Anglophone West Africa kicks back at use of Eco to replace CFA franc

In the rarified realm of currency negotiations, the year had started on a positive note.

Some eight Francophone West African states, lead by Côte d’Ivoire, decided in December 2019 to move towards a new currency, the Eco, away from the CFA franc.

• Critics called this a whitewash – despite the new name, it will still be pegged to the euro and still be backed by the Banque de France, leaving it open to old criticisms.
• Backers called the important first step in a process. France, for example, will no longer sit on the management committee of the currency.

And even the wider West African community seemed to be behind it. Ghana’s President Nana Akufo-Addo called for his country to join.

That moment of pan-African unity was shattered yesterday, when a communiqué out of Abuja from a 16 January meeting of the Anglophone finance ministers of the Economic Community of West African States (ECOWAS) and Guinea criticised the move.

A key compliant: that they had taken the name –  ‘Eco’ – of a mooted joint currency that would have covered all the countries of the West African region.

Certainly, a beehive has been kicked.

• A source familiar with government deliberations in Ghana and other West African countries says: “The Anglophones were blindsided.” Another adds: “France is trying to subtly arm-twist the sub-continent into kowtowing to it’s terms.”
• For Nigeria’s finance minister Zeinab Ahmed, it was “inconsistent with the decision of the Authority of the Heads of State and Government of ECOWAS for the adoption of the eco as the name of an independent ECOWAS single currency”.

The question is legitimate. If ECOWAS had decided on the Eco as the name of their currency last year, why did the Francophone grouping take the name?

#Ouattara clearly thought #Nigeria would look the other way because it has no intentions of joining any single currency anytime soon. Looks like he miscalculated. https://t.co/yNw5dn33oC

— Amaka Anku (@AmakaAnku) January 16, 2020

Within the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) itself, a source argues this “was to be expected. The timing agreed in Abuja in December was that the announcement was to be made in March after the finance ministers’ assessment of the financial performance of the eight countries. The idea being that the Union Economique et Monétaire Ouest Africaine (UEMOA) would adopt the single currency en bloc.”

There is also a concern within the BCEAO that this will aggravate an already tough relationship between the two linguistic blocs. The source continues: “There was already a wall between us [UEMOA] and the Anglophones. This decision widens the gap that we will have to manage.”

French connection

Others within the BCEAO blame France. “It was President [Emmanuel] Macron who imposed this agenda on us. Macron made a point of talking about the CFA franc in Abidjan.”

On the Ivorian side, sources within the presidency say that too much is being made of this – especially as the communiqué is from ministerial level, while the decision had been taken by presidents in the region.

• President Alassane Ouattara is travelling to London for the UK-Africa Summit on 20 January and has not ruled out bilateral meetings on the issue on the sidelines.
• Critics argue that the CFA change was rushed through as red meat for Ouattara’s electorate ahead of crunch elections in October.

Some Francophone leaders are trying to pour oil on troubled waters. “I understand that the initiatives taken to set up the Eco in these conditions, for the UEMOA countries, can provoke reactions,” says a former governor of the Central African franc zone central bank – a zone not itself involved with this reform.

But others take a harder line.

• “We have launched a very important fund reform on the closure of the operating account, on taking over the management of foreign exchange reserves, on the governance of the management bodies… And we have done so, moreover, within a framework and timetable that had been agreed within ECOWAS. No one has come to question this work. I think the controversy is not about the substance, but about the form”, says a source in Benin’s finance ministry. “There may be a fixation on the name, on the fact that they were not present at the time of the announcement.”

Private sector view

Entrepreneurs active in the region have long seen the potential for growing trade between Francophone and Anglophone areas.

• “I am not surprised they are frustrated. Anglophone countries had been clamouring for a while for complete monetary independence in the region, and they understand that it is far from being the case”, says Guy-Bertrand Njoya, the chief financial officer of Nigerian start-up Max.ng. “The row over the naming in my opinion is a red herring. It is not altruistic, either, the interest of Ghana and Nigeria is to have monetary sovereignty for the whole region because that will free up trade.”

In particular, Bertrand sees a “need to unlock financial resources by pooling risk and capital to finance, for, example rural roads between Côte d’ivoire and Ghana”, the that kind of project is much easier in the framework of a common currency.