CFA Franc Convertibility In Africa At Stake.

 
The current status quo slows down industrialisation in countries of the Central and West Africa.
It might sound funny to many, yet it is true. Doing business in countries of Central and West whose currency is all pegged to the EURO remains incompatible when it comes to the use of the CFA Franc. Both zones, more than 50 years after independence still carry out trade transactions in a currency that is not convertible from one country of the sub region to the other.

It bits the imagination of many, when the same CFA Franc used in Cameroon in Central Africa for the example, suffers from devaluation while in other CFA used in West African countries like Côte D’Ivoire was not. The exchange rate system of the CFA Franc in the Central Africa Sub-region is different from that of West Africa.

A situation that does not favour rapid economic growth and capital flows among countries using the same currency. Convertibility of the CFA Franc is therefore desirable to achieve a higher rate of economic growth, improve the balance of payment situation and thereby improve the living standards through greater trade and capital flows within African nations of the Franc zone. There is no gainsaying that at the time countries of the Franc Zone stand to reap more benefits when the currency is convertible.

With convertibility, profitability of exports increases because market foreign exchange rate is higher than the previous officially fixed exchange rate. And this is where both economies zones stand to gain. CFA Franc convertibility provides greater incentatives to send remittances of foreign exchange by workers of countries of Central and West Africa living abroad and makes illegal payments and smuggling less attractive.

Not abiding by this and more, Economists like Dr Ernest L. Molua, strongly hold that in the current status quo, the CFA franc benefits the French more than African States. He pointed out that 3,000 billion Euros of African money was in the French treasury, and the 15 African States using the CFA Franc are clients to the treasury, which means that this money could do more to African Economies if they had immediate control and could command its use at short-notice.“But this is not the case. The bureaucracy involved in accessing this money, implies it is more like confiscated money”, he stated.

After meeting in France in october 2015, Finance Ministers of the Franc Zone with governors of central banks converge in Yaounde from April 8 to 9, 2016, to discuss the financial health of their economies. The Governor of the Bank of Central African States, Lucas Abaga Nchama disclosed during the Monetary Policy Commitee in Yaounde on April 6 that the Yaounde confab will serve as a platform to pry into the issue with the Development bank of Central African States BDEAC.

source: Cameroon Tribune