The West African CFA Franc, the Eco, and the Covid-19: What Do We Know?

Summary

The CFA franc reform is part of a wider reflection on the future of the Franc Zone and the long-standing monetary cooperation between France and the Franc Zone member countries. The reform seemed necessary to address the ever-growing criticism against the colonial-era currency and African countries’ demands for more sovereignty and control over their monetary policies. It is considered as a necessary step toward a wider regional monetary integration.

Officially announced in Abidjan on December 21, 2019 by the President of Côte d’Ivoire, Alassane Ouattara and the French President, Emmanuel Macron, the CFAF reform only applies to the West African Economic and Monetary Union (WAEMU). It is mainly symbolic at this stage and covers three aspects of the CFA franc currency: (i) the renaming of the CFA franc as “Eco”, (ii) the end of the obligation of the WAEMU central bank, the BCEAO, to deposit its foreign exchange reserves in an operational account opened with the French Treasury, and (iii) the withdrawal of France’s representatives from the BCEAO and WAEMU governing bodies. However, the key pillars of the CFA franc are maintained under the newly rebranded currency. The “Eco” will continue to be pegged to the Euro at a fixed parity rate of 1 Euro = Eco 655.957 and its unlimited convertibility will be guaranteed by France. The CFAF reform is expected to be implemented by the end of 2020.

The CFAF reform is being implemented in parallel to the ECOWAS monetary union and single currency project. The ECOWAS has also chosen “Eco” as the name of its new single currency — expected to replace the current national currencies of the 15 member states. The CFAF reform, although different from the ECOWAS single currency project, is considered a preliminary reform to ECOWAS’s monetary integration. However, some ECOWAS member countries condemned the unilateral rebranding of the CFA franc as “Eco” by WAEMU countries.

The WAEMU’s CFAF reform and adoption of the “Eco” name will not change the fundamentals of the CFA franc or affect the WAEMU sovereigns’ overall ratings and risks. However, effective implementation of the CFAF reform and the launch of the ECOWAS’s single currency, initially scheduled in 2020, are expected to be further delayed as a result of the coronavirus (Covid-19) pandemic.

§ 1. Background: The Franc Zone

In the aftermath of independence, some African states implemented a common monetary project: the Franc Zone. The Franc Zone includes 14 countries of French-speaking sub-Saharan Africa, the Comoros, and France. It is subdivided into two monetary unions: the West African Monetary Union (“WAMU”) which includes eight West African states (Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal, and Togo), and the Central African Monetary Union (“CAMU”), which includes six Central African states (Cameroon, Central African Republic, Republic of the Congo, Gabon, Equatorial Guinea, and Chad). The two monetary unions operate identically under monetary cooperation agreements signed between 1959 and 1962 (amended for the WAMU in 1973), which define a set of key principles governing the monetary organization of the Franc Zone. Following their independence, France recognized the right of the two monetary unions to issue their own currency, the African Financial Community Franc (“XOF”) and the Central African Financial Cooperation Franc (“XAF”) (both the XOF and XAF are commonly referred to as “CFA franc” or “CFAF”), and to have their own issuing institutions: the Central Bank of West African States (Banque centrale des États de l’Afrique de l’Ouest — “BCEAO”) for all eight member countries of the WAMU and the Central Bank of Central African States (Banque Centrale des États de l’Afrique Centrale — “BEAC”) for the six member countries of the CAMU[1]. The Franc Zone thus stems from the development of monetary relations between France and its former colonies in Africa and reflects the shared desire of these countries to maintain an institutional framework for monetary cooperation. Under the arrangement, each of the BCEAO and the BEAC has an operational account in the books of the French Treasury. The latter guarantees the convertibility of the CFA franc. France has representatives to the main governing bodies of the WAMU and CAMU and their central banks. The peg of the CFA franc to the French franc was replaced by a peg to the Euro on January 1, 1999, with a fixed exchange rate of 1 Euro = CFAF 655.957. The switch from the French franc to the Euro did not affect the monetary cooperation mechanism of the Franc Zone.

The monetary cooperation between France and the African countries of the Franc Zone is governed by four fundamental principles: (i) a guarantee by the French Treasury of unlimited convertibility of the three central banks’ currencies, (ii) a fixed peg to the Euro, (iii) free transferability, and (iv) centralization of currency reserves. In exchange for the guarantee of convertibility, each of the central banks of the Franc Zone is required to deposit at least 50% of its foreign currency reserves in an operational account opened with the French Treasury[2] (this rate is set at 65% for the Central Bank of the Comoros). The management of the operational accounts is governed by agreements between the French authorities and representatives of the member states of the three central banks. These accounts are operated as current interest-bearing accounts and may, in exceptional circumstances, have a debit balance. The convertibility guarantee comes into play when the operational account is overdrawn. Several preventive measures are provided for in each of the operational account agreements to avoid any overdrafts, such as direct debits by the BCEAO or the BEAC from foreign currency cash (other than amounts in the operational account), the use by member states of their SDRs (Special Drawing Rights)[3] with the International Monetary Fund (IMF), or the exchange of their SDRs for cash.

The monetary cooperation is subject to regular consultations between French and involved African States, notably through bi-annual meetings of the Ministers of Finance and Governors of the central banks of the Franc Zone countries. The CFA franc, however, does not enjoy unanimous support among the people of the Franc Zone member countries. In West Africa, for example, the people have decried the use of this currency, which they see as the last vestige of French colonialism and the so-called françafrique.

§ 2. The CFA Franc: Last Vestige of French Colonialism?

The Franc Zone was created on the eve of World War II by a decree of September 9, 1939, with the aim, amongst others, of protecting the French economy against instability resulting from the War. Before the creation of the Franc Zone, a privilege was granted to private banks in the French colonies, allowing them to issue francs locally with the same parity as the metropolitan franc. However, as reported by Banque de France in its note of August 2015, the primary concern at the dawn of the War to which the September 1939 decree was intended to respond, was capital flight. The decree introduced strict exchange controls and imposed the inconvertibility of the franc outside a defined geographical area that included metropolitan France, its overseas departments, and its African and Asian colonies: the Franc Zone[4].

The ancestor of the CFA franc as we know it today dates back to the post-World War II years. The end of the Second World War saw the birth of the CFA franc (Franc des Colonies Françaises d’Afrique de l’Ouest et d’Afrique Centrale) and the CFP franc (Franc des Colonies Françaises du Pacifique) created by the decree of December 26, 1945.[5]

Despite the accession to independence of the French territories and colonies, the Franc Zone did not break-up. Some newly independent states (of the WAMU and CAMU) chose to remain in the Zone while others decided to leave it altogether. Among the states that decided to withdraw from the post-independence Franc Zone are Lebanon (1948), Morocco, Tunisia and Algeria (1956–1962), and Guinea Conakry (1958). The other states, including Mauritania and Madagascar, first chose to remain in the Franc Zone but eventually departed in 1973[6]. The Franc des Colonies Françaises d’Afrique de l’Ouest et d’Afrique Centrale was later renamed as the Franc de la Communauté Financière Africaine pour l’Afrique de l’Ouest (XOF) for West Africa and as Franc de Coopération Financière en Afrique Centrale (XAF) for Central Africa, and both commonly referred to as CFA Franc.

In the 1970s, African countries in the Franc Zone began to assert their desire for sovereignty and more control over the currency and monetary cooperation with France. This led to reforms, notably the signing of new monetary cooperation agreements in 1972 and 1973. These reforms also led to a reduction in French presence on the boards of directors of the BCEAO and BEAC and the transfer of the headquarters of the central banks to African soil (Yaoundé in 1977 for the BEAC and Dakar in 1978 for the BCEAO). Decision-making positions and national directorates of each central bank were entrusted to nationals of the member countries.[7] Notwithstanding the reforms and the desire of the member states to increasingly assert their common sovereignty over their currency and monetary policy, France remained a key player in the Franc Zone and the implementation of the CFA franc mechanisms. To date, it still has representatives in the governing bodies of each monetary union.

About 60 years after the member states gained political independence, however, the issue of the CFA franc, long relegated to the academic arena and the closed circle of Africans and Africanists specializing in economics and monetary policy, caught the attention of the African youth who became increasingly aware of the correlation between economic development and monetary independence. Some see the CFA franc as a colonial, servile and predatory currency. The last vestige of French colonialism in Africa, which, in an almost extraordinary way, survived the independence movements[8] (all the other colonial monetary zones ended with the dissolution of the sterling zone in 1979[9]). In recent years, there has been an increase in the number of public demonstrations in several sub-Saharan African cities, including Dakar, Cotonou, Libreville and Bamako, and in Paris. They demanded “monetary decolonization,” which, in the opinion of some observers, necessarily involves the abandonment of the CFA franc, considered a timeless piece of French colonialism[10].

The control, supposed or real, by France over the CFA franc, the economy and the monetary policy of the 14 African countries in the Franc Zone has been the subject of several debates and criticism both in Africa, by Africans, and in the international community.[11] Such criticisms have made a thorough reflection on the future of the Franc Zone and the CFA franc necessary and inevitable.

§ 3. The “Eco” Single Currency and the CFAF Reform

ECOWAS Single Currency Project

During its ordinary session held on June 29, 2019 in Abuja (Nigeria), the Economic Community of West African States (“ECOWAS”)[12] Assembly of Heads of State and Government adopted a principle of “a flexible exchange rate regime with a monetary policy framework based on inflation targeting.” The identification of the anchor currencies has not yet taken place. The conference further instructed the ECOWAS Commission, in consultation with the West African Monetary Agency and the Central Banks, to accelerate the implementation of the revised roadmap, in particular the work on the single currency symbol (the “Eco”) to be presented at its next session.

The “Eco” is the name of the single currency project for the fifteen countries of the ECOWAS, whose origin dates back to 1983. Its introduction was initially planned for 2003 but was postponed several times, in 2005, 2010 and 2014. Nonetheless, ECOWAS stated that adoption would be gradual so that countries that meet a set of key convergence criteria could join, and others later. These convergence criteria are of two kinds:

• the first set is (i) to maintain the budget deficit at a level below or equal to 3% of nominal GDP, (ii) to maintain an annual average inflation rate below 10%, (iii) to ensure that the budget deficit/central bank ratio is below 10% of the previous year’s tax revenues, and (iv) to hold a 3-month or more gross reserves in months of imports; and
• the second set is (i) to maintain the variation of the nominal exchange rate with a range of 10% upwards or downwards, and (ii) to maintain the total public debt ratio below the threshold of 70% of nominal GDP.

In January 2020, the five English speaking countries of the ECOWAS (namely Nigeria, Ghana, Gambia, Liberia, and Sierra Leone), along with Guinea Conakry, issued a communiqué condemning the WAEMU’s decision to unilaterally rename the West African CFA franc as “Eco”. The bloc highlighted that the “Eco” is expected to be the name of a new independent ECOWAS single currency[13].

At the ECOWAS level, the “Eco” single currency was expected to be officially launched in July 2020, subject to participating member states meeting the convergence criteria. However, on February 10, 2020, the President of Nigeria, Muhammadu Buhari, issued a statement requesting a postponement of the launch of the “Eco” single currency, which, as mentioned above, aims to replace current regional currencies. The Nigerian President pointed out the fact that the convergence criteria initially set in the roadmap of the ECOWAS member states in Abuja on June 29, 2019, which are necessary for the establishment of the “Eco”, have not yet been met by all member states.

WAEMU’s CFAF Reform

At the West African Economic and Monetary Union (“WAEMU”) level, the reform of the CFA franc is supported by all eight member states in parallel to the ECOWAS-level single currency project. Both the WAEMU and ECOWAS have chosen the same currency name: the “Eco”. On December 21, 2019, in Abidjan, Emmanuel Macron, President of France, and Alassane Ouattara, President of Côte d’Ivoire met to discuss the CFAF reform and highlighted the main elements of the reform to monetary cooperation between France and the WAEMU, in particular, the following[14]:

• the renaming of the “CFAF” as “Eco” in 2020;
• the end of the centralization of the foreign exchange reserves of the BCEAO in an operational account opened with the French Treasury[15]. As part of the reform, the operational account will be closed and the balance of the reserves will be transferred to the BCEAO. The BCEAO will have more control over its foreign exchange reserves and will be able to invest such reserves, at its discretion, with central banks or the Bank for International Settlements (BIS); and
• the withdrawal of French representatives from the WAEMU’s governing bodies (BCEAO’s Board of Directors and Monetary Policy Committee, Banking Commission). In theory, French representatives should not withdraw from BCEAO’s supervisory bodies until the BCEAO’s articles of associations and the provisions governing the WAEMU (i.e. the Convention relating to the WAEMU Banking Commission and the Cooperation Agreement) are appropriately amended[16]. However, should this formalism delay the implementation of the “Eco”, France agreed to recall its representatives as soon as the WAEMU member States request such a withdrawal.

A new cooperation agreement providing for the above changes to the monetary cooperation between France and the WAEMU was initialed by the Minister of Economy and Finance of France and the President of the Council of Ministers of the WAEMU[17]. However, the reform will leave unchanged the key pillars of the CFA franc with regard to the Euro and France:

• the peg of the “Eco” to the Euro at a fixed exchange rate (at the current parity of 1 Euro = CFAF 655.957); and
• France’s unlimited and unconditional guarantee of currency convertibility.

The guarantee of the “Eco” convertibility and the fixed exchange rate against the Euro have been maintained at this stage of the reform in order to consolidate macroeconomic stability and economic growth. The Governor of BCEAO declared that the two key pillars of the monetary stability of the WAEMU (i.e. the fixed exchange rate against the Euro at the current parity and France’s unlimited and unconditional guarantee of convertibility of the “Eco”) have been maintained with a view to making the “Eco” the foundation of the dynamism of the economic union (i.e. WAEMU), as well as the prosperity of the populations of the member states[18]. The new cooperation agreement is subject to ratification by the French Parliament and by each WAEMU member state’s government in accordance with their respective rules.

Figure 1. the two economic and monetary areas in the west and central Africa forming the Franc Zone and the ECOWAS.

§ 4. Impact of the CFAF Reform on the WAEMU Member States

Based on the announcement made on December 21, 2019 by the Presidents of Cote d’Ivoire and France, and the Governor of BCEAO, of the key highlights of the reform outlined above, the WAEMU’s CFAF reform is mainly symbolic. Indeed, the two main pillars of the CFA franc, which are (i) the peg to the Euro (at a fixed rate of 1 Euro = CFAF 655.957) and (ii) the unlimited convertibility guarantee by France’s Treasury, will be maintained under the “Eco” currency.[19] Today, the reform is viewed as a simple rebranding that does not change the fundamentals of the CFA franc and monetary policy in the WAEMU member states. In its report assessing the potential impact of the currency reform on West African member states, Fitch Ratings (“Fitch”) stressed the symbolic nature of the reform and noted that the changes to the WAEMU CFA franc do not fundamentally alter the external liquidity risks of the two Fitch-rated WAEMU members, Benin (B/Stable as of April 9, 2020) and Cote d’Ivoire (B+/Positive as of November 12, 2019) [20]. Standard & Poor’s (“S&P”) concurred and wrote, in its February 2020 report on the reform, that the announced reform is not expected to have an immediate effect on the WAEMU member state sovereign ratings, as the devaluation of the “Eco” is not on the agenda.[21]

S&P noted that only a devaluation of the “Eco” would impact the fundamentals of WAEMU economies. In the event of a devaluation, the largest WAEMU economies, including Côte d’Ivoire and Senegal, would be the most exposed. Their dependence on foreign currency borrowings in international capital markets has increased sharply in recent years, notably through various Eurobonds issuances which increased both countries’ foreign currency debt stocks to around 40% of GDP for the former and around 50% of GDP for the latter.[22] For Benin, which issued its first Eurobond in March 2019, foreign currency debt is estimated at around 30% of GDP. Eurobond issuances have helped countries, including Côte d’Ivoire and Senegal, diversify their sources of funding beyond the traditional multilateral and bilateral funding while reducing costs associated with such funding. These countries strengthened their presence in the international financial markets and were able to finance their major infrastructure projects and plurennial development strategies, including the National Development Plans (NDPs) in Côte d’Ivoire and the Plan Sénégal Emergent (PSE) in Senegal. As a result, any exchange rate pressure could adversely affect the credit quality of such countries, according to S&P.[23] However, Fitch insists on the immediate neutral effect of the currency reform and posits that more substantial changes to the exchange-rate regime, such as a departure from the peg, are only a long-term possibility.[24]

The reform will cause only minor technical changes to the convertibility guarantee, without changing its purpose or core functioning. A new guarantee agreement, which is expected to replace the operational account held with the French Treasury, will provide for the triggering conditions of the guarantee, either in the form of an overdraft or a line of credit. It will include a yield, which may vary according to the duration of the overdraft or credit. The guarantee agreement will be entered into by the Governor of the BCEAO and the French Minister of Economy and Finance. While the convertibility guarantee helps limit external liquidity risks (see Fitch’s January 2020 report), as under the previous system, the guarantee does not protect against a sustained deterioration of external solvency — for example, due to excessive WAEMU-wide current account deficits.

Moreover, the closure of the BCEAO’s operational account opened with the French Treasury, the end of the centralization of the foreign exchange reserves in such an account and the subsequent transfer of all of the WAEMU’s foreign exchange reserves to the BCEAO do not affect the WAEMU’s liquidity risk. The BCEAO’s foreign exchange reserve reporting has been considered as credible by rating agencies, and economic policies are expected to continue to support the current level of foreign exchange reserves.[25] However, there is a risk that the BCEAO may be affected by the loss of its current access to preferential interest rates on its deposits with the French Treasury.[26]

The IMF praised the WAEMU’s proven track record in the conduct of monetary policy and external reserve management. It highlighted that WAEMU member states recorded low inflation and high economic growth over the last decade, while their fiscal situation has improved, and their level of foreign exchange reserves has increased. With regard to the WAEMU’s CFA franc currency reform, the IMF welcomed the announcement as a key step in the modernization of long-standing monetary arrangements between the WAEMU and France.[27]

§ 5. Impact of the Coronavirus (Covid-19) on the CFAF Reform and the ECOWAS Single Currency Project

The coronavirus (Covid-19) pandemic may have just caused both the ECOWAS single currency project and the CFAF reform to be further delayed (again!). But for how long? The effective implementation of the WAEMU’s CFAF reform was expected in 2020. The launch of the ECOWAS’s single currency, scheduled for July 2020, was expected to be delayed by WAEMU’s and ECOWAS’ divergent positions on the name, the fixed or floating exchange rate of the future single currency, its peg to the Euro and the existence of a French guarantee, which Côte d’Ivoire supports and Nigeria rejects, have been clarified. Although no official communication has been made or issued as to the CFAF reform or postponement of the launch of the “Eco” currency in the WAEMU area, it is highly anticipated that the initial schedule will be impacted by the Covid-19 pandemic as African countries step up their containment efforts and prepare for the worst. As to the ECOWAS single currency project, the hurdles will likely worsen and the obstacles even more material than initially expected due to the Covid-19 pandemic and its foreseeable adverse effects on ECOWAS economies.

First, assuming West African countries successfully contain the Covid-19 pandemic and ultimately win the war against the coronavirus[28], disagreements on the CFAF reform and its alignment with the wider ECOWAS single currency project still need to be further discussed before the ECOWAS single currency project can move on to its implementation phase. This alone comes with potential further delays for the monetary integration and single currency project. Second, compliance with the key convergence criteria was one of many reasons why Nigeria suggested in early 2020 that the launch of the ECOWAS single currency be delayed since no country has — and would likely have — met the first set of convergence criteria which are essential for the implementation of the single currency. Now, the million-eco question is: which country is going to meet such criteria after the Covid-19 pandemic? One needs not be a monetary policy expert to answer that question. The best guess would certainly be… none. As the ECOWAS economies grapple with containing the pandemic and providing support to their citizens and industries, which ultimately comes with higher rates of public spending and foreign debt, the Covid-19 pandemic is expected to heavily impact the global economy and worsen the budget and fiscal position of already vulnerable West African economies.

The IMF warned that the impact (economic and social) of the Covid-19 pandemic can be much worse than during the 2008–2009 financial crisis.[29] In its 2020 World Economic Outlook (WEO) published in April 2020, the Fund notes that the Covid-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. As a result of the Covid-19 pandemic, the global economy is projected to contract sharply by -3% in 2020 according to the IMF (compared to an initial forecast of 3.4% in the October 2019 WEO). In a baseline scenario, which assumes that the Covid-19 pandemic fades in the second half of 2020 and containment efforts are gradually unwound, the global economy is projected to grow by 5.8% in 2021 as economic activity normalizes, according to the Fund. For sub-Saharan African economies, real GDP, consumer prices and current account balance are projected to be heavily impacted by the pandemic.[30] Real GDP growth is expected to contract by -1.6% in 2020 (compared to 3.1% in 2019) — the lowest level since 1970 (see Figure 2 below). As a reminder, the October 2019 Regional Economic Outlook for Sub-Saharan Africa projected real GDP growth of 3.6% in 2020 (see Figure 3 below). Year-end to year-end changes in consumer prices are expected at 9.3% in 2020 (compared to 8.4% in 2019), while current balance accounts are expected to contract by -4.7% in 2020 (compared to –4.0% in 2019). African oil exporters are expected to register real GDP growth contraction of -2.9% in 2020 (compared to 1.7% in 2019)[31]. African middle-income countries are expected to record real GDP growth contraction of -3.0% in 2020 (compared to 2.3% in 2019)[32].

Figure 2. Real GDP Growth for Sub-Saharan Africa, 1970–2020

Source: IMF, Regional Economic Outlook for Sub-Saharan Africa, April 2020.

Figure 3. Real GDP Growth for Sub-Saharan Africa, 2019–2020

Source: IMF, Regional Economic Outlook for Sub-Saharan Africa, April 2020.

The Paris Club and the G20[33], the IMF and World Bank Group[34] have issued statements calling for the temporary suspension of debt service payments for select groups of heavily-indebted countries that receive bilateral and multilateral debt from their creditor members. Beneficiary countries of IMF and World Bank include IDA (International Development Association) member countries and all least developed countries, as defined by the United Nations, that are current on any debt service to the IMF and the World Bank. Paris Club members and the G20 have agreed on a common term sheet providing for the key features of their debt suspension initiative. The term sheet provides for a suspension from May 1, 2020 until December 31, 2020, subject to a possible extension, taking into account a report on the liquidity needs of eligible countries by the World Bank and IMF. The suspension applies to both principal repayments and interest payments and will be NPV-neutral. The repayment will span a period of 4 years period, including a one-year grace period and the debt treatment will be achieved either through rescheduling or refinancing. While such suspension will allow the beneficiaries to free up and allocate such resources to their efforts to contain the coronavirus and support their own national economy, there is no doubt that the efforts come short in providing much-needed long term support to poor countries.

Following the Covid-19 pandemic, there will likely be two options for the ECOWAS single currency project: (i) the convergence criteria will likely have to be reviewed in order to take into account, at least in the short term, the economic and social impact of the pandemic. This is not without consequences and will require unanimous consent and support from all ECOWAS member states. Such continuation of the single currency project after the pandemic would also be a good test of ECOWAS countries’ willingness and commitment to the single currency project and of Nigeria’s ability to show strong leadership within the bloc — at a time where such leadership is desperately needed or (ii) the single currency project will be delayed altogether. As some may recall, the ECOWAS’s “Eco” project was first announced more than 30 years ago. At this point, it is only fair to note that some have lost faith in its implementation in their lifetime. Thus, the second option seems more plausible; after all, we have waited for 30 years already.

The Covid-19 pandemic is an unprecedented test of the commitment of WAEMU member states to their monetary independence and of West African countries to deeper economic and monetary integration at the ECOWAS level. As a result, the CFAF reform and the ECOWAS single currency project will likely continue to experience further challenges and hurdles to their implementation. The CFAF reform needs to move forward to yield tangible changes to the current monetary arrangements between the WAEMU and France. At the ECOWAS level, the pros and cons of moving forward at this time with the 15-country single-currency project need to be carefully assessed and addressed with particular attention to the long-term wellbeing and interests of West African communities.

[1] Both the WAMU and the CAMU were later organized to wider economic and monetary regional organizations, namely the West African Economic and Monetary Union (WAEMU) and Central African Economic and Monetary Community (CAEMC), respectively. The CFA franc reform and the “Eco” single currency project do not involve member countries of the CAMU and CAEMC— which are not part of the ECOWAS. However, there have been voices in the CAEMC community, stressing the necessity of a CAEMC’s CFAF reform, led notably by Chad and Equatorial Guinea. At the CAEMC summit in Yaoundé in 2019, the member States decided to launch a thorough analysis of the conditions and framework of a new monetary cooperation with France and tasked the central bank, BEAC, with putting forward an appropriate roadmap leading to the currency’s evolution.

[2] Under the Cooperation Agreement (Article 2) and the Transaction Account Agreement (Article 1) of 4 December 1973, the BCEAO is required to deposit at least 50% of its foreign exchange reserves into the operational account opened with the French Treasury.

[3] The SDR is the unit of account established and used by the IMF. Its value results from the daily calculation of a basket of four currencies (US dollar, Euro, Pound sterling and Japanese yen). For information on how SDRs work: https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/14/51/Special-Drawing-Right-SDR

[4] See Banque de France (2015), La Zone franc, Note d’Information, Août, p.2

[5] See J. Suret-Canale (1994), La dévaluation du franc CFA et ses conséquences, Aujourd’hui l’Afrique, n° 51, p.8 . At that time, the decree set the value of the CFA franc at 1.7 metropolitan francs and that of the CFP franc at 2.4 metropolitan francs.

[6] See Banque de France (2015), Ibid.

[7] Ibid.

[8] See D. M. Dembélé (Dir.) et al. (2016), Sortir l’Afrique de la servitude monétaire: A qui profite le franc CFA?, La Dispute ; see also Saïd Bouamama (2018), Le Franc CFA, une monnaie coloniale, servile et prédatrice, CADTM, https://www.cadtm.org/Le-Franc-CFA-une-monnaie-coloniale-servile-et-predatrice#nh12

[9] The other zones were dissolved, including the Belgian franc zone (1960), pesetas zone (1969) and escudo zone (1975).

[10] See Manifestations d’opposants au franc CFA en Afrique et en région parisienne, in Le Monde Afrique, 18 September 2017, https://www.lemonde.fr; and Sénégal: le mouvement anti-franc CFA de retour dans la rue, RFI, 17 September 2017, http://www.rfi.fr/fr/

[11] See El Pais, ¿Es el franco CFA una moneda colonial?, 5 february 2019, https://elpais.com; see also, The New York Times, The African Currency at the Center of European Dispute, 22 January 2019, https://www.nytimes.com

[12] ECOWAS member States are Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.

[13] See https://www.cnbc.com/2020/01/17/west-african-eco-currency-sparks-division-over-timetable-and-euro-peg.html

[14] See Banque de France, Réforme de la coopération monétaire avec l’UEMOA, 9 January 2020 https://www.banque-france.fr/sites/default/files/media/2020/01/09/819421_zf_carte_zones_eco_v5.pdf

[15] Under the Cooperation Agreement (Article 2) and the Transaction Account Agreement (Article 1) of 4 December 1973, the BCEAO is required to deposit at least half of its foreign exchange reserves (50%) into the operational account opened with the French Treasury (excluding amounts intended for its current treasury operations or transactions with the International Monetary Fund). The reserves held by the French Treasury mainly consist of listed government bonds.

[16] In accordance with the articles of association of BCEAO, the convention relating to the WAEMU Banking Commission and the 1973 Cooperation Agreement, representatives of France are appointed to the BCEAO Board of Directors and its Monetary Policy Committee and to the WAEMU Banking Commission.

[17] This new cooperation agreement will amend the 1973 agreements (i.e. the Cooperation Agreement and the Transaction Account Agreement of 4 December 1973) between the eight WAEMU member States and France.

[18] See https://www.bceao.int/fr/communique-presse/communique-de-presse-reforme-du-franc-cfa

[19] See Katarina Hoije, W. Africa Monetary Union to Reform CFA Franc, Keep Euro Peg, in Bloomberg Markets, 21December 2019, https://www.bloomberg.com/news

[20] See Fitch Ratings, WAEMU Currency Reform Mainly Symbolic, January 10, 2020

[21] See Standard & Poor’s, CFA Franc Reform Will Have No Immediate Effect On Sovereign Ratings In The West African Economic And Monetary Union, 23 December 2019; and Standard & Poor’s, Entrée dans l’âge de l’eco: implications de la réforme monétaire en Afrique de l’Ouest, 17 February 2020.

[22] See Standard & Poor’s Global Ratings, ibid. p. 8

[23] Ibid.

[24] See Fitch Ratings report, Ibid.

[25] Ibid.

[26] It is expected that France may no longer apply the preferential rate (0.75%) currently offered to BCEAO on its deposits with the French Treasury under the current monetary arrangements.

[27] See Statement by the IMF Managing Director on the Reform of West Africa’s CFA franc, Press Release n°19/487 of 21 December 2019. https://www.imf.org/en/News/Articles/2019/12/21/pr19487-md-statement-on-the-reform-of-west-africa-cfa-franc

[28] Leaders, in France, the United States and China, have qualified the fight against the Covid-19 pandemic as a war against an invisible enemy.

[29] See IMF (2020), World Economic Outlook, April: available at https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020

[30] See IMF, 2020 World Economic Outlook, p. 24

[31] These include Nigeria (-3.4%), Republic of the Congo (-2.3%), and Angola (-1.4%).

[32] These include South Africa (-5.8%), Ghana (1.5%), Côte d’Ivoire (2.7%), Cameroon (-1.2%), and Senegal (3.0%).

[33] See Paris Club creditors press release: http://www.clubdeparis.org/en/communications/press-release/debt-suspension-initiative-for-the-poorest-countries-15-04-2020

[34]See the joint statement by the World Bank Group and the IMF: https://www.worldbank.org/en/news/statement/2020/03/25/joint-statement-from-the-world-bank-group-and-the-international-monetary-fund-regarding-a-call-to-action-on-the-debt-of-ida-countries