political systems. This currency is currently being used by Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali. Niger, Senegal, and Togo in West Africa, and Cameroon, Central African Republic, Chad, Congo-Brazzaville, Equatorial Guinea, and Gabon in Central Africa.

As established by the monetary accords between African nations and France, the CFA franc is pegged to the euro, and the central banks of the West African States and the Central African States are required to deposit 50 percent of their foreign exchange reserves in a special French Treasury ‘operating account’. Now, defenders of the currency praise its credibility and stability and point out that no CFA member has experienced a major financial crisis. Well, this may be true but the fact is that African countries are paying dearly for this so-called stability that the currency brings. First, think about the fact that every CFA member country is required to deposit at least 50% of its foreign exchange reserves which is currently about 10 billion euros into a special account in the French treasury. And, in return, France guarantees the unlimited convertibility of CFA francs into euros. But does this make any sense? Why would an Independent country have to deposit half of its foreign reserve in the bank of another country? As Malian economist Cheickna Bounajim Cisse says “It makes no economic sense and in our opinion, it’s just a way for France to cooro exercise control over its former colonies.

Another effect of using the CFA franc is that it artificially raises the price of African goods. Unlike other African countries that can use their currency rates to influence their economy, CFA countries cannot independently do that. They do not have control over their currency, meaning that if they wish to devalue their currency to increase exports, they would have to wait for France to do so and since the CFA franc is tied to the strong euro, their prices are automatically higher. This not only reduces the competitiveness of their economies, it also favors imports from countries with weak currencies, like China. The import of finished products in turn limits the industrialization of CFA zone members and makes them more dependent than they already are on exporting raw commodities.

So, who really benefits from the CFA franc? Defenders of the CFA franc claim that the use of the currency in Francophone Africa has made the inflation rate in this region to be low compared to other places in Africa. This may be true but the result of this so-called low inflation is a weak economy and the creation of fewer jobs. The reason for this is that the stability of the currency attracts foreign investors but stifles local production. So, in simple terms, the CFA franc is a good currency only for those who benefit from it, namely the major French and overseas corporations, the executives of the zone’s central banks, the elites wishing to repatriate wealth acquired legally or otherwise, and heads of state unwilling to upset France. This is the reason why the revolutionary governments of Mali, Niger, and Burkina Faso have made it known that they intend to put an end, in the coming months of 2024, to the colonial fiscal agreements concluded decades ago with France.

However, creating a common currency is more than just printing new banknotes. Mali, Niger, and Burkina Faso will have to deal with creating a new central bank that would need to manage a delicate transition away from the CFA franc, formulate monetary policy, and decide what to do about more than $4.6 billion in outstanding CFA-denominated regional bonds. Burkina Faso has over 1.2 trillion CFA francs in outstanding bonds. Mali has slightly over 1 trillion CFA francs, while it’s 498 billion CFA francs for Niger. According to one expert, pulling out of the CFA zone may result in turmoil and uncertainties which would likely leave the three states cut off from future financing from regional and international capital markets. The uncertainty could also provoke capital flight and an immediate depreciation of a new currency. Imports could become prohibitively expensive, fuelling run-away inflation.

In the light of the risks involved in creating the new currency, the military junta’s are approaching the currency question more carefully than their ECOWAS withdrawal. Definitely, a lot of things will have to be put in place before the currency can be realized. However, the fact that this issue is on the table and part of the agenda is mindblowing. Since the military junta’s of Mali, Burkina Faso and Niger came into power, they have completely changed the order of things. From kicking France out of their countries, denouncing Western pressures, to withdrawing from the ECOWAS bloc, these countries have consistently shown that they value their sovereignty above all else. And, now that they are making plans to create a common currency, if they are successful these guys will go down in history as African leaders who defied Western pressure to give monetary freedom to their countries.

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