West African opinion divided over CFA franc reform

CFA franc banknotes. (AFP)
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Updated 25 December 2019

West African opinion divided over CFA franc reform

  • Experts questioned whether the change amounts to much but others thought it a step forward, although vital issues remain to be tackled

DAKAR: Plans to overhaul the CFA franc, a France-backed currency used by former colonies in West Africa, have drawn reactions ranging from skepticism to cautious optimism.

Some experts in the region questioned whether the change amounts to much but others thought it a step forward, although vital issues remain to be tackled.

Introduced in 1945 during colonial times, the CFA is linked to the euro under an arrangement that requires African members to lodge half their reserves in the Bank of France.

The deal provides currency stability — and a dampener on inflation — for the eight countries in the West African Monetary Union (WAMU).

They comprise Benin, Burkina Faso, Ivory Coast, Mali, Niger, Senegal and Togo, which are former French colonies, as well as Guinea-Bissau, a former Portuguese colony.

But the dependence on France, and even the name of the currency itself, are under fire.

Critics have directed withering fire, describing the CFA franc as a symbol of colonialism and past French meddling and an affront to economic sovereignty.

On Saturday, Ivorian President Alassane Ouattara and French President Emmanuel Macron announced a major shift.

Under it, the CFA franc will be renamed the “eco” and its member countries will no longer be required to keep reserves in France.

The currency will retain parity with the euro, and France will quit its managerial institutions.

However, France will provide backup, in the form of a line of credit, if WAMU countries hit a currency crisis.

The description of the change as “historic” ran into immediate flak.

“It’s six of one and half a dozen of the other,” the Ivorian opposition newspaper Notre Voie (“Our Way”) said, while the Quotidien de Dakar daily in the Senegalese capital said: “The outside has changed, but inside, nothing has moved.” Some economists agreed.

Senegalese expert Makhtar Diouf said the announcement was a “non-event” while Ivorian economist Mamadou Koulibaly, an opposition candidate in next year’s elections, said, “there are reasons for feeling confused.”

Donaldine Amangbedji, a researcher at the Abomey Calavi University in Benin, saw no tangible benefit for the public except for “stirring debate on possible alternatives.”

But Togolese economist Kako Nubukpo, a key figure in the attacks on the CFA franc, said the announcement was “marvelous news ... (a) historic moment.”

He cautioned, however: “We will however remain vigilant about the currency regime, which should be sorted out soon — the fixed parity (with the euro) is transitional.”

Senegalese economist Felwine Sarr, writing on Facebook, said the change was “a step forward, but not a revolution nor a fundamental break.”

“At the present time, this reform ... only concerns the most symbolic aspects, but leaves major components of the former relationship unchanged,” Sarr said.

Several important questions will have to be answered in the coming months.


Big oil feels the heat on climate as industry leader promises: ‘We will be different’

Updated 22 January 2020

Big oil feels the heat on climate as industry leader promises: ‘We will be different’

  • Trump singles out ‘prophets of doom’ for attack
  • Greenpeace told the Davos gathering that the world’s largest banks, funds and insurance companies had invested $1.4 trillion in fossil fuel companies since the Paris climate deal

LONDON: Teenage environmental activist Greta Thunberg slammed inaction over climate change as the global oil industry found itself under intense scrutiny on the opening day of the World Economic Forum in Davos.

The teenage campaigner went head to head with US President Donald Trump, who dismissed climate “prophets of doom” in his speech.
She in turn shrugged off the US president’s pledge to join the economic forum’s initiative to plant 1 trillion trees to help capture carbon dioxide.
“Planting trees is good, of course, but it’s nowhere near enough,” Thunberg said. “It cannot replace mitigation. We need to start listening to the science and treat this crisis with the importance it deserves,” the 17-year-old said.
The 50th meeting of the World Economic Forum was dominated by the global threat posed by climate change and the carbon economy.
The environmental focus of Davos 2020 caps a year when carbon emissions from fossil fuels hit a record high, and the devastating effects of bushfires in Australia and other climate disasters dominated the news.
Oil company executives from the Gulf and elsewhere are in the spotlight at this year’s Davos meeting as they come under increased pressure to demonstrate how they are reducing their carbon footprint.
“We are not only fighting for our industry’s life but fighting for people to understand the things that we are doing,” said Vicki Hollub, CEO of Occidental, the US-based oil giant with extensive oil operations in the Gulf. “As an industry when we could be different — we will be different.”

‘Planting trees is good, but nowhere near enough,’ activist Greta Thunberg told Davos. (Shutterstock)

She said the company was getting close to being able to sequester significant volumes of CO2 in the US Permian Basin, the heartland of the American shale oil industry which is increasingly in competition with the conventional oil producers of the Arabian Gulf.
“The Permian Basin has the capacity to store 150 gigatons of CO2. That would be 28 years of emissions in the US. That’s the prize for us and that’s the opportunity. People say if you’re sequestering in an oil reservoir then you are producing more oil, but the reality is that it takes more CO2 to inject into a reservoir than the barrel of oil that it makes come out,” Hollub said.
The challenge Occidental and other oil companies face is to make investors understand what is happening in this area of carbon sequesteration, she added.
The investment community at Davos is also looking hard at the oil industry in the face of mounting investor concerns.
Greenpeace told the Davos gathering that the world’s largest banks, funds and insurance companies had invested $1.4 trillion in fossil fuel companies since the Paris climate deal. It accused some of these groups of failing to live up to the World Economic Forum goal of “improving the state of the world.”