Title: FOREX Africa: The CFA Franc aka The African Euro
Headings: FOREX Africa: The CFA Franc aka The African Euro
FOREX Africa: The CFA Franc aka The African Euro
France, Africa, and the CFA franc
Countries Using the CFA Franc

Content: A strong currency like the CFA franc makes exports from the CFA-franc zone much more costly than they would ordinarily be and as a result economic growth suffers accordingly. Since most of the countries that use the currency are poor, mostly agricultural economies, this has put a stranglehold on their trade and made them overly dependent upon continuing, privileged access to French and, though them, European markets. That this effectively recreates a quasi-colonial trading relationship between France and its former African colonies that benefits France mightily has not been lost on observers. One way to escape this dependency, of course, is to have a high-value export product like gold, oil, uranium, or cocoa that can sell even with an overvalued currency. Then, as in a country like Gabon – a major oil producer – the benefit of such a strong, overvalued currency becomes clear. Strong commodity exports can easily finance the importation of most everything the country, or, rather, its ruling elites, need. Since domestic markets and banking institutions are simply not developed enough to justify large deposits of export earnings, naturally enough these earnings are deposited back into Western — mostly French and European — banking and financial institutions. These transactions are facilitated, again, by the strong value of the CFA franc. So, what we have in the CFA franc is a currency area that greatly benefits the ruling cliques that run the countries, but otherwise provides very little in the way of benefit to the average citizen of the CFA franc zone. Sure, the lucky few who benefit from control of the economy may be able to import French wine and Japanese cars at a reasonable price, but the politically excluded – meaning the vast majority – are left behind as the economy does not develop and the society becomes overwhelmingly dependent upon a single, high-value commodity or export market for its economic well being.