Will the Eco help West Africa reclaim monetary sovereignty?

Kako Nubukpo, a Togolese economist renowned for his research on the CFA franc, believes that adoption of the Eco is a historical and decisive step for the future of the continent. His anti-CFA stance has often caused controversy and for him, the Eco represents an important step forward that will help to restore West Africa’s monetary sovereignty.

Get comprehensive access to global business, stock market and financial news, and trending topics like bitcoin and biotech. Born2Invest brings you the latest news from around the world and across the spectrum of the trusted global network.

Can the announcement of the replacement of the CFA franc by the Eco in eight West African countries really be described as historic?

Nubukpo believes that this is a historic decision for two reasons. First, it is the first time in 75 years that the name of this currency has been changed. Since December 26, 1945, and despite the various changes, the acronym CFA has been kept for “French colonies in Africa.”

As a result, in the popular imagination, the CFA has not budged. However, Nubukpo argues that money, and the name we give it, goes beyond the framework of just the economy. It forms a part of a nation’s identity. For example, you need only look at the debates that took place when the Euro was created.

“Germany did not want to give up the Deutschmark because the Deutschmark is the German identity. You cannot ask the Americans today to count in yen because their identity is the dollar. The unit of account of the currency is the primary function of the currency.” explained Nubukpo.

A symbolic moment

In this context the announcement yesterday is significant. By removing the association of being a currency tied to former French colonies the new Eco currency is, in a way, breaking down the established order. In many ways, the decision to move to the Eco is more symbolic than economic.

The name of the currency is significant. The Eco is the name chosen for the future single currency of 15 countries of the Economic Community of West African States (ECOWAS) and could be viewed as a statement of intent.

Beyond symbolic implications, there are some serious practical reforms coming through as well. France has agreed to renounce its right to at least 50% of the foreign exchange reserves of the CFA zone countries. The country has also agreed to withdraw from all WAEMU decision making bodies, perhaps marking the final, albeit symbolic, stage in the decolonization of the region.

__

(Featured image by Doran Erickson via Unsplash)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in LePoint, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.