Introduction – The Last Colonial Currency: A History of the CFA Franc – Part 2

I have been commissioned to write the Introduction (Preface) to the upcoming book – The Last Colonial Currency: A History of the CFA Franc – by Fanny Pigeaud and Ndongo Samba Sylla, which is an English version of the original 2018 book, L’arme invisible de la Françafrique. It will soon be published by Pluto Press (UK) – as soon as I finish this introduction. The book is incredibly important because it shows the role that currency arrangements play in perpetuating colonial oppression and supporting the extractive mechanisms that the wealthy have used for centuries to further their ambitions. It also resonates with more recent neoliberal trends where these extractive mechanisms, formerly between the colonialist (metropolis) and the occupied peripheral or satellite nation, have morphed into intra-national urban-regional divides. I am very appreciative for the chance to write this introduction for these great authors. This is Part 2 of a three part series, which I will edit down to my preface for the book.

Colonisation and decolonisation

The – Scramble for Africa (or ‘Partition of Africa’), or, more appropriately, the ‘Conquest of Africa’ referred to the carving up and plundering of Africa among the advanced powers after they successfully invaded and occupied the continent.

In his 1993 review of the famous book by Thomas Pakenham, A.G. Hopkins talks of the “plunderers” who depicted the Africans as “being primitive and barbaric”, which was a convenient smokescreen to legitimatise their invasions in the eyes of the populations of the invading nations.

Historians suggest that these conquests were never really the subject of assent by the broader populations or parliamentary processes but driven by pressure groups who were pursuing their own agendas.

Lawrence Abrams and David Miller, for example, provide an excellent account of the role the so-called parti colonial , a French pressure group with considerable economic and political influence, who determined the way in which France pursued “an expansionist role in West Africa in the 1890s”.

It consisted of “a large number of colonial organizations, most of them concerned solely with sending missions abroad, organizing propaganda campaigns, and holding banquets at which topics concerning France’s empire were discussed” (p.686).

The sense of plundering chaos backed by military might reached such levels in the early 1880s that war between the colonial claimants was seemingly inevitable.

Britain and France were at odds over their various claims in West Africa and other conflictual situations emerged across the entire African continent.

This prompted Count Otto von Bismarck to organise – The Berlin Conference – (aka Congo Conference) to provide a European-centric framework to regulate the ‘Scramble’ and the resulting trade.

It began in November 1884 and continued until February 1885. Most of the European nations were represented but the people of Africa were completely ignored by the colonial powers in the process. It was as if they were inanimate objects in the colonial quest for wealth and ‘gloire’.

The geographic boundaries that were agreed at the Conference were rather arbitrary and were insensitive to local cultures and language groups, which would lead to problems in later years. But the colonial plunderers were oblivious to such issues at the time.

David Birmingham wrote in 1995 that (p.1):

The partition of Africa did not create a set of uniform colonies each resembling the other in a constitutional stereotype. On the contrary, the establishment of colonial rule was varied and pragmatic. The differences were to be found not only between empires but within empires.

While we should not place too much importance on the Berlin Conference, it did, essentially, represent a Franco-German pact designed to head off military conflict in the European efforts to dominate as much of Africa and its resources as possible in the shortest possible time.

The agreed partition of Africa provided rather orderly circumstances for the colonial extractive mechanism to operate.

In represented an early example of Franco-German rivalry creating arrangements that benefited the elites but were largely dysfunctional for the majority of citizens directly implicated. The creation of the Eurozone is the most recent example. We will return to this issue in Part 3.

For many years, the colonies enriched the metropolitan economies.

But the pressures to decolonise were evident even “before the colonial conquests had been completed” (Birmingham, 1995:3).

These pressures mounted after the Second World War, with Britain leading the way, although very few nations let go without being involved in violent struggles with local independence movements.

Over time, it became obvious to all that “the old colonial nexus was not viable, nor indeed necessary to metropolitan interests” (Birmingham, 1995: 4).

France experienced early demands from northern Africa (Algeira) for independence, which reflected a complex set of tensions among the population protesting over the economic oppression, the complications arising from the divisions between the Berbers and Arabs and the sense of dislocation within the Muslim population (Birmingham, 1995: 14).

The struggle for independence from France by the separatist elements also cut across a civil war as the Pieds-Noirs, people with a French background who had been born in Algeria but wanted it to remain part of France.

The French were savage in their response to the violent uprising that started in earnest in the early 1950s.

The failure of the French to stem the crisis, led to the demise of the republican government of the Fourth Republic in 1958, and the installation of Charles de Gaulle as President under the constitution of the Fifth Republic.

He immediately offered the French colonies a ‘loaded’ independence deal, which would continue to tie the new nations to France.

The colonial elites, who saw their own interests more aligned with France than the fortunes of their people, were told by de Gaulle that if they agreed to his terms, which required the independent nations to accept France’s continued strategic management, then they could enjoy personal largesse and some development funding.

France was hoping to maintain a number of individual states which would all be, effectively, controlled by the metropolis.

As Birmingham notes (1995:3):

The new terms, however, flattered the vanity of the politicians and used the patriotic discourse of nationalism while preserving in French hands the realities of military and financial power.

All but Guinea chose de Gaulle’s deal.

The situation in central Africa was not dissimilar, although France’s desire to maintain control of the rich mining resources there (for example, uranium and oil in Gabon), required military suppression in the post independent era.

The point is that all this was going on at the same time as Europe was undergoing reconstruction after the debilitating effects of World War Two.

Its economy was devastated and it wanted to maintain access to the resource wealth in its colonies as part of the rebuilding process. Its currency was weak and so it had to work out a way to continue extracting that wealth on beneficial terms.

In general, it was imperative for the colonial powers, such as France, to insure they maintained control of the resource wealth in their African dominions, as it became obvious that the old colonial systems were in decline.

de Gaulle saw European integration as a chance for France to take advantage of Germany’s shame over its conduct during the War and become the pre-eminent European nation controlling inter-governmental arrangements in its favour.

At the same time, he saw the maintenance of the French sphere of influence in Africa as a part of this generalised desire for French ‘gloire’.

These ambitions went beyond a raw desire to extract the resources from Africa to enrich the metropolis.

France was engaging in a global fight for status after being decimated in the War and losing many of its colonies in the upshot.

The CFA franc

Fanny Pigeaud and Ndongo Samba Sylla provide us with a detailed and convincing analysis of how the shifting currency arrangements fed into the process of decolonisation, such that the French were able to maintain control of the financial sector, and, the economies of former colonies.

During the colonial era, local producers (particularly farmers) were forced to trade with the metropolis under exclusive arrangements (to prevent competition) and at prices that favoured the colonialist.

Borrowers in the colonies were forced to take on debt at punitive rates and default led to disastrous compensations to the bankers.

The post independence period did not change much.

The lack of credit and punitive rates continued, which hampered the ability of the newly independent states to foster industry.

Trade with Europe required an infrastructure (transport, legal services, insurance services, etc) that the new states did not control and were forced by the metropolis to pay hefty contract fees.

The direct-rule colonial arrangements were thus replaced by so-called – Françafrique – which comprised political and economic dimensions.

It is here that the introduction of the common currency for several African colonies – the CFA franc (‘franc de la Communauté Financière Africaine’) – in 1945, at the same time that France entered the Bretton Woods fixed exchange rate system, has to be understood as being a central part of the French vision of its colonial control surviving as independence became inevitable.

Of course, the official line from the French government at the time was that the currency would protect the colonies from inflation arising from the devalued French franc, a consequence of the devastation experienced from the War.

A famous quote by the French foreign minister at the time suggested French beneficence was the motive for the creation of the common currency.

But as Tatenda Gwaambuka wrote in 2016:

… one needs to understand that Europeans have always harboured delusions of a “mutually beneficial colonialism” … Colonialism was looked at as a manner to help the “savages” of Africa achieve some degree of civilisation and that thinking is still prevalent. Jalata Asafa in the research paper, The triple causes of African underdevelopment: Colonial capitalism, state terrorism and racism says, “These countries used the discourses of the superiority of their race, culture, civilization and Christian religion to promote and justify destructive and exploitative policies such as terrorism, genocide, and economic exploitation.”

The CFA franc is the legacy of colonialism and no matter how anyone may spin the story, it remains more beneficial to the French than the Africans: a perpetuation of modern-day colonialism.

This is the terrain covered by Fanny Pigeaud and Ndongo Samba Sylla and they outline in some detail how this unequal arrangement plays out in practice via the currency arrangements established in 1945, which largely continue to the present day.

First, the CFA franc is, in fact, two separate currencies operating in two currency unions.

The West African CFA franc (XOF) is used by 8 nations, who form the Western African Economic and Monetary Union (WAEMU); while the Central Africa CFA franc (XAF) is used by six nations, who form the Central African Monetary Union (CAMU).

Each currency is issued by a respective central bank – Banque Centrale des États de l’Afrique de l’Ouest (BCEO) and the Banque des États de l’Afrique Centrale (BEAC). The French maintain membership of these decision-making bodies and can veto decisions made by them.

While the currencies are issued by these central banks, monetary policy settings (interest rates, etc) are set by the the ECB, and previously by the Banque de France.

The policy settings reflect the priorities of the French state (now the ECB) rather than having any necessary connection with the needs of the CFA franc-using states.

Second, the CFA franc was pegged against the French franc (and then the euro after 1999).

As part of this arrangement the French Treasury department guaranteed convertibility into the French franc at the parity set by the Treasury.

This guarantee was made operational by the Treasury standing ready to provide the BCEO and the BEAC the necessary reserves to cover shortfalls.

Third, but the ‘cost’ for the French Treasury maintaining guaranteed convertibility was that the BCEO and the BEAC were forced to deposit a proportion of their foreign reserve holdings with the French Treasury and are paid ridiculously low returns (sometimes even negative real returns).

That proportion was 100 per cent at the inception but is now 50 per cent.

Fourth, as a result of the French control of the foreign exchange reserves, all cross currency transactions involving the CFA Franc have to be mediated by the French Treasury.

The evidence is clear – the arrangement works in favour of France.

It can purchase imports from the CFA franc nations without engaging risky foreign exchange transactions and impacting on its own exchange parity with the rest of the world.

Further, the peg has always overvalued the CFA franc, which means that the terms of trade favour French importers and damage farming exports in the member states of each monetary union.

Fanny Pigeaud and Ndongo Samba Sylla provide a detailed account of these historical developments of the CFA franc and document all the ways that the currency arrangements have benefited France at the expense of advancing the material prosperity of the West and Central African states that are members of the CFA franc zones.

They also analyse the impact of France’s accession to the Eurozone on the CFA franc nations and it is to that issue we briefly turn next.


In Part 3, I consider the contemporary debate about the substitution of the CFA franc for the ECO (a ruse) and the impact that France’s accession to the Eurozone has had on the CFA franc-using nations.

It doesn’t get any prettier, I can tell you.

That is enough for today!

(c) Copyright 2020 BIll Mitchell. All Rights Reserved.

This Post Has 7 Comments

  1. It just goes to show they knew how it works in reality all along for many years.

    Which is why when it comes to central bankers we have to drop the ” stupid tag “. It is impossible not to know how it works after running central banks and Treasuries, for the length of time they have been in existence.

    Even when the Berlin wall was in operation they were being run on a Geopolitical basis. Then the West was run like a Saks fifth avenue Xmas display window. The golden age window look what we can provide you.

    When the Berlin wall fell, stuff the Window they no longer needed it. The geopolitical landscape changed, so central banks and Treasuries changed to Greek and Roman conquest models. Leaving their own populations to fight for bread in the streets.

    The part universities have played in all of this is nothing short of totalitarianism. Creating a web of lies and deceit. To hide what was actually going on and handing out a Nobel prize to a long list of Judas Iscariot’ s. Who would come up with ever more fanciful ways to come up with economics of conquest that left their own populations poorer.

  2. Geopolitics will never allow MMT to be implemented. It is not Greek or Roman enough for them. Not enough war involved.

    Our only hope is global warming and even now just look at how the elites are resisting MMT. With their fanciful ideas how to tackle it.

  3. “In the (18) ‘sixties and ‘seventies Tunis, under the government of a native bey, and nominally under the suzerainty of Turkey, was penetrated economically by a horde of French speculators, financiers, concessionaires and adventurers. They were successful in ruining the country. Lending money at usurious rates to the bey, they got him to make over to them in return the most valuable economic concessions. The bey, heavily in the debt of Paris capitalists and financiers, was compelled to fleece his subjects in order to pay interest on the loans. The inhabitants were in a constant state of rebellion against this process by which they were reduced to penury in order to feed the Paris money market. The financiers and concessionaires then appealed to the French government to protect their interests in Tunis against the “chronic disorder” of the Tunisians….The French Premier sent an army into Tunis to put down the disorders and to protect the interests of French subjects. But everyone in Paris knew that the motives of this military expedition were economic. M. Clemenceau said in the French Chamber that the whole thing was a “coup de Bourse”…”

    From Economic Imperialism by Leonard Woolf (first published in 1920)

  4. “Further, the peg has always overvalued the CFA franc, which means that the terms of trade favor French importers and damage farming exports in the member states of each monetary union.”

    Isn’t the peg overvaluing the franc as opposed to the CFA franc? which allows France to buy alot of stuff from CFA franc nations for doing little. am i reading it wrong please help?

  5. If I understand the terms of trade correctly, would you argue in a similar fashion that China has imposed colonial regime on itself by keeping its exchange rate low for decades?

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