West Africa: Economists Nubukpo and Zinsou find common ground on ending the CFA franc

CFA zone countries keep some of their reserves in the central bank and the currency’s value is tied to the euro. Some campaigners have been calling for West African countries to seek out an independent course and break those ties with Paris.

In September 2017, Togolese economist Kako Nubukpo described his peer, Benin-born Lionel Zinsou, as a “poster boy for voluntary servitude” after the latter referred to outspoken critics of the CFA franc currency as “populists”.

What followed was a two-year cold war between the duo, over the course of which they never showed up at the same events, despite repeated invitations from media outlets, pan-African NGOs and the like.

However, Nubukpo and Zinsou slowly began to repair their relationship, with both participating in a lecture and debate on the CFA franc in October 2019. The event was hosted by the Association de Sciences Po pour l’Afrique (The Sciences-Po Association for Africa), an organisation affiliated with the French political science university Sciences Po, in partnership with the French government’s Africa policy advisory body, the Conseil Présidentiel pour l’Afrique.

We see eye to eye on the fact that African enterprises lack access to medium- and long-term loans, which in turn leads to lower investment.

In April 2020, their names appeared side by side as signatories of a petition calling on African governments to act to slow the progression of the Covid-19 pandemic.

Both economists, who have “a cordial but at times tense relationship”, as Zinsou once put it, attended a conference on the eco on 26 May in Lomé, Togo, a meeting where the potential transition to proposed eco currency was discussed.

Mutual respect

“I hold Professor Nubukpo’s expertise in high regard, as he’s one of West Africa’s best economists,” said Zinsou, who formerly served as prime minister of Benin. “We can have different understandings of an issue and still respect one another’s views,” he said, noting that he was relieved to see the “somewhat unpleasant” turn of phrase “voluntary servitude” disappear from his colleague’s vocabulary, even though he found the analogy more “amusing” than offensive.

Zinsou also emphasised that he does not lump Nubukpo together with “these kinds of people who double down on their positions on ideological grounds, while ignoring the macroeconomic issues of the monetary policy debate” – in other words, those he dubbed “populists” in 2017.

“Disagreement is what leads to advances in the field of economics, so I understand that Lionel Zinsou’s interpretation of the CFA franc question may be different from mine. What’s important is sincerity of thought and that you don’t hide behind convenient posturing,” Nubukpo says.

One area of agreement: business lending needs

The two men have different perspectives on the history of the CFA franc and its impact on the development and growth of the CFA zone countries as well as the preferential treatment that the currency has afforded French companies. However, they do not disagree on everything; for example, they share similar sentiments on African businesses being underfinanced.

“We see eye to eye on the fact that African enterprises lack access to medium- and long-term loans, which in turn leads to lower investment. With the exception of countries like Egypt, Morocco and South Africa, Africa has the lowest levels of business lending in the world,” says Zinsou, who co-founded the investment-banking firm SouthBridge.

In his view, Africa’s top priorities should be to increase banking penetration, expand and refinance microfinance institutions, and provide housing loans.

New currency, new scope

Even when it comes to the future eco currency, which was on the agenda at the symposium in Lomé, Nubukpo and Zinsou both see ECOWAS countries as having similar economies, which should make it easier to transition from the Union Economique et Monétaire Ouest Africaine (UEMOA)’s version of the eco to ECOWAS’ version.

“Nigeria’s economy is going to end up like that of other ECOWAS countries as oil continues to lose its value, while the agriculture and service sectors, which dominate the rest of the region’s economies, will become more important,” says Zinsou, who worked for several years as a senior executive at the food giant Danone before he made his way to the top of Benin’s government.

He also argues that after the five- to 10-year process required for monetary convergence to become reality – using the euro as a guide – the new monetary union, covering a single market of over 300 million consumers, “gives us hope that West Africa will achieve economic progress on par with other regions of the world”.