Eight West African countries are cutting financial ties with France and replacing the CFA franc. Their new currency will be the Eco, and France’s president, Emmanuel Macron, advised that it “will see the light of day in 2020.” 50% of the currency reserves will no longer be held in the French Treasury. However, six African countries are still logged onto the monetary zone: Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, and Gabon.
Although this is great news, backing out of the CFA franc system has garnered some pushback. The following has been advised:
They have made the argument that since the CFA franc is pegged to the Euro, it provides stability to Africa’s fledgling economies. Inflation is also kept lower compared to other countries in the sub-Saharan region.
According to the International Monetary Fund (IMF), the 14 countries in the zone account for about 12% of Africa’s total gross domestic product. Their economies have expanded since France initiated financial reforms in 1994.
The adoption of the Eco by half of the Economic Community of West States (ECOWAS) may not go down well because the Eco will still be pegged to the Euro currency. But this is still a step in the right direction, especially regarding African sovereignty.
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