Pegging the CFA or Eco to the euro, by France-based monetary instruments, has remained the obstacle to the progress being made to roll out the single currency across the ECOWAS sub-region. Ironically, such Greek gifts (of a beautiful but dangerous Trojan Horse) have been the moonshine that has been luring the survival preoccupations of the leadership of UEMOA ( West African Economic And Monetary Union) towards Paris.
In 1945, when the CFA was launched, it was pegged to the French Franc. Then, after France joined the European Common Market, it got pegged to the euro. The monetary deal was run with a proviso that 50% of the foreign reserves of each member state of the CFA bloc be remitted to the French Treasury in Paris. It equally involved having representatives from France on the managerial or decision-making boards running the operations of the West African Economic and Monetary Union.
The arrangement pegged the CFA to the French Franc and, thereafter, to the euro at a fixed exchange rate guaranteed by the Banque de France (French central bank) for a stable system of convertibility.
Through the twin instruments of foreign reserves requirement and representation of France in the management of the central bank of the UEMOA zone, the members of the zone surrendered the management of their monetary policy to France. Though France, through tighter monetary policies than it could apply to its own economy had made the CFA zone the most stable in the world, with single digit inflation rates for decades, few other nations are tempted by that. And even in member states the agitation is rising for the overthrow of this loathed colonial arrangement.
France, having honed the Machiavellian rules of her ‘assimilation’ policy, has offered to do away with UEMOA having to bank half of her aggregate national fortunes in the French treasury. The unilaterally taunted Eco, as promoted by Ouattara and Macron, also seeks to jettison the proviso of having representatives from France on the executive boards of UEMOA.
But then, despite the gaudy adornments and golden rims of the monetary package, regional and global economic and monetary analysts still point out the insidious economic machinations by which France is preying upon her former West African colonies.
Peter Fabricius, an international policy analyst, pointed out the self-deluding absurdity of the francophone monetary show:
“On closer inspection, it looks more symbolic than substantive. To some, it seems like cutting the more obvious but less important neocolonial monetary ties with Paris, but not quite letting go of the apron strings that matters most: the CFA peg to the euro.”
The CFA or Eco peg to the euro guarantees that the socioeconomic destinies of the peoples benefitting from the Greek gift are continually determined by power games at the French treasury or the Banque de France.
In the light of all these expositions, President Ouattara of Cote d’Ivoire may have scored low in pan-African diplomatic ratings. But then he’s scored very highly on the tough turfs of demagogical electioneering. This is because his timing of the unilateral Eco launch in December, last year, was perfectly expedient.
Ouattara seems to enjoy the knack for deploying an eagle eye on the fields of political opportunism. So, he never meant to allow the UEMOA deal to slip away.
Cote d’Ivoire has a presidential election this year, while Burkina Faso and Niger will be holding parliamentary elections (Togo has just had its own presidential election in the first quarter of the year). So, it is all clear that the Ouattara game is all about coating self-interest with a political flavour and presenting it to the electorate as a political agenda.
So it is no wonder that suspicions have been trailing the motives for his pulling the carpet from under the feet of the WAMZ leadership to effect the controversial launch.
The timing of the move was, as well, economically and politically expedient. It put the klieglights on Nigeria, which had shut its borders (last August) against traders, professionals, businesspeople and sundry citizens of associate ECOWAS countries, as a Bad, Big Brother.
Ironically, what was meant to be a temporary border shutdown got, fortuitously, or rather unfortunately, transformed into a border lockdown by the emergent coronavirus pandemic.
Nigeria, being the commercial hub or honey pot of West Africa, hosting over 70% of the business transactions of the ECOWAS sub-region, the long border closure puts her in the bad books of neighbouring countries.
But then such reactive policy stance was inevitable. Faced with ubiquitous corruption and rather intractable incidents of massive economic leakages, something drastic needed be done to control the damage. Besides, the financially vexatious and continual fall of oil prices has shrunk the economy, thereby destabilizing budgetary projections.
Nevertheless, harping on such challenges, in respect of the stifling of trans-West African commerce can hardly sell well to the affected businesses, business groups, corporate bodies, professionals and their political leaders in the various ECOWAS countries. Compounding the whole conundrum is the vociferous outcry denouncing the long border closure as a protectionist power play by the Nigerian government. And such attitude obviously falls flat in the face of concerted efforts geared towards rolling out a single common currency for the sub-region. Moreover, the bedrock of any viable and sustainable trade convergence is free and unhindered commercial ties and transactions across West Africa.
The urgent challenge Nigeria faces now, as the undisputed leader of the ECOWAS bloc, is to pick up the broken pieces, mend fences and design more proactive diplomatic ways of forging lasting, sustainable, socioeconomic alliances with the other associate economies in West Africa.
It is almost four decades now since ECOWAS member states have been nursing the ambition to have a regional currency as well as an independent monetary union that would make them totally break away from the strings of post-colonial vassalage.
For now, it’s still an extenuating uphill task with the francophone setback. Having clinched the proviso to stop remitting 50% of the foreign reserves of each UEMOA country to the French Treasury, as well as clear French moles from out of the bloc’s monetary and financial institutions, Ouattara seems to have a well-packaged feed for the electorate in Cote d’Ivoire.
Contrariwise, not much is happening in the WAMZ bloc as its leadership in Abuja battles with the energy-sapping and economically harmful coronavirus pandemic. With billions of naira allocated not only to heal the sick and fight the plague but also to provide food for millions of the poor and the elderly enduring the lockdown across the country, WAMZ does not seem battle-ready for the Ouattara duel.
However, beyond this distracting geopolitical dancing around the Eco lies the real litmus test for any genuine readiness to roll out a common currency for ECOWAS: a strong economic performance that ensures that each country meets up with the macroeconomic convergence rating that would smoothen the process of socioeconomic integration
Such convergence criteria, laid out in the road map of the ECOWAS member countries as a prerequisite to the establishment of the Eco, have not yet been met by a majority of countries, mostly WAMZ nations.
Ghana, despite nestling a strong economy, is reeling under a heavy debt burden. And Nigeria, has been battling with both dwindling oil fortunes, an economically crippling plague of coronavirus and an exasperatingly bloody and billions-guzzling war to defeat or destroy Islamic terrorists in its northern territories.
Beyond such worrisome concerns of the Nigerian situation is the accusation, by fellow ECOWAS states, that it is pushing across a protectionist policy as underscored by the long closure of its borders even ever before the threat of coronavirus.
Such observation has been equally advanced by the American financial rating agency, Standard & Poors Global, which advises that compromises have to be reached, however sacrificially, to ensure a viable and sustainable establishment of the Eco.
As the buck-passing zigzags between UEMOA and WAMZ blocs, the ensuing geopolitical distractions downplay the fact that beyond establishing the Eco are the real core developmental issues. Such unfolding challenges involve having to ensure the congenital economic, financial, commercial and industrial base for the Eco to function as a regionally resilient and an internationally competitive West African currency.
Launching the Eco is, therefore, a tip of the iceberg of the complex and immense developmental components required to birth a strong, safe, peaceful, industrially-productive and socioeconomically prosperous ECOWAS.
Milling around such socioeconomic complexities are the challenge of having to battle corruption, ensure transparency in governance, commerce and fiscal and monetary transactions.
Furthermore, there would be need to smoothen up customs and immigration processing as well as invest in such massive development of social infrastructures and sundry policy thrusts as would incrementally drive job creation in ways that will help eradicate poverty across the sub-region.
Such progressive policy sphere would have to give respectable space to civil liberty guarantees as well as the promotion of both constructive and responsible press freedom.
These are challenges that would cause only temporary headaches across the presidential palaces of the ECOWAS leaders. But with doses of determination, stagecraft, sincerity of purpose and a patriotic commitment to break the chains of vassalage tethering the West African peoples and attain an invitingly beautiful, powerful, progressive and prosperous West Africa.