It has been nearly two decades since the world saw the introduction of a new multinational currency bloc that would alter the balance of global power. Just like the euro, a new currency is taking shape that can compare in scope and vision. Only this time, it’s happening in Africa, and shockingly it’s not digital.
The West African Monetary and Economic Union state countries are currently in transition to adopt a new currency that will be used in a single market across a dozen or more West African countries — the Eco. Pegged to the euro, it is designed to be a new fiat currency replacing the current CFA Franc and will be in circulation in many West African countries.
However, while it might compare in scope and vision, Eco’s mere existence isn’t enough to ensure a currency’s success or power. Surprisingly, the Eco is a non-digital currency that is being launched to increase the efficiency of cross-border trade in West Africa. Yet in reality, it is still pegged to the euro, like its predecessor the CFA Franc. Rather than moving toward a true digital currency market and adopting African cryptocurrencies, the introduction of Eco appears to be a thinly veiled attempt at rexerting French colonial control over Francophone African economies with the launch of another centralized currency from outside of the continent.
The origin of Eco
The WAEMU was established in 1994 by eight French-speaking countries in Western Africa. It is a collection of countries that have joined together in a customs union and currency union in order to advance economic growth. Its origins lie in the shared hope of promoting economic integration in West Africa, which was enduring a stubborn period of economic growth into the 1990s.
The current members of WAEMU are Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo. The primary goal of WAEMU and the currency union under the CFA Franc is to create a common market, coordinate policies, and harmonize fiscal policy among neighboring countries to promote security, stability and prosperity.
The CFA Franc has been around in some form or other since the end of WWII, and has driven a persistent connection to France, their culture and their economy. Its backing by the French government has allowed the European power to maintain a level of influence in West African affairs, leading to the end of colonial control and extending the region well into the 21st century.
Modern history of francophone currency in Africa is dripping in blood. Three days after the first President of Togo, Sylvanus Olympio, tried to print their own currency in 1963 rather than the French sponsored one, he was assassinated by an ex-French Foreign Legionnaire. The president of Mali, Modiba Keita, launched a sovereign currency in 1962 and was deposed by an exFrench Foreign Legionnaire, later dying in prison. Even recently, in 2011, President Laurent Gbagbo of Cote D’Ivoire was deposed by French Foreign Legionnaires for considering the same thing, only to be released from European imprisonment without any proper charges or findings of guilt last year.
As the former Finance Minister of France Pierre Moscovici said in 2013:
“We have to speak the language of truth: African growth pulls us along, its dynamism supports us and its vitality stimulates us — we need Africa.”
Even the Italian Minister for Foreign Affairs Luigi Di Maio was explicit about this issue in 2019 when he said:
“France above all, has never stopped colonising dozens of African countries. If it wasn’t for Africa, France would rank 15th in the world economies not in the top six.”
Why Eco is doomed to fail
The Eco is simply another iteration of the same idea — storing the wealth and assets of African economies in European banks and putting that wealth on their balance sheets, thereby continuing to prop up European economies.
Unfortunately, the leaders in charge of creating the Eco are still proposing having it pegged to the euro and storing assets in a host of European banks, instead of just in France. They haven’t gone far enough in their effort to allow West Africa a true independence, rather than a continued subservience to the former colonial overlords.
The Eco is not just a new currency, but a strategic tool used by the French government and its allies to control former colonies. The big scandal in all of this — 50 years after the supposed independence of these countries — is that France still maintains a tight grip over the currencies of the countries that make up the CFA, and therefore the Eco. France will still print the Eco in France and circulate them back to Africa for use as fiat currency, which means France will control the supply of currency in circulation and therefore (if need be) switch the economy off or on for “badly behaved” African nations.
The value of African reserve assets held in Paris are variously estimated at between $20 billion and $200 billion on negative interest rates. This means that African governments are paying to store their money in France. This hamstrings many governments and economies by limiting the liquidity of their central banks, effectively blocking access to investment capital. Then, when not supporting France’s own economy, the money is lent back to the francophone African nations at double-digit interest rates set by European rating agencies, impoverishing them further.
The CFA is a key component of the shadow neo-colonial rule that has been pushing the Eco as a replacement, a currency that will still be pegged to the Euro, and therefore, tied to its destiny.
Symbolic and ideological reasons aside, the implementation of the Eco is doomed for failure for a few reasons. First, the Eco is being designed as a currency for more nations than just those who were using the CFA Franc. Currently, the plan is to include seven nations that are not current members of WAEMU into Eco’s orbit — a plan with fundamental challenges that will be hard to surpass (namely, confidence in the stability of many West African nations).
“The risks are political. The only way for the Eco to succeed is if all heads of state and government get involved. At this time, not all of them are taking ownership of the project. Some feel lukewarm about President Ouattara’s leadership status on the matter. They are wondering how things will turn out if he hands over the Côte d’Ivoire presidency in November 2020 to someone who has less experience in this area,” said a leading financial market analyst. It is notable that it was Ouattara who was supported by the French when they deposed Gbagbo and wrongfully threw him in jail, where he sat for eight years.
Additionally, there are other countries in different regions of Africa that speak French, but are not being included in these plans for a new currency. They have been excluded from consideration, as they have a separate currency market that is also backed up by the French government. This is just another example of how the French government continues to exert its control into African affairs, hindering true pan-Africanism to take root.
With the emergence of the Eco, it might appear that many of the governments pushing for a “liberation” from Africa might have succeeded. However, in reality, switching from the CFA to the Eco is trading one dominant economic power for another — in this case, Nigeria. In the current Economic Community of West African States zone, Nigeria accounts for two-thirds of the GDP of the entire region and half the population.
Africans don’t need a single-currency market, they need crypto
Eco is just another imposition of non-African control over currency markets. What it does is maintain the bonds that manipulate current economic structure and institutions across Africa. What Africa really needs for success is full-scale adoption of cryptocurrencies and blockchain technology, which can offer true freedom from Western central banks and influence from former colonizers.
What Africans do need — and indeed want — is for a societal wide adoption of cryptocurrencies and adoption of blockchain technologies to power 21st-century growth in Africa. Over the past year, three out of the top five countries where Bitcoin has been trending on Google Trends are located in Africa.
Cryptocurrencies can also provide unparalleled autonomy and emancipation to countries that have historically — and currently — had their economies and central currencies controlled by powers outside of their lands. They can also provide benefits to consumers who want to control how they spend their money without prior coordination with intermediaries like governments and banking institutions.
Simply put, cryptocurrencies are uniquely suited to help less-developed economies like those that make up ECOWAS, due to the amount of rural, unconnected and unbanked populations of West Africa. It gives them instant access to money in a way that central banking and the money supply cannot provide.
For governments and those that elect them, cryptocurrencies can provide a much-needed level of transparency that they may have never been historically provided. In many West African countries, governments (and therefore economies) have been ruled by military juntas or dictatorships, leaving many civilian populations with little transparency about how their government and economy function. Cryptocurrencies eliminate this by making their books accessible to anyone with an internet connection.
In addition to this massive level of interest coming from Africa about cryptocurrencies and blockchain, the continent is also uniquely poised demographically to achieve mass adoption among its modern consumers. According to Pew Research Center, Africa will lead the world in population growth by the end of the century. In response to this trend, national governments have become increasingly committed to financial inclusion initiatives in hopes of supporting future growth.
Observers assume that the alternative is between a rock and a hard place: strong centrally banked notes backed by global currencies versus nonfungible, volatile, local African money. But that’s not the exchange. It is, instead, a choice between the Devil and the deep blue sea. It is increasingly likely that the much-troubled post-Brexit EU will falter (and with it, the euro) than proceed immutably.
It will probably survive as a currency, but few remember that the euro is only twenty years old, was trading at just $0.86 in 2003, was nearly twice this price in 2008, and is now back at nearly a dollar. It could yet fall to $0.50. Economies in Africa would fall with France’s.
Better to choose the deep blue sea by cutting the euro out and choosing a future that looks toward Africa’s digital and demographic destiny: A multi currency universe based on mutuality.
Currently, Africa has 200 million people aged between 15 and 24, making Africa the continent with the youngest population in the world. This specific age bracket represents the population that is aging into the workforce, and entering the economy for the first time. This population is uniquely predisposed to accept tech solutions and is seen as an area for the economy to grow, given the digital payments and e-commerce sectors.
What Africans need is less focus on rigid institutions set up nearly a century ago by colonial powers. These institutions have failed to deliver lasting economic prosperity, and their new “solutions” are inadequate for the modern global economy. What is needed are decentralized and transparent systems that anyone can enter for access to financial autonomy.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Chris Cleverly, a barrister by profession, has made it his mission to help bring development mechanisms to Africa which can empower Africans to seize their own destiny. His journey on this mission began during the 1990s when he attended King’s Law College and became a barrister. After graduating, he founded the Trafalgar Chambers in the U.K., and became the youngest head of chambers in over a century. In 2005, he founded the Made In Africa Foundation, an organization he has guided to fulfill his dream of bringing systemic infrastructure change to Africa. Today, he is CEO of Kamari, a blockchain project looking to build an ecosystem of mobile gaming and payments for one billion people across Africa.