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Seen from the presidency in Bangui, the “historic decision” to adopt Bitcoin as an “official currency” undoubtedly represents “a decisive step towards opening up new opportunities” for the CAR, according to an executive document that we managed to consult.
Outside the borders of this state, which is one of the six poorest countries on the planet – where the GDP per capita stagnates at $493, well above Burundi’s score ($239), but not too far from Afghanistan ($518) – the reaction is incandescent.
“It’s a slap in the face to community principles,” says a senior official from the sub-region’s financial administration. “This decision seems to be a provocation intended to lead to the CAR’s expulsion from the CEMAC zone and the CFA franc. The Bangui authorities are giving neighbouring countries a reason to expel them from the zone rather than assuming their unilateral desire to leave it,” says this expert. “The law passed on 22 April 2022 in the CAR is null and void, insofar as it violates the texts of the Central African Economic and Monetary Community (UMAC) to which the country belongs,” adds an official from the Bank of Central African States (BEAC) in Yaoundé.
In a sign of the urgency and volatility of the situation, our interviewees insisted that their anonymity be preserved until the sub-regions heads of state have issued their official statements.
Approximations and legal stuttering
The text of the 22 April law voted on by the Central African parliament members poses many difficulties. It grants “unlimited issuing power” (art. 1) governing crypto-currencies, without making it clear on which authority this power depends. The same article states that this provision is “without prejudice to the law on monetary integration.” In other words, a new structure for issuing legal tender has been established “without prejudice” to the bodies responsible for supplying legal tender in the CAR.
This text, which also grants cryptocurrencies an exchange rate “freely determined by the market” – a monetary heresy in view of the texts governing the exchange rate of the Central African CFA franc (XAF) against the euro – proclaims that for accounting purposes the “currency legally used in the CAR is considered the reference currency.” But is this referring to the CFA franc or Bitcoin? For now, it’s a mystery.
These approximations and legal stammerings exasperate the financial specialists and regional monetary framework that we consulted. “There are community bodies to which monetary policy powers have been delegated. According to information obtained from the BEAC, the issue of granting legal tender to cryptocurrencies in the CAR has never appeared on the agenda of the Central Bank’s Monetary Policy Committee. This is the most serious institutional crisis in Central Africa’s recent history,” says our Libreville-based executive.
Short-circuiting the legal, financial and institutional architecture
In fact, despite the circumlocutions of the text adopted on 22 April in Bangui, according to the Central African authorities themselves, the objective is to short-circuit the legal, financial and institutional architecture existing within the Central African Economic and Monetary Community.
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“Sending money from the CAR to the international level is becoming very difficult. Receiving [funds] in the CAR is also becoming difficult. Because it is controlled [and] goes through the Central Banks,” said Justin Gourna Zacko, the Central African Minister of ICTs, after the law was passed.
“Have the Central African authorities fully understood the scope and practical consequences of this decision?” asks our leader.
Challenge to institutions, risks of propagation
According to several sources within the CEMAC (Cameroon, the CAR, Congo-Brazzaville, Gabon, Equatorial Guinea and Chad), it is entirely possible that the CAR may simply leave the CFA zone. “No one can accept this bad behaviour and challenge to the monetary zone’s entire internal control mechanism,” says our contact in Libreville.
“The clear risk is that this may propagate to the entire market. As soon as you have a marketplace within a CEMAC member country that allows you to convert CFA francs (XAF) into cryptocurrency, you have a de facto currency outflow mechanism similar to the one controlled by the BEAC. So anyone who has possession of CFA francs in the zone can use it, whether they are in the CAR or not. It opens the door to all sorts of illegal currency outflows and inflows,” adds our source.
“With cryptocurrency, the Central Bank no longer exerts any control. You have your money, you send it to an investor or a company, you [receive it] in any currency – dollar, euro, CFA, naira. We need to, first of all, establish the legal framework that will allow any Central African to have this possibility of transferring money,” said Zacko, confirming the worst fears of several leaders of neighbouring countries.
This precautionary language is, in fact, one of the main sources of anxiety and anger about the Bangui experiment. “Article 3 of the Convention governing the UMAC stipulates that: ‘The monetary union is characterised by the adoption of a single monetary unit whose issuance is entrusted to a common issuing institute, the Bank of Central African States, […] governed by its own statutes which are an integral part of this Convention,” says the BEAC executive. He believes the recent Central African announcements are a direct affront to the very principle of monetary union.
Is Moscow’s tutelary shadow behind this decision?
Many see in this “disruption” the tutelary shadow of Moscow, whose Wagner nebula subdivisions are present throughout Bangui. “It is strange and abnormal that the CAR is the first country to take the initiative to write a law on cryptocurrency, without the opinion of the BEAC’s governor and outside any community regulatory framework. This is a serious offence,” said our interviewee in Yaoundé.
“By this law, in its eagerness to legislate to place itself among the first ‘courageous and visionary’ states in the world to recognise Bitcoin as an official currency and means of payment, the CAR has made the sovereign decision to implicitly denounce all the monetary and financial treaties and agreements it has concluded,” says an internal legal note written by the regional monetary institution that we managed to consult.
As a matter of fact, there has been some reluctance from within the CAR itself, where internet penetration is only 11% according to online data specialist DataReportal. Opposition parliament members Anicet Georges Dologuélé and Martin Ziguélé, as well as Rachel Ngakola, former director-general of customs – who are all members of the commission that studied the draft law – disassociated themselves from the final report because of “strong reservations.”
According to them, this operation will “encourage dirty money laundering and provide a breeding ground for tax fraud and swindling.” The three commission members are also concerned about the impact that this measure will have on landlords. Such a project “can only arouse suspicion” and risks compromising “the disbursements of the major institutions,” they say.
The delicate exercise of the BEAC’s ad hoc committee
According to our information, the BEAC set up an ad hoc committee to work on the new monetary framework established in the CAR. Convened by the BEAC’s governor, Chad’s Abbas Mahamat Tolli, this committee had to deliver its conclusions by 2 May.
This is a delicate exercise, as not everyone agrees with Bangui’s decision. A senior financial official in Equatorial Guinea points out the “panic” that has been caused by the financial sanctions against Mali and Russia, notably that access to the Central Bank of West African States has been restricted and foreign currency reserves have been confiscated.
“Any responsible government must prepare for the worst. We no longer trust that Westerners will even respect international rules. A leader takes such and such a contested decision, and any citizen of the country in question can have his assets confiscated? Without respect for any rules, not even diplomatic protections? The CAR is not wrong to take the lead. These are protective decisions, parades, palliatives,” says this source. However, the Central African leaders should have “informed the authorities of the sub-region and partners, including France,” she adds.
Severe reactions, towards exemplary sanctions?
“This law carries within it all the seeds needed to destroy the monetary, banking and financial system of the CEMAC, which was built on a single currency, as we know it,” says a legal analyst at the Central Bank.
On the Western side, the reaction is severe. “We have taken note of the enactment on 22 April of a law regulating cryptocurrencies in the CAR,” a European Commission spokesperson told us. “The European Union is awaiting clarification on the proposed implementation modalities, as well as on the implications for the Cemac monetary union, including the Umac convention. Our delegation is in regular contact with the country’s authorities, as well as with our main partners and the CEMAC institutions,” added the European official. The latter reiterates, however, that “the restrictive measures with regard to the situation in the CAR, which include (among other things) a freeze on assets and a ban on making funds available to persons and entities on the sanctions list,” remain in force.
“Crypto assets and in particular cryptocurrencies are covered by these sanctions. Circumventing EU sanctions by using crypto assets is not allowed,” it concludes. Duly noted.
From Bangui to Silicon Valley
Although the bill has only recently been submitted to the National Assembly, according to an institutional source close to the matter, the initiative has been “secretly managed” for the past 10 months by the major works and investment unit of the Central African presidency, which is headed by minister advisor Pascal Bida Koyagbele. The latter has travelled twice – in September 2021 and February 2022 – to Silicon Valley, in the US, “to meet with blockchain leaders.” Koyagbele then presented the project to the CAR’s President Faustin Archange Touadera. After validating it, Touadera tasked Justin Gourna Zacko, minister of posts and telecommunications, with defending the project in front of parliament members.
The law on cryptocurrencies is expected to allow Bangui to bypass the traditional circuit of fund transfers and thus claim direct budgetary support from Russia without transiting through control institutions. According to a source close to the presidency, who requested anonymity, “this tool will make life easier for Central Africans. This solution will not charge for instant transfers and so will help the government save money.” The same source concluded, “many think the Russians are behind it. But this is not the case. The CAR can make its own decisions. We have the capacity to surprise the powers that continue to undermine us.”
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