French Council of Ministers has adopted a bill ratifying the end of the use of CFA franc by eight French West African countries.
A spokesperson for the French government, Sibeth Ndiaye, said the bill ratifying the end of the 75-year old currency was adopted on Wednesday.
According to the Voice Of Nigeria (VON), the move is part of a renewal of the relationship between France and the affected African countries.
“It was during an official visit to Ivory Coast in December 2019 that President Macron and French West African leaders announced a historic reform of monetary cooperation that was to lead to the end of the CFA franc,” she said.
“This symbolic end was to be part of a renewal of the relationship between France and African countries.”
The CFA franc, used by eight French West African countries, is set to become the newly proposed Eco, a currency to be adopted by the entire West African bloc, ECOWAS.
The adoption by French authorities marks the end of the centralization of foreign exchange reserves of eight West African states affected with the French Treasury.
The eight countries concerned are: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.
The future Eco currency will have a fixed parity with the euro.
Last December, French President Emmanuel Macron announced that a revamped common currency in West Africa known as the ECO will be launched in 2020.
Mr. Macron made this known during a trip to Ivory Coast.
He noted that in cooperation with eight West African countries — Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo — France was working towards loosening up the supervision of the currency.
Speaking in Abidjan, the economic capital of Ivory Coast, he described colonialism as a “grave mistake and a fault of the republic”.
He said: “I wanted to engage France in a historic and ambitious reform of cooperation between the West African economic and monetary union and our country. We do it for African youth.”
Known as “Colonies Francaises d’Afrique” (French colonies in Africa), the CFA franc was established in 1945 and has been tagged as a controversial currency for its control by France.
Although it was initially pegged to the French franc, it has been linked to the euro since 1999 and a French representative has been on the board of the currency’s union.
Analysts have always been divided over the controversies surrounding the currency with concerns raised over the need for the African countries to store 50% of their foreign currency reserves with France in return for France guaranteeing the currency.
The new currency revamp announced by Macron will not require African countries in the ECOs economic bloc to keep half their reserves with France or have a representative sit on their currency’s board.
However, it will remain pegged to euro and guaranteed by France.