“The CFA franc is coming close to retirement,” predicted the Togolese economist Kako Nubukpo before this year’s meeting of the finance ministers of the CFA zone, held not in West or Central Africa, but in Paris. This surprising choice of location epitomises the source of many of the currency’s critics. Perceived as a colonial remnant and an instrument of neo-colonialism, very little is done to polish its image. Printed in France, with a 50% reserve requirement to the French Treasury, it also sees French administrators sitting on the board of its two central banks. This echoes cries of colonialism, and its history does too.

The CFA franc, originally the currency of French African Colonies, was split into two currencies after decolonisation. Both kept the acronym CFA but were rebranded to the “Financial Community in Africa” and the “Financial Cooperation in Central Africa.” The “Zone Franc” is thus divided in two, with two central banks each issuing their own CFA franc, but both under the same type of institutional setup. The main reason for this split is the vastly different economies of the oil and resource-dependent Economic and Monetary Community of Central Africa (CEMAC) and the more diversified West African Economic and Monetary Union  (UEMOA). Today, the debate is centred around the issues of the monetary sovereignty and the economic results of the CFA franc.

The first is pretty straightforward. When reserves have to be deposited abroad, when exchange rates are pegged such that a devaluation can only be decided by Paris, and when foreign powers have a say in the money supply, interest rates and almost every monetary decision, there is a significant loss of sovereignty. The extent of this came to light in 1994, when France, no longer able to guarantee the convertibility of the CFA franc into French francs, decided to devalue it by 50% overnight. This was regarded as a humiliation throughout the continent, and a stark display of its continued dependence on the former colonial power. But there are strong monetary arguments in favour of such control.

The current system holds France guarantor of the convertibility of the CFA franc into euros – and previously French francs. This means France bears the risk of a serious cost if the currency’s value departs too strongly from that of the Euro. This explains the requirement of a deposit of 50% of the reserves in the French Treasury, allowing Paris to adjust the market exchange rate. Should the value become unsustainable, only a devaluation can guarantee this convertibility, hence France’s decision in 1994.

But a legitimate question arises: why is the peg and convertibility so important? First, the peg on the euro anchors the CFA to a stable currency, and thus limits fluctuating and uncontrolled inflation, such as that seen with Nigeria’s naira. This avoids all the traditional problems of high inflation, such as uncertain drops in purchasing power, and encourages foreign investment. But the peg on the euro also carried the CFA to chronic overvaluation, the euro typically being stronger. This discourages exports and makes European imports cheaper. As for the convertibility of the CFA franc into euros, this guarantees the security of investments in the zone. But just as easily as money goes in, it can go out. Many accuse this guaranteed convertibility of siphoning money made in Africa back to Europe, depriving the CFA area of much-needed capital. One could view this aspect of control with scepticism, as many Africans do.

Despite the obvious benefits of monetary stability, the CFA franc’s critics argue this vision of economics is ill-suited for developing countries. In need of higher growth and employment, many economies can consciously and reasonably make the choice of allowing higher inflation, with expansionary monetary policies. Being pegged to the euro, the CFA franc is also affected by the decisions of the European Central Bank (ECB), whose policies are designed for the Eurozone, not developing countries. Currently, the objective of 2% inflation and the requirements of a large amount of reserves restrict the potential for public investment, while the high interest rates limit private investment. This policy arguably keeps Africa dependent on foreign investments, while the resulting political influence and informal coercive effect on economic, trading and fiscal policy is undeniable.

Nevertheless, the fiscal discipline and technocratic control advocated by France and the IMF have limited corruption, decreased the spending deficit, and improved recent trends in economic indicators, even though the zone has traditionally lagged behind most of its neighbours. Ultimately, this debate really boils down to the traditional choice between contractionary versus expansionary policies.

Beyond the theory, the case against the CFA franc is currently being undermined by the 2017 average growth of about 6.7% in the UEMOA. As for CEMAC’s sluggish rate of 1.7%, it is largely imputable, not to the currency, but to corruption, public debt crises and most importantly, falling commodity prices. Additionally, recent economic studies argue that the CFA franc is neither over nor under-valued. Nevertheless, these long-awaited results still have not lifted the average growth rates to that of their neighbours, on a twenty- or thirty-year timeframe.

Besides, the encouraging indicators still pale in comparison to the nearby Ghana and Guinea, whose departure from the CFA franc in 1960 led to severe retaliation by France. Currently, both have growth rates of above 8%, and Ghana also has nearly six times has much foreign investments as Côte d’Ivoire with a lower, albeit marginally, unemployment rate. If economic success is possible alongside monetary sovereignty, why is reform so late to come?

The CEMAC is currently embroiled in a series of debt and political crisis that is only exacerbated by the violence in the Central African Republic and Cameroon, and  ever-fluctuating commodity prices. Understandably, this pushes monetary reform down the agenda. As for the UEMOA, many presidents are in favour of changing the CFA franc, but the strongest economy, Côte d’Ivoire, is firmly opposed to it. It seems the biggest obstacle to reform is not the much-fantasised neo-colonial influence but rather discord amongst the African countries themselves. Unilateral exit of the currency would probably prove very costly, so the countries must come to an agreement if anything is to change.

A change of currency currently seems complicated, and it could open the door to an economic crisis. Plus, a common currency is not necessarily a bad idea in a globalised world, especially if the economies of member countries truly start converging. But step-by-step reform in the aim of regaining monetary sovereignty is possible. One of the most popular ideas, and to which most countries seem disposed, is anchoring the CFA franc to a basket of currencies, not just the euro, which would create more leeway for the central banks to decide for themselves.

For this, African leaders will need the cooperation and help of the current guarantors of the currency, and last year, French President Emmanuel Macron certainly did them no favour by claiming this problem was their own to deal with. In any case, it is time they start rethinking their currency and its dependence on France, if only to appease the distracting but growing accusations of neo-colonialism. In a debate captured by popular fantasies and technocratic sterility, they must choose a path that respects both the pragmatic and symbolic nature of the common currency.

*due to its complications but limited relevance in our discussion, Comoros’ membership in the CFA is not discussed in this article.