In a bold move that could redefine their economic landscapes, Burkina Faso, Mali, and Niger have expressed their desire to abandon the CFA franc, a currency that has been a symbol of their economic ties to France.
The decision stems from a growing sentiment among these nations that the currency represents a relic of colonialism and hinders their full sovereignty.
The countries’ drive for economic independence
The military juntas leading Niger, Mali, and Burkina Faso have announced plans to create a single regional currency. This initiative, according to Niger’s transitional leader Abdourahamane Tchiani, is a step towards shedding the remnants of colonization.
The proposed currency is seen as a sign of sovereignty, marking a significant shift in the economic strategy of these nations, collectively known as the Alliance of Sahel States (Aes).
Breaking away from the CFA Franc
The CFA franc currently serves as the common currency for the eight member countries of the West African Economic and Monetary Union (WEWA), including Niger, Burkina Faso, and Mali. The move to replace the CFA franc with a new currency underscores the desire of these countries to regain total control over their monetary policies.
This sentiment was further echoed by Burkina Faso’s military ruler Ibrahim Traore, who emphasized the need to break free from any form of economic bondage.
The CFA franc, pegged to the euro, has long been praised for providing macroeconomic stability in a volatile region. However, critics argue that it has stifled growth and perpetuated dependency on France.
The currency’s structure, requiring countries to hold a portion of their foreign reserves with the French Treasury, has been a particular point of contention.
Challenges ahead
While the desire to ditch the CFA franc is clear, the path to a new currency is fraught with challenges. Establishing a new central bank, formulating monetary policy, and managing the transition from the CFA franc are just a few of the hurdles these countries will face.
Additionally, there are concerns about the impact on regional debt and the potential for economic turbulence.
Despite the risks, the move away from the CFA franc is seen by some as an opportunity for greater economic autonomy and development. The ability to set their monetary policies could make their exports more competitive and foster industrial growth.
However, this decision also carries the risk of economic instability, including the possibility of a severe recession.