SYDNEY and KUALA LUMPUR, Aug. 30 (IPS) – Most sub-Saharan African French colonies became formally independent in the 1960s. But their economies have made little progress, leaving most people in poverty and generally worse off than in other post-colonial African economies.
Pre-World War II colonial monetary arrangements were consolidated in the Colonies Françaises d’Afrique (CFA) franc zone established on December 26, 1945. Decolonization became inevitable after France’s defeat at Dien Bien Phu in 1954 and its withdrawal from Algeria less than a decade later.
France insisted that decolonization should involve ‘interdependence’ – presumably asymmetric, rather than between equals – and not real ‘sovereignty’. In order for colonies to gain ‘independence’, France required membership of Communauté Française d’Afrique (still CFA) – founded in 1958, replacing Colonies of Community.
CFA countries now have two currency unions. Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo belong to UEMOA, the French acronym for the West African Economic and Monetary Union.
Its counterpart CEMAC is the Economic and Monetary Community of Central Africa, comprising Cameroon, the Central African Republic, the Republic of Congo, Gabon, Equatorial Guinea and Chad.
Both UEMOA and CEMAC use the CFA Franc (FCFA). Ex-Spanish colony, Equatorial Guinea, joined one of the two non-French colonies in 1985. In 1997, the former Portuguese colony of Guinea-Bissau was the last to join.
Such requirements have ensured the continued exploitation of France. Eleven of the 14 former French colonies in West and Central Africa remain Least Developed Countries (LDCs), at the bottom of UNDP’s Human Development Index (HDI).
French African Colonies
Guinea was the first to leave the CFA in 1960. For fellow Guineans, President Sékou Touré told President Charles de Gaulle: “We prefer poverty in freedom to wealth in slavery”.
Guinea soon faced French destabilization efforts. Counterfeit banknotes were printed and put into circulation for use in Guinea – with predictable consequences. This massive fraud brought down the Guinean economy.
France withdrew more than 4,000 civil servants, judges, teachers, doctors and technicians, saying they should sabotage everything: “un divorce without pension alimentaire” – a divorce without alimony.
Maurice Robert, former head of the French Espionage Documentation Service (SDECE), later acknowledged: “France has launched a series of armed operations using local mercenaries, with the aim of creating a climate of insecurity and, if possible, overthrowing Sékou Touré” .
In 1962, French Prime Minister Georges Pompidou warned African colonies considering leaving the franc zone: “Let’s allow the experience of Sékou Touré to unfold. Many Africans are beginning to feel that Guinean politics is suicidal and contrary to the interests of all of Africa.”
Togo’s independence leader, President Sylvanus Olympio, was assassinated outside the US embassy on January 13, 1963. This happened a month after he established a central bank that issued the Togolese franc as legal tender. Of course, Togo stayed in the CFA.
Mali left the CFA in 1962 and replaced the FCFA with the Malian franc. But a coup d’état in 1968 ousted the first president, radical independence leader Modibo Keita. Unsurprisingly, Mali rejoined the CFA later in 1984.
Rich in resources
The eight UEMOA economies are all oil importers, exporting agricultural commodities such as cotton and cocoa in addition to gold. By contrast, the six CEMAC economies, with the exception of the Central African Republic, are heavily dependent on oil exports.
CFA apologists argue that the FCFA’s peg to the French franc, and later the euro, has kept inflation low. But lower inflation has also led to “slower per capita growth and reduced poverty reduction” than in other African countries.
The CFA has traded “lower inflation for fiscal restraint and limited macroeconomic options”. Unsurprisingly, CFA member growth rates were lower on average than in non-CFA countries.
With one of Africa’s highest incomes, petroleum producer Equatorial Guinea is the only CFA country to “graduate” MOL status in 2017, having only met the “graduation” criterion for income.
The oil boom resulted in an average growth of 23.4% per year in 2000-2008. But since then, growth has fallen sharply, with an annual contraction of -5% in 2013-21! The 2019 HDI of 0.592 ranked 145 of 189 countries, below the average of 0.631 for middle-class countries.
With over 70% of the population poor and over 40% in ‘extreme poverty’, inequality is extremely high in Equatorial Guinea. The top 1% got more than 17% of the pre-tax national income in 2021, while the bottom half got 11.5%!
Four out of ten children aged 6-12 in Equatorial Guinea did not attend school in 2012, far more than in many poorer African countries. Half of the children who started primary school did not complete it, while less than a quarter went on to secondary school.
CFA member Gabon, the fifth largest African oil producer, is an upper-middle-income country. Since petroleum accounts for 80% of exports, 45% of GDP and 60% of fiscal revenue, Gabon is very vulnerable to oil price volatility.
One in three Gabonese lived in poverty, while one in ten was in extreme poverty in 2017. More than half of rural residents were poor, with three times more poverty than in urban areas.
Côte d’Ivoire, a non-LDC CFA member, experienced high growth, peaking at 10.8% in 2013. With lower cocoa prices and Covid-19, growth declined to 2% in 2020. About 46% of Ivorians lived off less than 750 FCFA (about $1.30) a day, with its HDI ranked 162 out of 189 in 2019.
The Neocolonial Role of CFA
It is clear that the CFA is “promoting slowness and underdevelopment among its member states”. Worse, it also limits available credits for fiscal policy initiatives, including promoting industrialization.
Credit-to-GDP ratios in CFA countries were low at 10-25% – up from over 60% in other sub-Saharan countries! Low credit-to-GDP ratios also indicate poor financing and banking facilities, preventing investments from being financed effectively.
Forgoing exchange rate and monetary policies means CFA members have less policy flexibility and room for development initiatives. They also don’t handle resource prices and other challenges well.
The CFA’s institutional requirements — specifically keeping 70% of their currencies with the French Treasury — restrict members’ ability to use their forex earnings for development.
More recent fiscal rules limiting government deficits and debt – for UEMOA from 2000 and CEMAC in 2002 – have also limited policy space, especially for public investment.
The CFA also failed to promote trade between members. After six decades, trade between CEMAC and UEMOA members averaged 4.7% and 12% of their total trade, respectively. Worse, pegged exchange rates have exacerbated balance of payments volatility.
Unlimited transfers to France have enabled capital flight. The FCFA’s unrestricted euro convertibility should reduce the risk of foreign investment in the CFA. However, foreign investment is lower than in other developing countries.
Total net capital outflows from CFA countries in the 1970-2010 period amounted to $83.5 billion – 117% of combined GDP! Capital flight from CFA economies was much more than from other African countries during the 1970-2015 period.
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© Inter Press Service (2022) — All rights reservedOriginal source: Inter Press Service