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Jeddah - Yasmine El Tohamy - DAKAR: Plans to overhaul the CFA franc, a France-backed currency used by former colonies in West Africa, have drawn reactions ranging from skepticism to cautious optimism.
Some experts in the region questioned whether the change amounts to much but others thought it a step forward, although vital issues remain to be tackled.
Introduced in 1945 during colonial times, the CFA is linked to the euro under an arrangement that requires African members to lodge half their reserves in the Bank of France.
The deal provides currency stability — and a dampener on inflation — for the eight countries in the West African Monetary Union (WAMU).
They comprise Benin, Burkina Faso, Ivory Coast, Mali, Niger, Senegal and Togo, which are former French colonies, as well as Guinea-Bissau, a former Portuguese colony.
But the dependence on France, and even the name of the currency itself, are under fire.
Critics have directed withering fire, describing the CFA franc as a symbol of colonialism and past French meddling and an affront to economic sovereignty.
On Saturday, Ivorian President Alassane Ouattara and French President Emmanuel Macron announced a major shift.
Under it, the CFA franc will be renamed the “eco” and its member countries will no longer be required to keep reserves in France.
The currency will retain parity with the euro, and France will quit its managerial institutions.
However, France will provide backup, in the form of a line of credit, if WAMU countries hit a currency crisis.
The description of the change as “historic” ran into immediate flak.
“It’s six of one and half a dozen of the other,” the Ivorian opposition newspaper Notre Voie (“Our Way”) said, while the Quotidien de Dakar daily in the Senegalese capital said: “The outside has changed, but inside, nothing has moved.” Some economists agreed.
Senegalese expert Makhtar Diouf said the announcement was a “non-event” while Ivorian economist Mamadou Koulibaly, an opposition candidate in next year’s elections, said, “there are reasons for feeling confused.”
Donaldine Amangbedji, a researcher at the Abomey Calavi University in Benin, saw no tangible benefit for the public except for “stirring debate on possible alternatives.”
But Togolese economist Kako Nubukpo, a key figure in the attacks on the CFA franc, said the announcement was “marvelous news ... (a) historic moment.”
He cautioned, however: “We will however remain vigilant about the currency regime, which should be sorted out soon — the fixed parity (with the euro) is transitional.”
Senegalese economist Felwine Sarr, writing on Facebook, said the change was “a step forward, but not a revolution nor a fundamental break.”
“At the present time, this reform ... only concerns the most symbolic aspects, but leaves major components of the former relationship unchanged,” Sarr said.
Several important questions will have to be answered in the coming months.
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