Colonialism began as a mercantilist enterprise, with companies establishing trading posts along the ocean coastlines in the warm waters of the tropics. They used whichever medium of exchange was most expedient for trade. Both local currencies and commodities – shells, for instance, and doubloons – were acceptable tokens. All were trade currencies, not sovereign currencies, valid in commercial zones rather than in fiefs and kingdoms. The fact that the currencies of Niger and the US have the same name – dollar, or dala (the colloquial term in Niger) – is a legacy of this era. Both words derive from the Maria Theresa thaler, a trade currency minted in Austria and several other places, including Mumbai, which at the height of the mercantile era circulated from the Gulf of Aden to the Gulf of Mexico.
When colonialism became a matter for the state – India passing from the East India Company to the crown, for example – some form of state currency emerged as the colonial norm. Napoleon had created the Bank of France in 1800 and its success as the sole issuer of banknotes, first in Paris and then throughout the country, persuaded the metropolitan elite that banks issuing currency and credit would animate capital in the colonies. The wars with Britain had devastated France’s mercantile empire – all that remained after the Napoleonic period were a few islands and trading posts in Senegal – and the end of the Atlantic slave trade in the mid 19th century, meant that profit from the colonies had to be sustained by other means. Abolition was financed by the state, and the banking system supported the transition to a market economy and wage labour.
In the Caribbean, France indemnified planters for the loss of their slaves to the tune of 126 million francs over twenty years. Out of this, the state allocated a huitième (an eighth portion) to establish colonial banks and currencies, with former slave owners becoming shareholders in the banks. In the Senegalese trading post of Saint-Louis, a similar system was implemented a few years later. A small Bank of Senegal was given the mission of replacing barter with numéraire – currency. Extending credit to French trading companies ensured its success.
Fanny Pigeaud and Ndongo Samba Sylla’s book is about the origins of the CFA franc, a currency created in 1945 under colonial rule and still in circulation today. Their story also clearly illustrates that it is debt – or credit – rather than savings that creates money. Where money didn’t exist, it had to be created, and this was done by credit banks with the help of government muscle: the state imposed the legal tender issued by the banks. Of course, money already existed in the region as a standardised form of trade currency. Across a great tract of West Africa, from the Middle Niger to Hausaland, this meant cowries. (In many languages, the term for ‘money’ is itself derived from the word for cowrie shell: noru in Songhay, kudi in Hausa and so on.) The forced demonetisation of the cowrie, and the fact that colonial banks had to abide by protocols prohibiting them from lending to entrepreneurial Africans, effectively destroyed money among the colonised. It was a staggering blow, leaving France’s African possessions entirely at the mercy of colonial capitalism.
In 1901, the Bank of Senegal became the Bank of West Africa (Banque d’Afrique Occidentale), issuing a currency that prefigured the CFA franc. The BAO was not a central bank. Its only monetary role was to keep the colonial franc pegged to its metropolitan counterpart at an exchange rate of one to one. But the BAO franc wasn’t simply the French franc under another name. In the days of the gold standard, it was ultimately pegged to gold. The possibility of monetary autonomy was real since, in theory, capital activity in the colonies added to the gold reserves of the Bank of France in amounts that would sustain the colonial currency.
By the mid 1930s, the gold standard system had collapsed and France began to develop a protectionist regime of ‘imperial preference’. Colonial currencies would be tied to the French franc via mechanisms that foreclosed any prospect of autonomy. They would be ‘covered’ by French francs deposited in Paris; all foreign exchange reserves were to be pooled in a common ‘stability fund’; current transfers in the common currency zone would be transacted without charges; all colonial currencies would be freely convertible into French francs. The first two rules were intended to produce ‘monetary solidarity’, in the words of the treasury; the third and fourth would rationalise ‘complementarity’. Pigeaud and Sylla see this as a trap. In the name of providing cover and insurance, the stability fund tied the colonial currencies firmly to the French treasury; ease of transfer, as well as convertibility to the French franc, meant that most trade transactions were straightforward on the French market, and if they were made on the world market they still had to be handled by French banks.
War in Europe, and division in France, stalled the project. The Gaullists established a base in French Equatorial Africa, while the Pétainists took French West Africa, from Senegal down to Niger. In 1941, the Free French under de Gaulle set up the Central Exchequer of Free France, which began issuing its own currency, the ‘Free French franc’, based on gold production in French Equatorial Africa. De Gaulle ceded half the gold produced to the British in exchange for backing in sterling, and licensed sales of colonial commodities to the Allies. The Gaullist exchequer couldn’t access the 2500 tons of bullion in the Bank of France, which had been spirited away to Pétain-friendly locations in the US, Canada and the Caribbean. But the existence of a provisional franc loosely pegged to sterling rather than the French currency suggested that the colonies might be able to survive without French ‘preference’.
This glimpse of an alternative currency was fleeting. After liberation, de Gaulle’s exchequer – now the Central Exchequer of Overseas France – was tasked with ensuring the success of the new currency, the CFA franc (originally the acronym for ‘Colonies françaises d’Afrique’, ‘CFA’ now stands for ‘Communauté Financière Africaine’). The central exchequer managed the currency for a decade, and made it a thoroughgoing product of the French state. In January 1946, an analysis by the weekly magazine Marchés coloniaux concluded that colonial economies needed the new currency precisely because they were colonial economies. Not only were they dependent on foreign investment, external aid and export commodities, but export commodities were at the mercy of speculation, which could provoke disastrous swings in the exchange rate unless the local currency was pegged to a more stable counterpart such as the French franc, especially in the age of Bretton Woods. Marchés coloniaux also reasoned that the colonies didn’t qualify for monetary autonomy because they lacked bullion. But they only lacked bullion because the colonial power had decreed it, as had been demonstrated by de Gaulle’s transfers of African bullion from French colonies to the British exchequer.
In the 1950s it became increasingly clear that the French colonial fiat couldn’t last. French capitalism was threatened by a new era of restlessness, which seemed to signal a repeat of Black emancipation in 1848. In 1960, the year of independence for most of France’s African colonies, Jean Boissonnat, the economics editor of the liberal Catholic daily La Croix, proposed a clean break with the CFA franc. France, he wrote, had enjoyed a good run for its money, having accrued gains through the CFA zone of hundreds of billions in low-cost trade transactions and handsome profits. More than half a million people in the metropole, he argued, owed their livelihoods to inward revenues from the CFA zone. Now it was time to scrap monetary centralisation. ‘Each country,’ Boissonnat argued, ‘must have its own currency and its own budget.’ And the colonies were now countries in their own right.
France chose to ignore his advice. The previous year, Raymond Aron had come up with very different findings in an essay titled ‘Economic Consequences of Political Developments in Black Africa’. Aron took the view that colonialism had involved a hefty investment of French capital in ‘Black Africa’ and that France had transferred a sizeable proportion of the metropolitan economy to the colonies. What was to become of this investment after independence? Was it to be lost, or were the French entitled to hang on to it? Aron believed that France ought to preserve what he described as its Grossraumwirtschaft, or ‘great economic zone’ (a term borrowed, interestingly, from the Third Reich), including all its sub-Saharan possessions. This wouldn’t address ‘the economic and social development needed to improve conditions for the [African] population itself’. But there wasn’t much to be done about that, besides bestowing aid on ‘underdeveloped’ countries.
Aron’s solution was ‘co-operation’, and in particular monetary co-operation, which would involve preserving the CFA franc in states such as Guinea that no longer wished to use it. If states were allowed to opt out of the currency zone (as Guinea eventually did), or if the zone were abandoned altogether, champions of French industry such as Pechiney, a huge aluminium producer, would be disadvantaged. They would no longer be able to act as if they were French companies operating in France with French currency. Still, maintaining the zone would commit France to bailing out non-industrialised states sure to be running significant trade deficits. Aron concluded that France should only maintain the CFA currency if it could assume leadership of the zone and establish an absolute distinction between ‘monetary unity’ and ‘economic unity’ – in other words, if France could remain on unequal terms.
These views mirrored the plans that the Gaullists, restored to power in 1958, were hatching for France’s re-emergence as a global player. They also struck a chord with Félix Houphouët-Boigny, a wealthy cocoa planter in Côte d’Ivoire. In 1955, Houphouët had come up with the term ‘Françafrique’ as a rejoinder to the concept of ‘Eurafrique’, which envisaged a convergence of interests between Europeans and Africans in the shadow of superpower rivalry between the US and the Soviet Union. For Houphouët, who became president of Côte d’Ivoire after independence, Eurafrique was as mistily ideological as pan-Africanism. He believed that integration with French capitalism was the way to build a secure ‘economic kingdom’, unlike the unstable ‘political kingdom’ established by Kwame Nkrumah in neighbouring Ghana. In most of France’s colonies, de Gaulle, Aron and Houphouët had their way and the CFA franc was retained.
Pigeaud and Sylla are unsparing about the many ways in which the currency has limited economic development in the countries that subscribe to it, while remaining a significant source of revenue for France. But CFA countries aren’t conspicuously poorer than other countries in sub-Saharan Africa. Their biggest burden may simply be the sense that France asserts its primacy over them by means of the currency. In recent years, with the rise of anti-French sentiment across Francophone Africa, the continuing hold of the CFA franc has begun to mobilise young people. The CFA zone is the only place in the world where currency regularly provokes street protests and occasionally reprisals: in 2017, an anti-CFA activist was arrested for burning a 5000 franc banknote in a staged TV performance in Dakar.
In 1962, Mali rebelled against the CFA franc and adopted its own currency, the Malian franc, minted in Czechoslovakia. In 1984, it returned, cap in hand, to the CFA zone. Guinea Bissau, a former Portuguese colony, and Equatorial Guinea, a former Spanish colony, are now members of the zone. Ghana considered joining in 1999, but decided not to for ‘political reasons’ that were never quite spelled out. Exchange-rate stability is a compelling aspiration. In 2011, I interviewed a Bank of France administrator who pointed out that, despite a decade of war, Côte d’Ivoire still had a stable currency. While I was writing this piece, a Nigerian scholar who had asked me to a conference in Lagos was calculating the best moment to buy my plane ticket: the naira, whimsical at the best of times, was in free fall. Critics of the CFA know that, however objectionable it is, there are advantages in having a stable currency. The CFA franc can’t be printed at will (so is more credible to outside investors), follows rules that keep inflation low and limit public debt, and stimulates regional integration. For many West African decisionmakers, the fact that it is also a tool of French policy hasn’t outweighed these benefits.
The discipline imposed by the French in order to keep the CFA franc pegged first to the franc, and now the euro, is such that the central banks are almost entirely preoccupied with maintaining the peg, rather than imagining ways to supply development credit. Yet on the only occasion when France has been called on to intervene, in the early 1990s, the treasury wrote a cheque for 600 million French francs to cover Ivorian debt to the World Bank, then negotiated briskly with the IMF to devalue the CFA by half in order to avoid covering further deficits. In the 1960s, some of the weaker states had sought to negotiate a fixed exchange rate with the French franc on less punitive terms. But Côte d’Ivoire, France’s bridgehead in the region, foiled these attempts.
How the exchange rate ended up with the CFA franc pegged at a fraction of the value of the French franc – and then the euro – is a long story, largely to do with France’s resistance to change. The CFA franc was one of three French colonial currencies (the others were created for the Pacific Islands and Djibouti) and each had a different exchange rate against the franc. After the war, as France struggled with a weak domestic economy, the CFA franc was worth more than the French franc against the US dollar. Colonial traders were among the loudest protesters against these valuations. In 1948, with the peg in place, one French franc was worth half a CFA franc. But when France redenominated its currency in 1960, giving it a value of one new franc to a hundred old francs, the CFA franc, which was still tied to the old currency, was effectively devalued: one French franc was now worth fifty CFA francs.
The currency remained vulnerable to the vagaries of the French franc, which was devalued six times in the three decades after independence – each devaluation was a shock to the CFA economies. There was no shortage of advocates for loosening the peg, notably the Third-Worldist economist Samir Amin, who argued that CFA countries should be allowed to determine the value of their currency on the basis of domestic economic realities. But the status quo was kept, leading to foreseeable problems. In the early 1990s, with CFA economies in the throes of a debt crisis that was engulfing the developing world, the CFA franc was damagingly overvalued. The consequence was a 50 per cent devaluation following French consultations with the IMF, which was widely seen as a betrayal. Since the launch of the euro in 1999, the exchange rate has remained stable at one euro to 655 CFA francs.
Pigeaud and Sylla argue that far from being a buffer against French financial liability, which is non-existent, the peg is designed to ensure French dominance on behalf of the Pechineys du jour. Sylla’s preferred solution to the loss of sovereignty resulting from French control, as he has said elsewhere, is a system of nation-state currencies. This almost came to pass in 2011, when Laurent Gbagbo, then president of Côte d’Ivoire, decided to issue a national currency, the mir (its name derives from Monnaie Ivoirienne de la résistance, or ‘Ivorian resistance currency’).
Gbagbo had lost the presidential election to Alassane Ouattara – the man who, as Côte d’Ivoire finance minister, assisted France in the devaluation of the CFA franc – but refused to concede defeat. This activated a rule in the treaty of the West African economic and monetary union (UEMOA) that removes control of a country’s central bank from leaders who violate procedural democracy. Gbagbo promptly organised a raid on the coffers of the central bank in Abidjan and began setting up an Ivorian central bank that would free him of all supranational oversight. It is almost certain that if he had succeeded, the CFA franc would have fallen apart in West Africa: Côte d’Ivoire accounts for almost 40 per cent of GDP of the UEMOA and supplies 40 per cent of the world’s cocoa. Last year, a putsch in Mali triggered the same rule. The UEMOA, in other words, is no less an obstacle to monetary sovereignty than membership of the CFA zone. The difference is that the UEMOA is a regional body, not a piece of French neo-colonial chicanery, which is presumably why Pigeaud and Sylla leave it out of their story.
France is their target, and one effect of reading an exposé of this kind, with its relentless tally of wrongdoing, is a feeling of despair. For Pigeaud and Sylla, the French state is malevolent, endlessly adaptable and skilled at delivering last-minute checkmates, of which the most recent was Emmanuel Macron’s announcement in December 2019 of a cosmetic reform of the CFA franc, and even a new name, the eco – the same name that the Economic Community of West African States had chosen for its proposed single currency. Pigeaud and Sylla believe that France holds a monopoly of action in its former African colonies. If their analysis is correct, a non-revolutionary challenge to the CFA franc, and to France’s grip on its members, is hard to envisage. To that extent, their book is unapologetically Gallic: practical alternatives to the present situation, with all its complexities and contradictions, come to seem more utopian than the sudden and complete destruction of Françafrique, stormed like a Bastille with pistols and bayonets.