The CFA franc will now be renamed the Eco, which is the new currency to be used by member states of ECOWAS.
Under the new deal struck between ECOWAS and France, this will also involve cutting off some of the financial links between Francophone West African countries and France.
“This is a historic day for West Africa,” Ivory Coast’s President Alassane Ouattara said during a news conference with French President Emmanuel Macron in the country’s main city Abidjan.
President Macron noted that “it’s the end of certain relics of the past. Yes it’s progress … I do not want influence through guardianship, I do not want influence through intrusion. That’s not the century that’s being built today.”
Beginning in January 2020, countries within the West African sub-region will be able to use the single currency, ECO.
Power of Eco
ECOWAS has a combined population of 385 million and was set up in 1975.
It comprises Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.
Eight of these countries use one currency, the CFA franc. Those are Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo.
As a result of the policy to adopt the Eco, West Africa’s monetary union agreed with France under a deal to ensure that the Eco will remain pegged to the euro.
The eight African countries for years have had their reserves kept in the French Treasury but they will no longer have to keep 50% of their reserves in the French Treasury.
There will no longer also be a French representative on the currency union’s board.
For decades Francophone nations in West Africa have had the management of their currency done in France.
Control from France
Their financial reserves have always been planned and controlled from France despite gaining independence many years ago.
A model where these eight former colonies of France had their foreign-exchange accumulation kept at the French Treasury was expected to change after concerns from member countries.
The CFA is used in 14 African countries with a combined population of about 150 million and $235 billion of gross domestic product.
The new changes will only affect the West African form of the currency used by Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal and Togo – all former French colonies except Guinea Bissau.