Africa’s Last Colonial Currency: The CFA Franc Story

Chapter 1: A Currency at the Service of the ‘Colonial Pact’

The first chapter lays the historical groundwork for the CFA franc by placing it within the broader logic of French colonialism and imperial economic strategy. It explains that the CFA franc was not a neutral monetary instrument but an essential cog in a system designed to sustain French economic interests in Africa, even after decolonization. The authors refer to this as the “colonial pact”, a term that symbolizes a set of economic and political arrangements meant to ensure France’s continued access to African resources and markets.

1.1 The Birth of the CFA Franc

The CFA franc was created on December 26, 1945, shortly after World War II, when France ratified the Bretton Woods Agreements and established the Franc of the French Colonies in Africa (Franc des Colonies Françaises d’Afrique). The timing was not coincidental: France, emerging weakened from the war, was keen to preserve its empire and economic sphere. To do so, it needed to maintain monetary and financial control over its colonies.

This new currency was pegged to the French franc at a fixed rate and could only be used within the colonial territories. France retained control over monetary issuance and foreign exchange operations. This setup institutionalized a monetary dependency between the colonies and the metropole, whereby African economies would be tied to the French economy—facilitating the extraction of raw materials, the export of French manufactured goods, and the maintenance of favorable trade balances for France.

1.2 The Role of the Colonial Pact

The “colonial pact” was an economic system that enforced a strict division of labor: African colonies were to provide raw materials, while France would supply manufactured goods. The colonies were discouraged from industrializing and forced into a subordinate economic role. The CFA franc was a crucial tool in this system, ensuring that African countries could not develop independent monetary or fiscal policies.

Under the pact, African nations could not manage their own currencies or foreign exchange reserves. These were centralized in the French Treasury, where a substantial portion of their foreign currency earnings had to be deposited. This was not just monetary domination—it was a systemic economic capture.

The colonial pact also facilitated price control mechanisms that kept African raw materials undervalued, benefiting French industries and consumers. It encouraged mono-cropping and discouraged economic diversification. For instance, countries like Côte d’Ivoire were locked into cocoa production, while others became dependent on peanuts or uranium. This lack of diversification made African economies extremely vulnerable to market shocks, yet kept them reliant on French markets and intermediaries.

1.3 The Post-War French Imperative

After WWII, France was under pressure to rebuild its economy and retain global status. It lacked sufficient natural resources and industrial power, so it looked to its African colonies to fill the gap. The CFA franc system provided a guaranteed supply of cheap raw materials, foreign exchange earnings, and captive markets for French exports.

France institutionalized these structures through legal, financial, and military arrangements, including the CFA franc. These ensured that France’s economic power would persist, even if political independence movements were successful. This helps explain why France was reluctant to let go of its colonies and why it continued to intervene in African politics long after formal decolonization.

The CFA franc thus became a central pillar of France’s neocolonial strategy, undergirded by an economic rationale disguised as monetary cooperation.

1.4 The 1948 Devaluation

One of the most revealing episodes of France’s unilateral control over the CFA franc was the 1948 devaluation of the French franc. At the time, France decided to devalue its own currency, but it also devalued the CFA franc by halving its parity with the French franc.

This move—decided without consultation with African authorities—meant that the purchasing power of Africans was drastically reduced. It also increased the cost of French imports, benefiting French exporters while impoverishing African consumers. The devaluation highlighted the asymmetrical power structure embedded in the CFA system: France could make sovereign decisions that profoundly impacted African economies, without any accountability.

This devaluation set a precedent for how the CFA franc system would function in the decades to come: French interests would prevail, and African partners would remain subordinate.

1.5 The CFA Franc and Political Control

More than just an economic instrument, the CFA franc was a tool of political control. It was a way for France to reward compliant regimes and punish those who resisted its authority. The authors point to various instances where leaders who questioned the CFA system faced retaliation, including coups d’état and political sabotage.

The logic was simple: by controlling the money, France could limit African sovereignty. Countries had limited freedom to enact fiscal policy, invest in infrastructure, or run trade deficits. Instead, their economies were kept in a tight monetary straitjacket, which hindered development and fostered dependency.

1.6 The Persistence of the Colonial Logic

Even after the wave of African independence in the 1960s, France maintained the core principles of the colonial pact through the CFA franc. The currency changed names—from “Colonies Françaises d’Afrique” to “Communauté Financière Africaine” in West Africa and “Coopération Financière en Afrique Centrale” in Central Africa—but the institutional structures remained essentially the same.

The supposedly cooperative nature of the CFA institutions is misleading. In reality, France retains veto power over monetary policy, dictates exchange rates, and continues to hold foreign exchange reserves on behalf of African countries.

The chapter concludes by emphasizing that monetary sovereignty is a prerequisite for real independence. As long as African countries remain tethered to the CFA system, they are denied the basic tools of economic self-determination. The CFA franc, far from being a symbol of regional integration, is a symbol of neocolonialism.

Chapter 2: The CFA System

This chapter explores the institutional architecture and functioning mechanisms of the CFA franc monetary system. It reveals the technical apparatus that ensures France’s continued control over the monetary affairs of 14 African countries. While the currency has been presented as a stabilizing force and symbol of cooperation, the authors argue that it functions more as an instrument of dependency and subordination.

2.1 The Two Currency Zones

The CFA franc zone is composed of two separate monetary unions:

1. West African Economic and Monetary Union (WAEMU)

• Countries: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo
• Currency: CFA franc (XOF)

1. Central African Economic and Monetary Community (CEMAC)

• Countries: Cameroon, Central African Republic, Chad, Republic of the Congo, Equatorial Guinea, and Gabon
• Currency: CFA franc (XAF)

Although both groups use a currency with the same name and parity, the two are not interchangeable—XOF and XAF are separate and cannot be transferred freely between the two zones. This fragmentation further complicates economic integration within Africa and reflects the French-engineered design to control and divide.

2.2 Fixed Peg and Convertibility

A defining feature of the CFA system is its fixed exchange rate with the French currency—first the French franc, and now the euro. The peg is maintained at a rate of 1 euro = 655.957 CFA francs, guaranteed by the French Treasury.

This peg is presented as a benefit: it is said to provide monetary stability, low inflation, and investor confidence. However, the authors argue that this stability comes at a high cost:

• Loss of monetary sovereignty
• Export disadvantages
• Structural deflation

Moreover, France has the final say in whether a devaluation can occur. This was demonstrated dramatically during the 1994 devaluation, when the CFA franc was halved in value under French orders—without African countries having real decision-making power.

2.3 The Operations Account Mechanism

At the heart of the CFA system is the “Operations Account” (compte d’opérations). This is a special account held at the French Treasury, where:

• 50% of the foreign exchange reserves of WAEMU and CEMAC central banks must be deposited.

In exchange, France provides an unlimited convertibility guarantee, meaning it will provide euros (or previously francs) as needed to back the CFA franc.

This mechanism gives France powerful leverage:

• Manages a portion of African reserves
• Access to financial data
• Influence over liquidity and fiscal policy

2.4 Monetary Policy and Governance

The two regional central banks—the BCEAO (for WAEMU) and the BEAC (for CEMAC)—appear independent, but are still subject to French oversight.

• A French representative sits on each central bank’s board with veto power.
• These representatives authorize monetary issuance and foreign exchange policy.
• Central banks follow strict rules modeled on the ECB, prioritizing price stability over development.

This results in a monetary orthodoxy that constrains public investment and developmental initiatives.

2.5 The Myth of Stability and Benefits

Proponents of the CFA franc emphasize:

• Low inflation
• Monetary stability
• Convertibility
• Investor confidence

But the authors argue:

• Foreign firms benefit more than African populations.
• Stability comes with underdevelopment and unemployment.
• Convertibility facilitates capital flight, not development.
• FDI has not produced sustainable transformation.

2.6 Structural Constraints and Dependency

The CFA system enforces dependency by preventing the use of:

• Independent monetary issuance
• Currency devaluation
• Central bank financing of public investment

This pushes countries toward external debt and austerity, reinforcing foreign control over economic policies.

Countries outside the CFA system (e.g., Ghana, Nigeria) face challenges, but enjoy greater macroeconomic flexibility.

2.7 Disconnected from African Realities

The CFA’s monetary rules reflect European concerns, not African realities. While African economies face:

• Underemployment
• Infrastructure gaps
• Export volatility

The CFA regime enforces rigid inflation control. Central banks are prevented from becoming agents of developmental transformation.

Chapter 3: Resistance and Reprisal

While the CFA franc was designed to ensure continued French influence in postcolonial Africa, it was not accepted without opposition. This chapter recounts the stories of leaders who challenged the monetary system, the reasons behind their resistance, and the often violent or coercive responses orchestrated by France to preserve its dominance.

3.1 Post-Independence Disillusionment

In the late 1950s and early 1960s, African leaders were told that remaining in the CFA zone would provide stability and support. However, many soon discovered that the system locked their economies into dependency and subservience. Some began pushing for monetary sovereignty, recognizing that political independence was meaningless without economic control.

3.2 Sylvanus Olympio and the Case of Togo

Sylvanus Olympio, Togo’s first president, planned to create a national currency and exit the CFA system. Days before the currency’s launch, he was assassinated in a coup (1963), reportedly led by French-trained soldiers. The new regime quickly realigned with France, setting a precedent: monetary defiance could be fatal.

3.3 Modibo Keïta and Mali’s Breakaway

Modibo Keïta, Mali’s first president, withdrew from the CFA zone and created the Malian franc. France responded with:

• Trade blockades
• Regional isolation
• Support for internal dissent

In 1968, Keïta was overthrown, and the new regime reinstated the CFA franc, showing how France could cripple a defiant economy.

3.4 Guinea and the 1958 Referendum

In 1958, Ahmed Sékou Touré led Guinea to vote “No” in the French Community referendum, rejecting the CFA franc. France retaliated by:

• Sabotaging infrastructure
• Flooding Guinea with counterfeit currency
• Severing trade relations

Despite these attacks, Guinea persisted—but the ordeal discouraged other nations from similar moves.

3.5 Compliant States and the Incentive System

While dissenters were punished, compliant governments were rewarded with:

• Aid
• Military protection
• Access to French markets

This nurtured a Francophile elite who enforced CFA rules in exchange for patronage and stability.

3.6 Psychological and Diplomatic Pressure

France also used softer methods to discourage resistance:

• Embedding French advisors in key ministries
• Warnings of inflation, chaos, and isolation
• Diplomatic isolation of rebels

These methods created a climate of fear, reinforcing the status quo.

3.7 The Broader Logic of Reprisal

A typical pattern emerged:

1. Sovereign monetary moves were announced.
2. Pressure and isolation followed.
3. If resistance persisted, regime change occurred.
4. CFA compliance was restored.

This cycle ensured the survival of the CFA system by eliminating successful counter-models.

3.8 Lessons and Contemporary Relevance

Today, the memory of these reprisals continues to shape African monetary policy. Discussions of reform often trigger:

• Elite anxiety
• Negative media campaigns
• French diplomatic interventions

Thus, the CFA’s persistence is less about economics and more about historical trauma and power dynamics.

Chapter 4: France in Command

This chapter explores how France maintains control over the CFA franc system. Despite African political independence, monetary sovereignty remains elusive, thanks to a network of formal agreements, embedded French representatives, and psychological submission. France commands the system without needing to resort to open coercion.

4.1 Institutional Control through Agreements

CFA countries operate under monetary cooperation conventions with France, granting it an enduring role in:

• Currency issuance
• Exchange rate policy
• Reserve management

These agreements are often asymmetrical and opaque, negotiated without public debate.

4.2 French Representatives in Central Banks

French officials sit on the boards of BCEAO and BEAC, where they:

• Influence monetary policy
• Possess veto powers
• Ensure French interests are protected

This gives France real-time input into every major financial decision.

4.3 Control Over Foreign Reserves

50% of CFA zone reserves are deposited in the French Treasury’s operations account. This enables France to:

• Track African liquidity
• Maintain de facto capital controls
• Offer a convertibility guarantee that benefits investors, not African states

4.4 Monetary Policy Aligned with French Interests

The CFA franc’s policies prioritize price stability, in line with:

• Eurozone anti-inflation doctrine
• Investor confidence over development needs

This results in austerity, low public investment, and economic stagnation.

4.5 Political Leverage and Surveillance

France’s embedded role enables it to:

• Block reforms
• Monitor political and economic shifts
• Protect corporate and geopolitical interests in Africa

4.6 Psychological Internalization of French Authority

Years of dependency have led many elites to believe:

• Monetary sovereignty is dangerous
• France’s presence is a stabilizing force
• The CFA system is less risky than alternatives

This belief system sustains the CFA without requiring direct force.

Chapter 5: At the Service of the Françafrique

This chapter explores how the CFA franc operates as a core component of the Françafrique system—a web of political, military, and economic domination that France maintains over its former African colonies. Far from being a neutral monetary tool, the CFA franc has been used to enforce loyalty, enrich elites, and suppress dissent.

5.1 Defining Françafrique

Françafrique refers to:

• French control over resources, military bases, and political regimes
• Informal patronage networks with compliant African elites
• Maintenance of French business monopolies in Africa

The CFA franc enables this system by giving France direct economic levers of influence.

5.2 Currency as a Tool of Political Discipline

France has used the CFA to:

• Block financial transfers
• Freeze reserves
• Withhold central bank support

These measures punish governments that challenge French influence.

5.3 Enriching the “France-Africa” Elite

A select class of elites has benefited from the CFA system:

• Wealth held in France or in euro-linked CFA accounts
• Political legitimacy tied to French recognition
• Rewards for facilitating French corporate interests

5.4 Supporting Authoritarian Regimes

France has propped up longstanding autocrats in the CFA zone by offering:

• Military protection
• Conditional aid
• Currency stability

This has fostered political repression and weak institutions.

5.5 Facilitating Capital Flight and Corruption

The CFA’s convertibility allows:

• Illicit financial outflows
• Money laundering via French banks
• Easy repatriation of multinational profits

France and its financial sector often benefit from or ignore these abuses.

5.6 Economic Subjugation of the Region

Structural impacts of the CFA system include:

• Commodity dependence
• Limited industrial policy autonomy
• Reserve control by France
• Restricted policy space

African economies remain shaped by French strategic interests, not developmental goals.

5.7 Complicity of International Institutions

IFIs like the IMF and World Bank praise the CFA system for:

• Price stability
• Macroeconomic discipline

They ignore:

• Its neocolonial structure
• Developmental stagnation
• Political manipulation

Chapter 6: An Obstacle to Development

This chapter shows how the CFA franc system, despite being praised for monetary stability, has become a major barrier to development. The countries that use it face deep structural stagnation, constrained public spending, and limited industrial growth.

6.1 The Development Paradox

CFA countries show:

• Low inflation
• Moderate debt
• Stable currency

But they also suffer from:

• High unemployment
• Low industrial diversification
• Persistent poverty

This disconnect between stability and development is the CFA zone’s core issue.

6.2 Structural Constraints Imposed by the CFA System

Key constraints include:

• Fixed exchange rate (no competitiveness)
• Reserves held in France (loss of control)
• No central bank financing (austerity)

These limit public investment and policy autonomy.

6.3 Comparative Performance with Non-CFA Countries

Compared to Ghana, Ethiopia, or Rwanda:

• CFA countries show slower growth
• Less infrastructure investment
• Weaker industrial policy

This suggests that monetary independence, while imperfect, supports development better.

6.4 Low Industrialization and Job Creation

Problems include:

• Limited access to credit
• Over-reliance on imports
• No export support

The CFA’s fixed exchange rate favors importers and foreign firms, not local production.

6.5 External Shocks and Vulnerability

CFA countries are commodity dependent and exposed to:

• Price drops
• Droughts
• Pandemics

They cannot respond flexibly and must cut spending, worsening inequality.

6.6 Investment and Public Spending Constraints

Governments face:

• No central bank lending
• Tight deficit rules
• Capital restrictions

This means chronic underinvestment in infrastructure and public services.

6.7 The Misleading Promise of Stability

CFA advocates sell “stability,” but:

• It favors foreign capital
• It limits developmental choices
• It blocks transformation

The real trade-off is sovereignty for stagnation.