African Leader

A summit of central African leaders was thrown into disarray when previously unannounced guests crashed the summit. The leaders were shocked to see IMF chief Christine Lagarde, a national of France who had held various ministerial positions in the French government before her current position as IMF chief, and current French Finance Minister, Michel Sapin, joining them. Only the host, Mr. Paul Biya of Cameroun must have been in on this surprise. Of course, he had once described himself as the best student of France. Ostensibly, the meeting was held to discourse the impact the fall of oil prices was having on their reserves, reserves that are held in part at the French treasury.

The reason of the stealthy gate-crashing move soon became apparent when suddenly on the table was the issue of devaluation of the Franc CFA, the currency used by these CEMAC countries (Economic and Monetary Community of Central Africa). An acrimonious argument soon ensued with the president of Chad, Mr. Idriss Deby pushing for a complete new currency for the zone devoid of French influence, and the IMF and France together with the “best student of France” toeing the French line of devaluation. It resulted in a walkout of Mr. Deby together with the president of Gabon, Mr. Ali Bongo.

More than 20yrs after the imposition of devaluation on these countries by France and the IMF and the devastating impact it had on the lives of ordinary Africans, the same culprits are back at it again. Let’s take a journey down memory lane:

On December 25, 1945, General De Gaulle, after the liberation of France, due in large part to the bravery, valour and sacrifice of African soldiers, created a currency, the CFA Franc, an acronym which originally meant “French Colonies in Africa.” If nothing else, the original acronym exposes the sham that France granted independence to any of its African colonies now using the CFA Franc. As France’s former Prime Minister Edouard Balladur puts it, “money is not a technical issue but a political one, which affects the sovereignty and independence of nations.”

If there was any doubt as to what Mr. Balladur meant, that should have been cleared up when France and the International Monetary Fund, in January of 94, imposed the devaluation of the CFA franc on the African countries using it. The devastating effect that decision had and the benefits to France is well documented. As Demba Moussa Dembele in his April 2014 piece for pambazuka indicated:

The ‘benefits’ which were expected from the use of the CFA franc were only a mirage. Indeed, it has neither promoted regional integration nor economic growth, let alone development! This is why the central argument of this paper is that as long as the issue of monetary sovereignty remains unresolved in accordance with the needs and development priorities of African countries, it is unrealistic to expect actual development in these countries. Money is an essential part of a country’s sovereignty and a key instrument of a state which intends to control its’ development process. A sovereign currency is one of the basic conditions for the formation of a true regional market, without which there can be no sustainable industrialisation process. We know, for example, how the developmental states in South East Asia and South Korea, have used monetary and fiscal policy to promote strategic sectors of their economies, turning them into the ‘Tigers’ and ‘Dragons’ of the global economy.

Demba Moussa went on to explain how the use of this currency cripples Africa, and as you read this portion, keep in mind that part of the IMF and French plan of devaluation and then imposition of privatisation was to make it such that state controlled natural resources could be sold off to French and European “investors” at bargain basement prices because citizens of the African countries could not compete with these investors after their capital was devalued. Demba Moussa explained how the CFA aided these “investors through capital flow:

The four principles underlying the operation of the Franc Zone, including the free movement of capital between African countries and France, take away any control by the Central Bank on capital movement within the area and weakens its ability to regulate capital movement between the latter and third countries. This double handicap explains the massive capital flight out of the Franc Zone, which is especially observed during times of political or economic crisis.
For example, the free transfer of capital between African countries and France represents a huge profit repatriation to French investors and their institutions and an exodus of household income from their country of origin. Thus, between 1970 and 1993, foreign investment in the African countries of the Franc Zone were estimated at $ 1.7 billion while the repatriation of profits and expatriated income would have amounted to $ 6.3 billion during the same period, nearly four times the level of foreign investment, says Nicolas Agbohou . These figures refute the view that the ‘stability’ of the Franc Zone promotes foreign direct investment (FDI). African countries that receive the most FDI are those that are rich in oil and mineral resources, not necessarily those with ‘stable’ currencies

Given this evidence and the clear reason that the previous devaluation was done for the benefit and the benefit alone of France, the IMF and the European central bank, that the same forces are now back at the table as European economies especially France’s suffer, should send a shiver down the spine of the Franc Zone.

Ben Nwana

This entry was posted in Business. Bookmark the permalink.
  • Pascal Kiki

    France is a leach in Africa. We must break away from this entrapment by any means necessary.

  • France is a leach in Africa. We must break away from this entrapment by any means necessary.

Valid XHTML 1.0 Transitional
Valid CSS!