The CFA Franc Is a Colonial Instrument, Not a Currency Union
On December 26, 1945, France ratified the Bretton Woods agreements and simultaneously created the CFA franc—Franc des Colonies Françaises d’Afrique—for its African possessions. The currency is often presented as a voluntary monetary union between sovereign states. This is ideological mystification. A currency union implies equal decision-making power over monetary policy, seigniorage distribution, and reserve management. The CFA franc offers none of this. Instead, it is a colonial instrument—a mechanism that structurally reproduces the imperial relation under juridical independence.
The West African Economic and Monetary Union (UEMOA) and the Central African Economic and Monetary Community (CEMAC) each use a separate CFA franc, both pegged to the euro at a fixed rate (655.957 CFA francs per euro since 1999). The peg is guaranteed by the French Treasury. In exchange, France demands two binding conditions: first, 50 percent of foreign exchange reserves must be deposited in an Operations Account at the French Treasury; second, France holds a veto over any modification of exchange rate policy. This is not partnership—it is monetary suzerainty, where the former metropole retains control over the money supply, credit conditions, and external accounts of nominally independent states.
The Operations Account Mechanism Drains African Surplus
The Operations Account is formally presented as a guarantee against reserve depletion. In substance, it functions as a capital drain. Since 1973, member states have been required to deposit half of their hard currency reserves with the French Treasury. As of 2020, estimates suggest this pool exceeded $10 billion (CNRS, 2021). These reserves earn below-market interest rates—often 0.75 percent or lower—while the French Treasury reinvests them at higher yields. The spread is a direct transfer of value from the African periphery to the French core, what Marxist economist Samir Amin termed accumulation by extraction.
The consequences are concrete. In 2019, the UEMOA zone sent approximately $500 million in reserve income to France, according to calculations by the IMF's African Department (IMF Country Report No. 19/68). This is not a trivial sum: it exceeds the annual health budgets of several member states, including Niger and Burkina Faso. The mechanism also imposes a deflationary bias. Since the CFA franc is overvalued against the euro—reflecting productivity differences between the two currency zones—exports are uncompetitive, forcing countries to restrict imports through austerity, compressing domestic demand, and suppressing wages.
The peg itself functions as a wage repression device. To maintain the fixed parity, the BCEAO (Central Bank of West African States) must keep inflation low, which it achieves by limiting credit to the domestic private sector while prioritizing debt service to French and European creditors. The result is stagnation: between 2010 and 2020, average GDP growth in the UEMOA zone was 4.2 percent, but per capita growth barely reached 1.5 percent after population adjustment (World Bank World Development Indicators, 2021). The surplus that could fund industrialization, infrastructure, or education instead flows northward, securing French corporate profits and maintaining the eurozone's external stability.
Monetary Sovereignty as Prerequisite for Development
To understand the CFA franc's role in underdevelopment, one must grasp what monetary sovereignty means under conditions of global capitalism. Monetary sovereignty is not simply the right to print currency. It is the capacity to create and allocate credit according to domestic social priorities, to manage the exchange rate in response to the balance of payments, and to command the fiscal space necessary for public investment. For a peripheral state, monetary sovereignty is the precondition for any industrial policy worth the name.
Neoclassical development economics historically treated independent monetary policy as a risk—a source of inflation, corruption, or misallocation. But the actual empirical record of CFA franc countries tells a different story. Compare Côte d'Ivoire and Ghana: both are cocoa exporters with similar colonial histories. Ghana, which abandoned its fixed peg in the 1960s and later adopted managed floating, saw per capita GDP rise from $1,300 in 1990 to $2,400 in 2020. Côte d'Ivoire, locked into the CFA franc, grew from $1,400 to $2,100 over the same period (IMF World Economic Outlook, 2021). More importantly, Ghana has retained flexibility to respond to commodity price shocks, while Côte d'Ivoire has been forced into procyclical austerity precisely when it needed expansion.
Monetary sovereignty is not a silver bullet. It does not automatically resolve class contradictions or state capacity problems. But without it, no periphery state can break the structure of unequal exchange—the systematic transfer of value from low-productivity to high-productivity economies that Arghiri Emmanuel theorized in his 1972 work. The CFA franc is not just a bad exchange rate regime; it is a lock on the door to autonomous development.
The Eco Currency Transition and Its Contradictions
In December 2019, French President Emmanuel Macron and Ivorian President Alassane Ouattara announced the "reform" of the CFA franc: the currency would be renamed the Eco for UEMOA countries, the reserve requirement would be reduced, and French representation on the BCEAO board would be phased out. The reform was widely hailed as a step toward sovereignty. A Marxist analysis reveals it as a managed transition designed to preserve the substance of control while conceding cosmetic change.
The key concession—the end of the 50 percent reserve requirement—was real but partial. As of 2020, the reserve ratio dropped to zero, but the peg to the euro remained, and France retained its guarantee and associated veto. Without exchange rate flexibility, the deflationary trap continues. Moreover, the reform applies only to the West African CFA, not the Central African version (CEMAC), which remains fully unreformed. Critics such as economist Ndongo Samba Sylla argue that the change amounts to neocolonial modernization: the mechanism adapts to survive by shedding its most visible colonial architectures while preserving the core constraint—the euro peg and the loss of monetary discretion.
The broader contradiction is that the Eco transition occurs within a region that lacks political unity. The original vision of a single West African currency, the Eco, was meant to encompass all 15 ECOWAS states, including Nigeria, Ghana, and others. But Nigeria’s naira is a floating currency, and Ghana’s cedi floats as well. A monetary union between fixed and floating regimes without convergence of fiscal and industrial policy is technically incoherent. The actual proposal collapses into a two-track system: the francophone bloc rebrands while the anglophone bloc remains outside. The Eco is thus not a decolonization but a reconsolidation of France's monetary sphere of influence under a new name.
From Monetary Colonialism to Monetary Independence
The path from monetary colonialism to monetary independence requires not technical adjustment but strategic rupture. The historical record shows that no peripheral country has achieved sustained industrialization without first breaking the external monetary constraint. Japan in the 1950s, South Korea in the 1960s, and even China after 1978 did not enjoy the "discipline" of a colonial peg. They exercised monetary sovereignty—controlling interest rates, managing exchange rates, and directing credit to priority sectors—precisely because they broke with the international monetary orthodoxy imposed by their former colonizers.
For West African states, this means three tasks. First, exit the CFA franc entirely: terminate the peg, nationalize the central bank, and assume full control over monetary and fiscal policy. Second, build regional monetary coordination on the basis of genuinely equal partners—not a French-guaranteed zone but a self-governing payments union among sovereign states with floating or managed rates. Third, institutionalize a development-oriented central banking framework, where the central bank is obligated to finance public investment, not hoard foreign exchange for the benefit of French bondholders.
This is not a romantic call for autarky. It is a recognition that the imperial division of labor can only be dismantled by political action that reclaims the tools of economic sovereignty—foremost among them, the money form. The CFA franc is not a neutral technical instrument. It is a political weapon, a conveyor belt of surplus extraction, and a monument to a colonialism that did not end in 1960. It can be abolished only when the working classes of West Africa—and the solidarity movements of Europe—recognize it for what it is: not a currency, but a chain.
