Beyond the CFA Franc: The Real Battle for Africa’s Financial Freedom
- Achille Ekeu, MBA, CVA
- 1 minute ago
- 4 min read
Introduction
At the 2025 CGECI Academy fireside talk in Abidjan, economists and policymakers convened to confront one of Africa’s most foundational dilemmas: can sovereign control of a nation’s currency deliver genuine economic independence? The debate, titled “Contrôler sa monnaie: mythe ou levier stratégique ?”, brought to light the tension between monetary discipline, development, and post-colonial financial structures.
For eighty years (1945-2025), fourteen African nations have used the CFA franc—a currency system deeply tied to France and the euro. Its defenders argue for stability, low inflation, and foreign investor confidence. Its critics claim it perpetuates dependency, constrains growth policy, and limits the freedom of African states to chart their macroeconomic destinies.
In this post, I reconstruct and analyze the debate between myself (Achille Ekeu), Dr. Demba Moussa Dembélé, and moderator Wade Adama. We examine:
The historical and structural constraints of the CFA system
Whether reforms of the CFA have meaningfully advanced sovereignty
The case for a new monetary paradigm in Africa
My goal is not only to unpack the arguments but to show why this is not merely an intellectual exercise—it is central to Africa’s capacity to fund infrastructure, industrialization, and inclusive economic growth.
1. The Legacy and Mechanics of the CFA System
1.1 Origins and Colonial Inheritance
The CFA franc was established in 1945 under French colonial authority. After independence, African states retained the currency system—with its fixed peg to the French franc (later the euro), mandatory reserve deposits in the French Treasury, and shared institutional governance by French authorities and African central banks.
This structure has several controversial implications:
Partial control of foreign reserves: Until 2019, members had to deposit up to 50 % of their foreign exchange reserves with France—substantially limiting their ability to use those reserves for sovereign objectives (e.g. stabilizing exchange rates, intervening in markets, or guaranteeing credit lines).
Fixed parity to a foreign currency: The CFA is pegged to the euro, which means that African economies must absorb external shocks through fiscal channels, rather than monetary flexibility.
Institutional duality: Decision-making within the CFA zone central banks still involves oversight and veto rights tied to French interests.
These factors create a built-in tension: the system offers monetary stability, but often at the cost of flexibility and localized policy autonomy.
1.2 Reforms and Their Limits
In 2019, French and Ivorian authorities announced reforms: reduce reserve deposit requirements, remove French seats from the central bank boards in West Africa (BCEAO), and gradually rebrand the CFA as the “Eco” in ECOWAS nations.
Yet, as we debated:
These reforms are largely symbolic. They do not break the peg, nor do they fully eliminate external influence over monetary operations.
Without a rethinking of the exchange rate framework, the benefits of monetary sovereignty remain constrained.
The promise of a transition to a common currency (Eco) by 2027 has repeatedly been delayed, suggesting deeper institutional and political resistance.
Thus, what appears as progress may in fact be incremental change without structural transformation.
2. Competing Visions: Stability vs. Freedom
2.1 The Case for Stability
Proponents of the CFA often emphasize:
Low inflation and fiscal discipline: The CFA helps anchor inflation expectations and discourages fiscally risky spending.
Investor confidence: A fixed anchor reduces currency risk and encourages foreign direct investment (FDI).
Regional trade coherence: A common currency reduces transaction costs among CFA countries.
These arguments carry weight — especially for nations with fragile institutions and high susceptibility to macroeconomic volatility.
2.2 The Case for Sovereign Freedom
But during the debate, I argued that:
True monetary control is indispensable for development. Without being able to adjust interest rates or direct credit, nations cannot support industrialization, small enterprise growth, or strategic infrastructure finance.
The cost of overvaluation. Pegging to the euro frequently leads to overvaluation in local terms, making exports less competitive and promoting import dependency.
Dependency perpetuates inequality. The elite and urban sectors benefit most from stability and capital flows; while agricultural and informal sectors lose when access to credit is restricted.
Reform must go deeper. A new monetary framework must include flexibility, capital controls (if necessary), regional institutions, and a clear exit path from colonial legacies.
Dembélé and I agreed: the CFA, as presently configured, cannot deliver both stability and sovereign development. One must choose where subsumption ends and autonomy begins.
3. Key Takeaways from the Debate
3.1 Sovereignty is not symbolic
Monetary sovereignty must mean real control over:
Reserve management
Interest rate policy
Currency issuance
Capital movement policies
Any reforms that leave these in foreign hands are superficial.
3.2 Transitional risks are real—but manageable
Critics worry that leaving the CFA would provoke inflation, capital flight, or currency collapse. In the debate, we acknowledged those risks but argued that:
A phased exit strategy can mitigate shocks
Regional coordination (e.g. ECOWAS or regional central banks) can provide buffer mechanisms
Digital currencies and financial innovation offer new tools not available in the 20th century
3.3 Political will is the greatest barrier
Monetary architecture is ultimately political. Resistance from entrenched interests — both within Africa and abroad — is formidable. Without courageous leadership and regional consensus, technical fixes will fall short.
Conclusion
The CFA franc debate is not about nostalgia or radicalism—it's about the design of economic agency. Africa’s future hinges on whether its states can reclaim the levers of capital, credit, and currency. The choice before us is stark: continue under a system that privileges external stability over internal dynamism—or build something new, risk-ridden perhaps, but rooted in sovereign ambition.
The debate at CGECI 2025 was only a first step. The real battle lies ahead—in boardrooms, central banks, parliaments, and public discourse.
✍️ Author’s Note
Achille Ekeu is Founder and CEO of The Washington Valuation Group, a U.S.-based firm specializing in business valuation, corporate finance, and economic strategy. With more than 25 years bridging African and American markets, he is a public voice on monetary sovereignty, development economics, and the architecture of value creation in emerging economies.
🔗 Learn more: www.washingtonvaluation.com