2024-04-29 22:00:04
One of the political objectives stated by the AES is to regain monetary sovereignty. These three states – Mali, Niger, Burkina Faso – want to create their own currency and abandon the CFA franc, pegged to the euro rate, printed in France and seen as a vestige of French colonization. But what would the exit of the CFA franc imply? In a joint article, two experts, François Giovalucchi of the Catholic University of Madagascar, and Marc Raffinot, of Paris-Dauphine University, point out that these states should leave the West African Economic and Monetary Union.
Legal prerequisite for the creation of a new currency: exit from UEMOA. However, this economic and monetary union provides facilities for the mobility of workers and goods. It also provides liquidity to States. “ What we see is that at the end of 2023, the AES countries are very short of foreign exchange, notes François Giovalucchi, former head of the Central Africa department of the French Treasury, current member of the scientific council of the Catholic University of Madagascar. These countries therefore draw from the common pot of BCEAOthey benefit from the solidarity of other countries. »
End of BCEAO liquidity
Cut off from liquidity from the Central Bank of West African States, the AES would also deprive itself of the possibility of borrowing on the regional market. “ One of the advantages, one of the successes of UEMOA, is that countries lend each other money, underlines François Giovalucchi. For example, Mali, Niger or Burkina Faso issue government securities which are bought by banks mainly from other countries, for example from Côte d’Ivoire. This allows them to have money that is not too expensive, with rates that are not too high, in any case much lower than the rates on the Euro markets. So countries would lose the advantage of having access to this regional funding and would have to find other funding, particularly international funding, and the situation does not seem favorable to me. »
The creation of a currency specific to the AES, an unattractive currency, risks creating the opposite of the desired effect, that is to say leading to what researchers call ” CFAïsation ».
The CFA franc could emerge strengthened
« This is the paradox that we highlighted in our paper, which is that ultimately the creation of a new currency risks strengthening the CFA francs !, underlines Marc Raffinot, lecturer at Paris-Dauphine University. Because everyone who trades between Mali and Ivory Coast will be interested in keeping a strong stable currency to keep their savings or keep security assets. And so they turn at that point to the CFA franc. This is what is currently happening with Nigeria and Ghana, who are attracted to the CFA franc because their currency is a melting currency. »
These foreign exchange needs could be partially met by the future increase in Niger’s oil production and by taxation of the gold sector. On condition, the authors warn, not to put it to use too harshly.
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