|
One
of the most important influences in the economic and political life of African
states which were formerly French colonies is the impact of a common currency;
the Communuate Financiere de l’Afrique (‘CFA’) franc. There are actually two
separate CFA francs in circulation. The first is that of the West African
Economic and Monetary Union (WAEMU) which comprises eight West African
countries (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger,
Senegal and Togo. The second is that of the Central African Economic and
Monetary Community (CEMAC) which comprises six Central African countries
(Cameroon, Central African Republic, Chad, Congo-Brazzaville, Equatorial
Guinea and Gabon), This division corresponds to the pre-colonial AOF (Afrique Occidentale Française) and the AEF (Afrique Équatoriale Française), with the exception
that Guinea-Bissau was formerly Portuguese and Equatorial Guinea Spanish).
Each of these two groups
issues its own CFA franc. The WAEMU CFA franc is issued by the BCEAO (Banque
Centrale des Etats de l’Afrique de l’Ouest) and the CEMAC CFA franc is issued
by the BEAC (Banque des Etats de l’Afrique Centrale). These currencies were
originally both pegged at 100 CFA for each French franc but, after France joined
the European Community’s Euro zone at a fixed rate of 6.65957 French francs to
one Euro, the CFA rate to the Euro was fixed at CFA 665,957 to each Euro,
maintaining the 100 to 1 ratio. It is important to note that it is the
responsibility of the French Treasury to guarantee the convertibility of the
CFA to the Euro.
The monetary policy governing
such a diverse aggregation of countries is uncomplicated because it is, in
fact, operated by the French Treasury, without reference to the central fiscal
authorities of any of the WAEMU or the CEMAC. Under the terms of the agreement
which set up these banks and the CFA the Central Bank of each African country
is obliged to keep at least 65% of its foreign exchange reserves in an
“operations account” held at the French Treasury, as well as another 20% to
cover financial liabilities.
The CFA central banks also
impose a cap on credit extended to each member country equivalent to 20% of
that country’s public revenue in the preceding year. Even though the BEAC and
the BCEAO have an overdraft facility with the French Treasury, the drawdowns on
those overdraft facilities are subject to the consent of the French Treasury.
The final say is that of the French Treasury which has invested the foreign
reserves of the African countries in its own name on the Paris Bourse.
In short, more than 80% of
the foreign reserves of these African countries are deposited in the
“operations accounts” controlled by the French Treasury. The two CFA banks are
African in name, but have no monetary policies of their own. The countries
themselves do not know, nor are they told, how much of the pool of foreign
reserves held by the French Treasury belongs to them as a group or
individually. The earnings of the investment of these funds in the French
Treasury pool are supposed to be added to the pool but no accounting is given
to either the banks or the countries of the details of any such changes. The
limited group of high officials in the French Treasury who have knowledge
of the amounts in the “operations accounts”, where these funds are invested;
whether there is a profit on these investments; are prohibited from disclosing
any of this information to the CFA banks or the central banks of the African
states.
This makes it impossible for
African members to regulate their own monetary policies. The most inefficient
and wasteful countries are able to use the foreign reserves of the more prudent
countries without any meaningful intervention by the wealthier and more
successful countries. The fact that as the French GDP grows and the parity of
the Euro to the dollar (the main currency of international trade) appreciates
there is the constant danger that the CFA franc may be fixed at too high an
exchange rate. This dampens the growth in trade between Africa and the rest of
the world and allows other countries, especially in Asia, to use their more
flexible exchange rates to gain market share, supplanting the Africans.
The creation and maintenance
of the French domination of the francophone African economies is the product of
a long period of French colonialism and the learned dependence of the African
states. For most of francophone Africa there is only limited power allowed to
their central banks. These are economies whose vulnerability to an increasingly
globalised economy is increasing daily. There can be no trade policy without
reference to currency; there can be no investment without reference to
reserves. The politicians and parties elected to promote growth, reform, changes
in trade and fiscal policies are made irrelevant except with the consent of the
French Treasury which rations their funds. There are many who object to the
continuation of this system. President Abdoulaye Wade of Senegal has stated
this very clearly “The African people’s money stacked in France must be
returned to Africa in order to benefit the economies of the BCEAO member
states. One cannot have billions and billions placed on foreign stock markets
and at the same time say that one is poor, and then go beg for money.”
How Did This Happen?
This system of dependence is
a direct result of the colonial policies of the French Government. In the
immediate post-war period after the signing of the
Bretton Woods Agreement in July 1944 the French economy urgently needed to
recover. To assist in this process it set up the first CFA amongst its African
colonies to guarantee a captive market for its goods. The principal decision
which resulted from the Bretton Woods Agreement was the abandonment of the Gold
Standard. In short, the new system gave a dominant place to the dollar. The
other currencies saw their exchange rate indexed to the dollar. The reserves of
the European central banks at that time consisted of currencies of dubious
post-war value and gold which had been de-pegged from the fluctuations of the
currency. For this reason France needed the currencies of its colonies to
support its competitiveness with its American and British competitors. De
Gaulle and his main economic advisor, Pierre Mendès France met with some
African leaders and developed a Colonial Pact which would enshrine this is in a
treaty (with both public and secret clauses). The genius behind this was
Jacques Foccart, France’s “Mister Africa”.
Decolonization south of the
Sahara did not happen as de Gaulle had intended. He had wanted a Franco-African
Community that stopped short of total independence. But when Sekou Toure's
Guinea voted "no" in the 1958 referendum on that Community, the idea
was effectively dead. Guinea was cast into outer darkness because of its
decision and a Community of sorts came into existence, but the call of full
independence proved too strong to resist.
Not really having planned for
it, in 1960 de Gaulle had to improvise structures for a collection of small
newly independent states, each with a flag, an anthem, and a seat at the UN,
but often with precious little else. It was here that Foccart came to play an
essential role, that of architect of the series of Cooperation accords with
each new state in the sectors of finance and economy, culture and education,
and the military. There were initially eleven countries involved: Mauritania,
Senegal, Cote d'Ivoire, Dahomey (now Benin), Upper Volta (now Burkina Faso),
Niger, Chad, Gabon, Central African Republic, Congo-Brazzaville, and
Madagascar. Togo and Cameroon, former UN Trust Territories, were also co-opted
into the club. So, too, later on, were Mall and the former Belgian territories
(Ruanda-Urundi, now Rwanda and Burundi, and Congo-Kinshasa), some of the
ex-Portuguese territories, and Comoros and Djibouti, which had also been under
French rule for many years but became independent in the 1970s. The whole
ensemble was put under a new Ministry of Cooperation, created in 1961, separate
from the Ministry of Overseas Departments and Territories (known as the
DOM-TOM) that had previously run them all.
The key to all this was the
agreement signed between France and its newly-liberated African colonies which
locked these colonies into the economic and military embrace of France. This
Colonial Pact not only created the institution of the CFA franc, it created a
legal mechanism under which France obtained a special place in the political
and economic life of its colonies.
The Pacte Coloniale
Agreement enshrined a special preference for France in the political,
commercial and defence processes in the African countries. On defence it agreed two types of continuing contact. The first
was the open agreement on military co-operation or Technical Military Aid (AMT)
agreements, which weren’t legally binding, and could be suspended according to
the circumstances. They covered education, training of servicemen and African
security forces. The second type, secret and binding, were defense agreements
supervised and implemented by the French Ministry of Defense, which served as a
legal basis for French interventions. These agreements allowed France to have predeployed troops in
Africa; in other words, French army units present permanently and by rotation
in bases and military facilities in Africa; run entirely by the French.
According to Annex II of the Defence Agreement signed between
the governments of the French Republic, the Republic of Ivory Coast, the
Republic of Dahomey and the Republic of Niger on 24 April 1961, France has
priority in the acquisition of those "raw materials classified as
strategic.” In fact, according to article 2 of the agreement, "the French
Republic regularly informs the Republic of Ivory Coast (and the other two) of
the policy that it intends to follow concerning strategic raw materials and
products, taking into account the general needs of defence, the evolution of
resources and the situation of the world market.”
According to article 3, "the Republic of Ivory Coast (and
the other two) inform the French Republic of the policy they intend to follow
concerning strategic raw materials and products and the measures that they
propose to take to implement this policy.” And to conclude, article 5:
"Concerning these same products, the Republic of Ivory Coast (and the two
others) for defence needs, reserve them in priority for sale to the French
Republic, after having satisfied the needs of internal consumption, and they
will import what they need in priority from it.” The reciprocity between the
signatories was not a bargain between equals, but reflected the actual
dominance of the colonial power that had, in the case of these countries,
organised "independence" a few months previously (in August 1960).
In summary, the colonial pact maintained the French control over
the economies of the African states; it took possession of their foreign
currency reserves; it controlled the strategic raw materials of the country; it
stationed troops in the country with the right of free passage; it demanded
that all military equipment be acquired from France; it took over the training
of the police and army; it required that French businesses be allowed to
maintain monopoly enterprises in key areas (water, electricity, ports, transport,
energy, etc.). France not only set limits on the imports of a range of
items from outside the franc zone but also set minimum quantities
of imports from France. These treaties are still in force and operational.
The creation of such a system was not the preserve of the French
National Assembly or the result of any democratic process. It was the result of
policies conducted by a small group of people in the President’s office, the
‘African Cell’, initially led by Foccart. For the past half-century, the
secretive and powerful "African Cell" has overseen France's strategic
interests in Africa, holding sway over a wide swath of former French colonies.
Acting as a general command, the Cell uses France's military as a hammer to
install leaders it deems friendly to French interests. In return, these
countries give French industries first crack at their oil and other natural
resources. Sidestepping traditional diplomatic channels, the Cell reports only
to one person: the president. The Cell's close ties to oil giant Elf Aquitaine,
where top executives were jailed on corruption charges, was a source of
embarrassment. And a former Cell chief has now been convicted of charges
related to arms trafficking to Angola. These highly contentious policy issues
never came before any of France’s democratically-elected bodies. African policy
is the personal fiefdom of the President’s office.
This was true for De Gaulle, Mitterand, Giscard D’Estaing and
Chirac. Sarkozy apparently has no contacts or ambitions in this field and has
left Chirac’s Cell in place.
The Impact of the Colonial Pact
Some of the consequences for
the Africa countries of the continuation of a policy of dependence are obvious
– lack of competitive options; dependence on the French economy; dependence on
the French military; and the open-door policy for French private enterprise.
However, there are more subtle differences which arise.
The French companies in
francophone Africa, by virtue of their protected monopolistic or oligarchic
status, contribute a substantial share of the GDP of these countries. More
importantly, however, they are often the single largest group of taxpayers. In
many of these countries the French corporations pay over 50% of the national
tax revenues collected. This gives them a unique status. Quite frequently the
French say that without the French companies the economy of the African state
will collapse. When coupled with the inability of the country to access its
reserves it undoubtedly true. However, it doesn’t follow that private
corporations from other countries, like the U.S. or China, would not contribute
equally. This is one reason that the French are so concerned with allowing
competition into the market place.
Another aspect of this is the
inability of these francophone countries to collect taxes from its ordinary
citizens. In a country like the Ivory Coast which has been divided for a number
of years between the rebel North and the loyalist South, tax collections in the
rebel regions have been impossible. The rebels have waxed fat on taxes and fees
imposed on their captive populations and the sale of stolen goods from their
regions. They do not want to disarm because it will have a deleterious economic
effect on them, not just a political one.
The lack of a citizenry
paying taxes breeds a gulf between the government and the citizens; mutual
responsibility is missing in the equation. It is the job of the National
Assembly to legislate for programs based on the supply of revenue to the state,
but if there are insufficient revenues the National Assembly is frustrated in
its role. If 80% of the funds go to France as part of the CFA franc project
there is little left for the ministers and the National Assembly to allocate
for social programs.
In many of the francophone
countries, suffering under conditions of drought, lack of food; lack of health
care; it is only French ‘aid’ to the national treasuries that sustains them.
This ‘aid’ is often their own money which the French have shepherded for them.
There are many in Africa who
have seen and understood the problem of the CFA franc and the Colonial Pact.
Mamadou Koulibaly, the President of the National Assembly in the Ivory Coast
has been an outspoken critic of the Colonial Pact and the dominance of the CFA
franc. He has written an excellent book on the subject and gives speeches and
interviews on the subject regularly. The problem is that very few people
understand the fundamental iniquity of this French system; including many
Africans.
If African nations are to
achieve growth and participate fully in the opportunities of globalisation they
must be freed from the fetters of this colonial albatross. In order to attract
additional direct investment in the economies, as opposed to just portfolio
investment this situation must be changed. In the words of President Koulibaly,
“In Africa we do not need alms, our problem is not due to a lack of money. My
conviction is that we must first of all clearly state our ownership rights over
our own land and the resources in our soil which were taken away by the
colonialists when they conquered our countries, and still be taken away through
the Colonial Pact”.
|
Gary K. Busch 
Posted by Robot| 06.02.2008 13:30