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22.11.2019 Africa

Six-nation central African summit debates future of CFA franc

By AFP
In many countries that use the CFA franc, a chronic lack of small change is a hindrance to trade.  By Sia KAMBOU (AFP/File)
NOV 22, 2019 AFRICA
In many countries that use the CFA franc, a chronic lack of small change is a hindrance to trade. By Sia KAMBOU (AFP/File)

Leaders from six central African countries gathered Friday in Cameroon for a summit expected to focus on the CFA franc, whose future has come under question in West Africa.

The extraordinary one-day meeting in Yaounde included leaders from Cameroon, Chad, the Central African Republic, Equatorial Guinea, Gabon and the Republic of Congo.

Cameroon President Biya hosted the summit and said it "gives us a new opportunity to exchange and agree additional measures that can consolidate the economic recovery of our region."

Five of the six nations were represented by their heads of state, while Gabon, whose President Ali Bongo Ondimba suffered a stroke last year, sent its prime minister.

As members of the Economic and Monetary Community of Central Africa (CEMAC), the nations jointly use the CFA franc, a currency rooted in the French colonial era in western and central Africa.

The CFA franc will be on the agenda, according to press kit distributed by Biya's office.

"The currency inherited from colonisation divides economists and heads of state in the (CFA) franc zone," it said.

"(It) is being presented by numerous financial experts as a brake to development."

The CFA -- its initials come from the French words for African Financial Community -- was launched on December 26, 1945 as a "franc of the French colonies of Africa."

The money then morphed into two geographic variants, one for eight countries in western Africa and another for six in central Africa, with a combined population of 155 million people.

CFA member countries must lodge reserves with the Bank of France.

The currency is essentially pegged to the euro, at a fixed rate of 655.96 CFA francs per euro.

The arrangement guarantees unlimited convertibility of CFA francs into euros, facilitates inter-zone transfers and helps price stability.

But detractors say the CFA franc is a "post-colonial" contract that prevents countries from exercising sovereignty over their currency, or which enables France to wield influence in Africa.

The 15 member states of the Economic Community of West African States (ECOWAS) have agreed to adopt a single currency, the "eco", as early as next year.

Prospects of earlier changes to the region's currency dramatically surfaced this month when Benin leader Patrice Talon said the western African states planned to pull their reserves from the Bank of France.

"We are all agreed, unanimously, that we should put an end to this model," Talon told French broadcasters RFI and France 24 on November 14.

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