The Euro-CFA Parity or the French version of monetary Nazism?

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90% of the sub-Saharan displaced are economic refugees according to the Ivorian economist Nicolas Agbohou, so the question that comes to mind is as follows: How is this possible on a continent with the richest soil on the planet?

To understand this monetary mechanism, we must go back to Nazi Germany. Monetary “Nazism” was an economic system used by Nazi Germany to establish its supremacy over its vassals, including France. As a result, all German-occupied countries were forced to export first to Germany, which had “negotiated” a clearing system called “Clearing” which, instead of paying in cash for the goods received, allowed Germany to credit accounts it had opened for its vassals on its territory. The funds stored in these accounts were only accessible to their beneficiaries under two conditions: the vassalized countries had to import the finished products from Germany, or access to the account was possible with Hitler’s authorization. This mechanism has had disastrous consequences for the French economy. Thus, from the liberation in 1945, General de Gaulle drew inspiration from it in order to raise his economy and thus applied it to the colonies of Africa and the Pacific. According to a report from the French franc zone, the French public treasury had more than 3600 billion CFA francs 72 billion Euros at its disposal. This colossal sum is higher than the budget of a country like Senegal (3360 billion CFA according to the Senegalese government’s 2017 finance law).

To grant its monetary guarantee to the countries of the franc zone, an agreement between France and the countries of the franc zone has been put in place. The latter stipulates that “Member States agree to pool their external assets in a foreign exchange reserve fund. These reserves will be deposited with the French Treasury in a current account called the transaction account. “And “the bank will pay into the operating account any cash it may have outside its issuing area”. Thus, until 1973, the countries of the said zone were required to pay all their assets into this account. Since 2005, this agreement has been reviewed and a 50% payment is required. The operation of the operating account implies that in the event of a debit balance the French Treasury receives interest and otherwise the member countries receive interest. In reality, it is “the Banque de France that buys or sells foreign currencies on the foreign exchange market on behalf of African issuing institutions on a daily basis” (source: Information report No. 2907 produced by the National Assembly of France on 9 July 1992) This situation allows France, through the credit balances of the operating accounts, to finance “the charge that results for it from overdrafts on the execution of finance laws and the amortisation of public debt”.

In addition, money must be an engine of growth and development, which implies getting into debt, and the credit to the economy ratio is 23% when it is more than 100% in the euro zone (according to economist Kako Nubukopo).This gap is large enough to hope for adequate financing of growth and leads to capital flight and the import of foreign products at the expense of exports, which would develop Africa, reducing mass unemployment and the extreme poverty in which French-speaking countries live.

In addition, Bruno Tinel (researcher at the Sorbonne Economic Centre) considers that the monetary authorities of the CFA zone are without real powers because their currencies are very strong compared to their very weak economies. Thus, the Analysis of the results of monetary cooperation between France and Africa after 72 years of existence gives the following result according to the UNDP report of 2016:

 

Pays

Rang

IDH

France

21

0,897

Gabon

109

0,6

Cameroun

153

0,516

Sénégal

162

0,494

Togo

166

0,487

Bénin

167

0,485

Cote d’Ivoire

171

0,474

Mali

175

0,442

Guinée Bissau

178

0,424

Burkina Faso

185

0,402

Tchad

186

0,396

Niger

187

0,353

Centrafrique

188

0,35

Thus, the world’s LDCs (least developed countries) are located in the franc zone.

In conclusion, after half a century of independence, this part of Africa should manage its currency to take control of its political and economic destiny.

Sources:

*UNDP Report 2016

*CFA Franc and African development, Nicolas Agbohou

*The world

Pape Faye

Pape FAYE


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