African franc faces unlikely foes on Europe's fringes

It has featured among complaints by French "yellow vest" protesters and in populist Italian rhetoric: Africa's CFA franc currency has become an unexpected hot topic on Europe's political fringes.

When a list of unofficial "yellow vest" demands went viral in December, some observers were surprised to see scrapping the CFA franc included alongside domestic requests such as a minimum wage hike.

If most "yellow vests" are chiefly concerned by the rich-poor divide at home, among their ranks is a hard-left minority which sees the CFA franc as a tool of French neo-colonialism.

It's a charge that has simmered for years among anti-imperialist intellectuals who argue that francophone Africa could have developed faster if it wasn't for the shackles of the franc.

The issue continues to generate strong opinions on the streets of cities like Abidjan and Bangui, and in 2017 protesters staged anti-franc demonstrations in Benin, Gabon, Ivory Coast and Mali.

And this week the CFA franc cropped up again in a diplomatic spat between France and Italy, with Paris summoning the Italian ambassador over incendiary remarks by deputy premier Luigi di Maio.

He accused France of continuing to "colonise" African countries, charging that it "hampers development and contributes to the departure of refugees" through the CFA franc.

But what exactly do anti-establishment politicians like Di Maio and some French "yellow vests" have against a currency used by some 155 million people in Central and West Africa?

Stability vs sovereignty

The CFA franc is technically two different currencies.

One version is used in West Africa (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo) and the other in central Africa (Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea and Gabon).

It was introduced in 1945, 15 years before these former colonies declared independence from France. All but two of the countries using it are former French territories.

Arguments both for and against the franc hinge on whether the currency, which has a fixed exchange rate with the euro, is healthy for African economies.

Some economists argue this "peg" overvalues the franc, making African exports more expensive than they should be. This would hurt local companies and hamper growth.

More broadly, critics say the peg forces African central banks to coordinate their monetary policies with Europe's, which is not necessarily in their interests.

The European Central Bank's historic priority has been controlling inflation, while many poor African countries prioritise economic growth.

Senegalese economist Demba Moussa Dembele, a staunch opponent of the currency, told AFP the franc was "a brake on development" for this reason.

What's more, France guarantees the franc's convertibility into euros -- meaning governments or businesses don't have to worry they'll be stuck with a currency no one wants.

But in return, the African countries are obliged to keep half their reserves in the French treasury, which critics see as a form of control.

A French central bank source stressed that Paris pays the governments above market rates for the deposits -- currently 0.7 percent.

"It's very favourable," the source said, noting that market rates are currently negative and confirming that the reserves are not, as Di Maio claimed, used to finance French debt.

Supporters also say that using a currency pegged to the euro reassures investors by preventing damaging fluctuations in the franc's value and enabling predictable long-term trade.

Challenged on the issue by a student in Ouagadougou on his first trip to Africa in 2017, Macron issued a staunch defence of the franc.

"It's a good thing," Macron said. "For one thing, it gives stability to those who have it."

Migrants not from franc countries

Other supporters say the franc obliges the countries using it to stick to orthodox economic policies, keeping their debt to less than 70 percent of GDP and inflation under three percent.

They point out that unlike neighbours that have suffered runaway inflation, the CFA zone has enjoyed relative stability. Leading the pack, Ivory Coast continues to forecast growth of 7.0 to 7.5 percent in the next few years.

As for Di Maio's suggestion that the currency is a direct cause of the wave of migration to Europe, it's an idea quickly slapped down by experts.

"It would be wrong to say that African countries using the franc are over-represented in the migrant flows towards Europe, even looking at it over the long-term," said Jacques Barou, research director at France's CNRS institute.

In recent years, he noted, migrants have "above all been setting off from Sudan, Eritrea and Nigeria -- three countries which have never used the franc."

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