On July 26, 2023, a military coup occurred in Niger. The leader of the coup and former captain of the presidential guard deposed President Bazoum and stopped exporting uranium ore to France. After negotiations between the two parties failed, French President Macron announced that he would withdraw from the country by the end of 2023. All the troops were stationed in Ni. How much impact will this have on the “return to Africa” strategy proposed by the French government a few years ago?
To predict this, we must first understand the concepts of “French Africa” and “CFA Franc” in African geopolitics.
“French Africa” and “CFA franc”
As a veteran colonial power, France had nearly 13 million square kilometers of colonies at its peak, ranking second after the United Kingdom. Its colonies are mainly in Africa, and once occupied 37% of the total area of Africa. Such a vast African area, with French as the official language, is called “French-speaking Africa”.
Beginning in the 1960s, the British and French colonial systems completely collapsed. In the “post-colonial era”, the relationship between the old colonial empires and the former colonies of the Third World gradually entered an era of equality at the international political level. Of course, due to uneven development in other aspects such as economy, technology, culture, society, and life, Western countries have market advantages in international commerce and trade.
In December 1945, the French government issued the “French African Colonial Franc”. Each French colony in Africa established a “business account” in the French Ministry of Finance and deposited all foreign exchange into this account. The fixed exchange ratio between the “French franc” and the “Chinese franc” is 1:1.7. As of 1949, France controlled 80% of the exports and 75% of the imports of African colonies through financial means.
In September 1958, France formulated the “Constitution of the Fifth Republic” and changed the “French Federation” to the “French Community”. Each member state of the “Community” enjoys autonomy in domestic affairs, economy, etc., but foreign affairs, defense, etc. are still controlled by France. After 1960, 12 countries in the “community” became independent. In 1961, the “Community” Senate announced its dissolution. Since then, France has maintained relatively close bilateral relations with the original Community member states in the form of bilateral treaties, trade agreements, and “associated countries”.
After the collapse of the French colonial system, French African countries became independent one after another. The new African states banded together to negotiate with the French government. These newly independent French African countries formed the “Monetary Union of West African Countries” in 1962, and the “Bank of Central African States” was established in 1972. These two central bank systems uniformly issue the legal tender of these new countries.
The “CFA Franc Zone” covers 15 African countries south of the Sahara (the island nation of Comoros in the Indian Ocean, which issues the Comorian franc separately) with a population of approximately 155 million. The exchange rates of “West African CFA franc” and “Central CFA franc” are equal, but they cannot circulate with each other.
In January 1999, the European Union recognized the currency cooperation agreement between France and the CFA franc zone, and approved the “CFA franc” to be officially linked to the upcoming euro, with a fixed exchange rate of 655.957:1 (CFA franc: euro).
Political independence vs. economic or monetary “dependence”
Now that these former French African countries have achieved political independence, why do they have to be closely linked to France economically, especially in terms of currency? The reason is: the social structure and economic development of these African countries are backward, and their national economies are completely dependent on France. Modern currency is no longer a physical currency defined by the gold standard, silver standard or bi-standard precious metals, but has evolved into a national credit symbol. Banknotes that lack credibility will not be recognized by the international community, and the region’s economy will collapse. After currency collapse, great social unrest, or even horrific famine and bloody civil war, often occur within a short period of time.
Therefore, the “Western CFA franc and Central African CFA franc” issued by African countries have to continue to be pegged to the franc. The credit endorsement provided by the franc’s international currency status has maintained the general stability of these countries for decades after their independence. For the people there, , the more simple function is that the more stable “CFA franc” can buy food and have food to eat.
Of course, France profited greatly from the relationship between the franc and the “CFA franc” and played an important role in France’s post-war reconstruction and economic revival after World War II. At the same time, black people in “French-speaking Africa” can also take advantage of the exchange of “Chinese francs” with French francs in their hands to go to France to study and do business, creating a large number of “African elites” who accept French thought and culture and speak French. This gives France great ideological, cultural, political and economic advantages in “French-speaking Africa”. At the same time, among the nearly 68 million people in France, there are nearly 8 million blacks (including illegal immigrants), accounting for nearly 12%.
In the process of long-term cooperation, France and Africa compromised with each other: the headquarters of the “Central Bank of West African States” and “Central Bank of Central African States” were moved from Paris to Dakar and Yaounde in Africa respectively. Alliance member states will adjust the proportion of foreign exchange deposited in the Bank of France from 100% to 65%. The “West African Central Bank” has a 7-member board of directors, with French directors reduced to 2; the “Central African Central Bank” has a 12-member board of directors, with French directors reduced to 3, which greatly reduces the weight of France and increases the rights of Africa.
Behind the “CFA Franc”, the franc’s international currency status, credit endorsement, and support from the French government (especially France’s commitment to the rigid exchangeability of the “West African CFA franc”) protect the economies of Central and West Africa, and are important for maintaining the former French African region. played an important role in maintaining social stability. In the 1970s, life in these African countries was pretty good.
After 1999, when the euro was born and the French franc withdrew from the stage of history, the “CFA franc” was instead pegged to the euro at a fixed exchange rate.
Relying on the long-term stability of the franc and the euro, the CFA franc has maintained a strong currency value even in the turbulent era of wars, frequent coups, and social crises in other parts of Africa. This has played a vital role in maintaining the existence of the government in “French-speaking African” countries and surviving the continuous wars, coups, economic crises, and social unrest across Africa.
Compared with other regions in Africa, the “CFA Franc Zone” has avoided inflation caused by excessive currency issuance and maintained currency credibility and stability. From 2014 to 2017, the global inflation rate ranged from 2.8% to 3.2%, and the inflation rate in sub-Saharan Africa (outside the “CFA franc zone”) soared from 6.3% to 11.3%. The inflation rate in the “CFA franc zone” has always remained between 0.7% and 1.7%. With good monetary credibility, the “CFA Franc” maintains the record as the longest-lasting fixed exchange rate mechanism in the world.
French troops in Africa
After the end of the “Cold War”, ideological conflicts gave way to what Huntington called the “clash of civilizations”, and “French-speaking Africa” is no exception. The conflict of civilizations in the context of great power competition for hegemony has even threatened the survival of many African countries. In 2012, the Malian government forces were defeated by the anti-government forces. The Malian government had no choice but to ask France, its former sovereign state, to send troops to rescue them. In 2013, the French army launched “Operation Serval” to drive the anti-government forces into the desert in northern Mali. , helped the Malian government regain most of its territory.
France’s current military operations in “French-speaking Africa” are not the colonial military aggression of “might is right” two centuries ago, but a stability-maintaining alliance military operation within the framework of modern international law. A hallmark of this type of action is that it requires a formal invitation from a legitimate government. If the local government does not agree to the continued presence of foreign troops, the French troops will have to withdraw.
The withdrawal of the French army from Niger is an example of this type of military operation: the French army was invited by the legitimate government of Niger to come to “anti-terrorism” (maintain stability). However, a military coup occurred in Niger. Although the current regime lacked legitimacy, it issued an expulsion order and the French army had to withdraw.
From West African CFA Franc to Eco?
France considers that ancient “colonialism” is gone forever. The so-called “return to Africa” strategy refers to France using a modern social form to rebuild new inter-country relations with “French-speaking Africa” on the basis of equality. The first priority is currency, and the major decision made by France is to support the currency reform of “French-speaking Africa”.
On December 21, 2019, French President Macron reached an agreement with the Chairman of the “West African Economic and Monetary Union” and announced that he was preparing to abolish the “West African CFA Franc” and use a new currency “Eco” in 2020.
France’s purpose is to promote the economic integration of the “West African CFA franc zone” in order to attract countries such as Nigeria and Ghana outside the franc zone to join. As the original initiator and guarantor of this new economic cooperation zone, France will have the greatest say in the currency union and become the biggest beneficiary of Africa’s cheap labor and abundant natural resources.
For the countries in the “West African CFA franc zone”, having the right to issue currency conforms to their domestic “financial nationalism” trend and is conducive to increasing the government’s reputation and safeguarding the survival of the regime. Most West African countries are small in size and have small economies. There is no economic power in the region to guarantee support for the implementation of a unified currency, so they must rely on France for support.
In the future, if countries outside the alliance (Nigeria, Ghana) can meet certain economic and other conditions, Eco does not rule out the possibility of attracting them to join, thereby establishing a larger monetary union.
Obviously, France’s goal is to focus on Nigeria. Nigeria is not only rich in oil resources, but also has a population of more than 200 million and maintains the highest fertility rate in the world. Some scholars predict that Nigeria’s population may reach about 700 million by the late 21st century. According to some schools of thought, the “demographic dividend” is huge.
According to the agreement, the issuance of the new currency Eco requires each country to meet certain economic indicators as a threshold, such as fiscal deficit not exceeding 3% of GDP, inflation within 10%, and public debt not exceeding 70% of GDP, etc. This is still a test for these countries. .
As of 2022, neither the “West African CFA franc zone” countries nor French officials have announced a specific advancement timetable for Eco. Affected by the COVID-19 epidemic, West African countries have experienced sharp declines in fiscal revenue, sharp increases in public expenditures, and high fiscal deficits. They are unable to meet previously preset thresholds, and the issuance of new currencies will be delayed.
The French government’s big game in “French-speaking Africa” and the “African Franc Zone” is of course based on French interests. But this is a new arrangement in the “post-colonialism” era. On the one hand, France maintains its influence in these places, but on the other hand, it also has to contribute money, effort and credit. Some countries are not willing to play with France in this way. France They have to withdraw obediently, so France generally plays the role of “big brother” or “co-leader”. If there are younger brothers who ignore this “big brother” or do not recognize this “co-leader”, France cannot use force like in the past. Therefore, we must examine and study this phenomenon with new thinking, new concepts, and new methods.