PANAPRESS
Panafrican News Agency
Cote d’Ivoire: ‘Challenge France on the F CFA’ - Economist
Abidjan, Cote d’Ivoire (PANA) – An Ivorian politician has called for the creation of a new currency to replace the F CFA that is used by French-speaking West African countries.
In an exclusive interview with PANA, Professor Mamadou Koulibaly, former president of the Ivorian National Assembly and former Economy, Finance and Budget Minister, who has made similar suggestions in the past in speeches and publications, said even if his bold thesis was not supported, it had nevertheless remained very topical.
“Yes, the creation of a currency is more than topical. Earlier, I suggested the introduction of a floating parity of the F CFA but in the face of general outcry, I think that a new currency should be created for the Economic Community of West African States (ECOWAS) that will not be called CFA,” he said.
Professor Koulibaly, who is the president of Freedom and Democracy for the Republic (LIDER), one of the numerous political parties in Cote d’Ivoire, stressed that “a new name should be found for it (currency) but its floating character should remain because it should be flexible”.
He said the exchange rate of this new currency would undergo small variations that would allow the business community to learn about the credibility of the economic policies.
Professor Koulibaly added that the floating character of the new currency should depend on the performance of the different economies, their strengths and policies.
Fixed parity of the F CFA: A poisonous gift
Professor Koulibaly claimed that it was the present rigidity of the F CFA, its fixed exchange rate no whatever happens, that had led to the “catastrophe” in francophone member countries of the F CAF, saying “most of them are unable to pull through”.
“Whatever their wealth and the natural resources they possess, they are all on the same boat, indebted, unable to develop and to emerge while next door others that have got their own currencies are relatively well off even if some of them deny it.”
To this end, Professor Koulibaly used macroeconomic data to prove that Nigeria was not in a worse situation than Cote d’Ivoire and that Ghana was not worse-off than Senegal.
He identified a number of hurdles in the way to the creation of a common currency for ECOWAS, which, he said, would not be pegged to the euro.
The main hurdle is the signing of monetary and economic cooperation agreements by member countries of the zone with France.
He stresses that these agreements, which do not authorise the creation of an ECOWAS currency, should be denounced before thinking about creating a new currency for the sub-region.
Prof. Koulibaly asked: “Are the ECOWAS countries, individually and collectively, capable of challenging these international agreements at the International Court of Justice at The Hague? Are they capable, individually or collectively, of asking for an audit of operative accounts that are created in the margins of these agreements that force ECOWAS countries to deposit 50% of their net foreign currency at the French Public Treasury as if they are French taxpayers?
"These funds attract a less competitive rate than the prevailing international rate and are used in conditions that very few African countries can reveal. This is possible but one should first have the courage to denounce these agreements.”
Missing political courage: An unspoken weakness
In this respect, Prof. Koulibaly suggests the hiring of two audit firms from London and New York and three law firms from London, New York and Paris to talk to the French authorities and the International Court of Justice to start negotiating the audit of operative accounts and challenge these agreements.
“After that, the ECOWAS countries, individually or collectively, can decide to create a new currency that will not be fixed to the euro but to a basket of foreign currencies like the Chinese Yuan, the US Dollar and the Japanese Yen, but this will require efforts of budgetary and economic discipline,” he said.
“Economic discipline,” he says, means African countries will stop using funds from the State budget to buy airplanes and they will also stop wasting money because, “every time they have a deficit in their budget they will be forced to increase taxes or the debts to fund these deficits”.
“This will impact on the value of their currency”, he observes.
The economist says that with the situation of the F CFA these deficits are being relatively neutralised.
“Ghana and Nigeria are managing their economies, meaning that these countries can make economic and budgetary efforts,” he adds.
He estimates that the situations of the Nigerian and the Ghanaian currencies are not brighter or more catastrophic than those of the F CFA.
“If Ghana loses its budgetary discipline, its currency goes down and this is happening presently. But despite this situation in Ghana and Nigeria, France trades enormously with these two countries as much as with Cote d’Ivoire, Burkina Faso and Mali.
"One cannot say that it is because we got the F CFA that is why we trade more with France.”
In addition to economic and budgetary discipline, a currency needs strength and credibility. For that matter, Prof. Koulibaly estimates that Central banks of the zone should be imperatively independent from political power, like the Bundesbank in Germany.
According to him, this is the only way to guarantee quality, saying from the moment “the rulers are themselves democratic, they respect the rights of the State and they see to it that their economic policies are not risky and a waste”.
-0- PANA JU/NA/MA 21Oct2014
In an exclusive interview with PANA, Professor Mamadou Koulibaly, former president of the Ivorian National Assembly and former Economy, Finance and Budget Minister, who has made similar suggestions in the past in speeches and publications, said even if his bold thesis was not supported, it had nevertheless remained very topical.
“Yes, the creation of a currency is more than topical. Earlier, I suggested the introduction of a floating parity of the F CFA but in the face of general outcry, I think that a new currency should be created for the Economic Community of West African States (ECOWAS) that will not be called CFA,” he said.
Professor Koulibaly, who is the president of Freedom and Democracy for the Republic (LIDER), one of the numerous political parties in Cote d’Ivoire, stressed that “a new name should be found for it (currency) but its floating character should remain because it should be flexible”.
He said the exchange rate of this new currency would undergo small variations that would allow the business community to learn about the credibility of the economic policies.
Professor Koulibaly added that the floating character of the new currency should depend on the performance of the different economies, their strengths and policies.
Fixed parity of the F CFA: A poisonous gift
Professor Koulibaly claimed that it was the present rigidity of the F CFA, its fixed exchange rate no whatever happens, that had led to the “catastrophe” in francophone member countries of the F CAF, saying “most of them are unable to pull through”.
“Whatever their wealth and the natural resources they possess, they are all on the same boat, indebted, unable to develop and to emerge while next door others that have got their own currencies are relatively well off even if some of them deny it.”
To this end, Professor Koulibaly used macroeconomic data to prove that Nigeria was not in a worse situation than Cote d’Ivoire and that Ghana was not worse-off than Senegal.
He identified a number of hurdles in the way to the creation of a common currency for ECOWAS, which, he said, would not be pegged to the euro.
The main hurdle is the signing of monetary and economic cooperation agreements by member countries of the zone with France.
He stresses that these agreements, which do not authorise the creation of an ECOWAS currency, should be denounced before thinking about creating a new currency for the sub-region.
Prof. Koulibaly asked: “Are the ECOWAS countries, individually and collectively, capable of challenging these international agreements at the International Court of Justice at The Hague? Are they capable, individually or collectively, of asking for an audit of operative accounts that are created in the margins of these agreements that force ECOWAS countries to deposit 50% of their net foreign currency at the French Public Treasury as if they are French taxpayers?
"These funds attract a less competitive rate than the prevailing international rate and are used in conditions that very few African countries can reveal. This is possible but one should first have the courage to denounce these agreements.”
Missing political courage: An unspoken weakness
In this respect, Prof. Koulibaly suggests the hiring of two audit firms from London and New York and three law firms from London, New York and Paris to talk to the French authorities and the International Court of Justice to start negotiating the audit of operative accounts and challenge these agreements.
“After that, the ECOWAS countries, individually or collectively, can decide to create a new currency that will not be fixed to the euro but to a basket of foreign currencies like the Chinese Yuan, the US Dollar and the Japanese Yen, but this will require efforts of budgetary and economic discipline,” he said.
“Economic discipline,” he says, means African countries will stop using funds from the State budget to buy airplanes and they will also stop wasting money because, “every time they have a deficit in their budget they will be forced to increase taxes or the debts to fund these deficits”.
“This will impact on the value of their currency”, he observes.
The economist says that with the situation of the F CFA these deficits are being relatively neutralised.
“Ghana and Nigeria are managing their economies, meaning that these countries can make economic and budgetary efforts,” he adds.
He estimates that the situations of the Nigerian and the Ghanaian currencies are not brighter or more catastrophic than those of the F CFA.
“If Ghana loses its budgetary discipline, its currency goes down and this is happening presently. But despite this situation in Ghana and Nigeria, France trades enormously with these two countries as much as with Cote d’Ivoire, Burkina Faso and Mali.
"One cannot say that it is because we got the F CFA that is why we trade more with France.”
In addition to economic and budgetary discipline, a currency needs strength and credibility. For that matter, Prof. Koulibaly estimates that Central banks of the zone should be imperatively independent from political power, like the Bundesbank in Germany.
According to him, this is the only way to guarantee quality, saying from the moment “the rulers are themselves democratic, they respect the rights of the State and they see to it that their economic policies are not risky and a waste”.
-0- PANA JU/NA/MA 21Oct2014
