Francophone Africa devalues currency: Currency link between France and its former colonies is severed

ONE OF the strongest remaining links between Africa and Europe was broken last night when the CFA, the currency of Francophone Africa, was devalued against the French franc for the first time since it was founded 45 years ago.

In that period when other African currencies have collapsed or are worth a fraction of their value even a decade ago, 14 Francophone African countries have relied upon a stable, convertible currency linked to and backed by the French treasury. The Communaute Financiere Africaine (CFA) Franc was worth 50 to the French franc when it was launched in 1948 and it has remained unchanged until today's devaluation by 50 per cent, to 100 to the franc.

The decision to devalue was taken by officials from the member countries who met representatives of the International Monetary Fund in the Senegalese capital, Dakar. The devaluation will hit poor countries hard. It represents a shift in French Africa policy away from its former colonies and towards a more pragmatic, commercial approach. It may mean a weakening of the relationship between Europe and Africa.

French support for the CFA, the currency of some of the world's poorest countries, such as Mali and Niger, has been a practical manifestation of the remarkably durable links between France and its former African colonies. Even now France spends on sub-Saharan Africa nearly 10 times as much as Britain in aid. At dollars 3bn ( pounds 2bn) in 1990 - the most recent figure - this is in addition to the uncounted burden of the CFA on the French treasury.

African countries using the CFA could obtain foreign exchange easily and were offered a degree of regional integration. The high fixed exchange rate meant that French imports were relatively cheap - Gabon consumes more champagne per head than Sweden, for example. For countries with low export levels such as Burkino Faso and Senegal, the high exchange rate was very advantageous, but for countries such as Ivory Coast, which export commodities that are falling in value, the high exchange rate was a disaster. When rumours of devaluation began in the middle of last year there was a huge outflow of funds.

Devaluation will hit the poorest hardest and many African governments have warned of civil unrest and asked for special help from the World Bank and other donors to cushion the effect on the urban waged population and the poor.

French business clearly benefited from the CFA and discouraged competition in Africa from businessmen from other countries. According to the president of the club of French investors in Africa, the devaluation will put in doubt the viability of up to 15 per cent of their subsidiaries. But the chief advantage to the French government, or at least the presidency, has been political. With 14 African countries clinging to its skirts, France could claim to be a world power with an influence far beyond Europe.

Yet a self-aggrandising vision does not fully explain the extraordinary relationship between the French government, and in particular President Mitterrand, and Francophone African leaders. It was often direct and personal and excluded the French Foreign Ministry. For many years French Africa policy was under the direction of the President's son, Jean-Christophe Mitterrand - a family touch appreciated by African leaders. There have also been implications for French domestic politics since many African leaders make substantial donations to the campaigns of French political parties.

This system is now coming to an end. Ever since the victory of the French right in March, the government in Paris has adopted a new, more hard-headed, approach to Africa with no special treatment for its old friends. A recent policy statement said bluntly that from now on the key condition for aid was that developing countries should put their economies in order and France would insist that its aid yielded concrete results.

Pressure for devaluation of the CFA has come particularly from the IMF and the World Bank. The French government neatly dodged the dilemma of having to choose between its friends and its principles by announcing that devaluation was up to the 14 governments. Until now it has said it would continue to support the CFA at 50 to one. At the same time Paris said that it would reward those countries which adopted economic structural adjustment programmes approved by the IMF. The IMF, however, would not approve a programme for any country with such an artificially high currency. After that, devaluation was only a matter of time.

(Graphic omitted)

Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
art
News
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
News
A scene from the video shows students mock rioting
newsEnd-of-year leaver's YouTube film features playground gun massacre
Travel
travel
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Voices
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act
News
i100This Instagram photo does not prove Russian army is in Ukraine
News
Kenny Ireland, pictured in 2010.
peopleActor, from House of Cards and Benidorm, was 68
News
Morrissey pictured in 2013
people
Sport
sportVan Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
Life and Style
Martha Stewart wrote an opinion column for Time magazine this week titled “Why I Love My Drone”
lifeLifestyle guru Martha Stewart reveals she has flying robot... to take photos of her farm
News
i100
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Environment
Tyred out: should fair weather cyclists have a separate slow lane?
environmentFormer Labour minister demands 'pootling lanes' for women cyclists
News
people
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

VB.Net Developer - £40k - Surrey - WANTED ASAP

£35000 - £40000 per annum + competitive: Progressive Recruitment: .Mid Level V...

Digitakl Business Analyst, Slough

£40000 - £45000 per annum + Competitive Benefits: Progressive Recruitment: Dig...

Mechanical Estimator: Nuclear Energy - Sellafield

£40000 - £50000 per annum + Car, Medical, Fuel + More!: Progressive Recruitmen...

Dynamics NAV Techno-Functional Consultant

£50000 - £60000 per annum + benefits: Progressive Recruitment: An absolutely o...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices