INTERNATIONAL SYMPOSIUM

INTERNATIONAL SYMPOSIUM INTERNATIONAL SYMPOSIUM

ON THE FUTURE OF THE FRANC ZONE

AND ITS ARTICULATION TO THE EURO

(CODESRIA - Dakar, 4-6 November 1998)

Some comments on objectives aimed and the results obtained

Document prepared for the debate Conference organized by the Nigerien Economist Association - Niamey - 26 November 1998

The International Symposium organized by CODESRIA with the support of ECA and UNDP held in Dakar lasted three days with about three hundred and fifty participants : academics, researchers, operators, and others experts. These participants were representatives of international institutions like World Bank, IMF or UNDP, Regional institutions like ECA, and public and private national institutions. They debated on the advantages and disadvantages of the future CFA Franc's connection to the Euro. Participants were in their great majority from Franc CFA African Zone countries (UEMOA, CEMAC and Comoros). Some of them came from African countries which are not members of Franc Zone. They presented monetary experiences of their respective countries (cases of Angola, Ghana, Gambia, Guinea and Tunisia). Others came from North Europe debating the potential effects of linking the CFA Franc to the Euro.
Debates were made in English and French, in both plenary sessions for general problems of CFAF devaluation and CFA Franc future balance and in workshops for study cases. More than thirty substantive documents have been distributed to participants enabling them to join in a more efficient debate.

Objectives of the meeting, its Agenda and organization

Contradictory presentations and rich discussions on the balance of the Franc Zone permitted participants to assess effects of the Franc Zone in the related countries, specifically in the following fields : i) the stability of their money; ii) the dynamism of their growth and development; iii) the contribution to the regional integration aim; iv) the obtained results from the January 1994 Devaluation; v) and the relevance of monetary theories and practices regarding their feasibility in the African context. Presentations and discussions on the balance, thanks to study cases, facilitated the assessment on the scenarios for the future of the CFA Franc in the trend of its link to the EURO.
Workshop discussions, on the basis of study cases of Ivory Coast, Gabon, Cameroon and Senegal, had contributed to the improvement of the analysis of sectorial and social effects of Devaluation in these countries. During the Symposium, a panel opened to journalists, trade union officials and NGOs and civil society representatives discussed the conditions for a better implication in the future of the civil society in the debates on the situation and the future of the CFA Franc Zone.
A final part of the Symposium had been devoted to monetary experiences in Countries which are not members of CFA Franc, namely Angola, Gambia, Ghana, Guinea and Tunisia.

Obtained results

Consensus for excluding myths and false debates

Most of the presentations made during the meeting referred implicitly or explicitly to fundamentals of globalization, regionalization or disconnection for national autonomous economic construction. They consequently legitimate their analysis and proposals. The debates were permitted to convene that even if heavy trends of unique and predominant thought draw up irresistibly to the globalization of the world economy functioning in a Global Village, this globalization will necessary be based on three poles structures : i) North, Central and South American pole ; ii) the Asia's one around Japan, China and India ; and the third pole composed of Europe, Africa, the Meddle East and others Caribbean and pacific countries members of the present association EU/ACP.
Globalization and regionalization aim at the reinforcement of integration and interdependence process concerning a long past period of human populations linked to their national identities in respect to their habits of production, consummation and exchange. The current historical process is in progress. If we have to understand its logic and its motivations better and if we need to try to correct its direction it seems easier to do so internally than externally .
Another unnecessary debate had been avoided, the debate on the opposition between those who support the market and those who believe on planning. Economic policies at the global, the regional, the national or the local level are and remain mixed. They manage in various and more or less sustained forms of a dynamic evolution both market rules and administrative mechanisms of regulation, justifying option for one or the other by the relevant and specific needs in each situation.
Finally, another unproductive debate had been forsaken, the debate on semantic. Like problems on Progress, growth, development, or on the economic and social development or sustainable human development. These concepts or paradigms are powerful intellectual constructions. But they lead to unjustified concord or to unexpected misunderstanding. Battles around the superiority of this or that concept or paradigm are useless regarding the same result aimed by all of them fighting against diseases that affect the humanity, poverty, illness, illiteracy, unemployment, iniquity, etc…

ii) Focus on items able to make debates progress and constructive proposals

The principles of monetary policy and the related intellectual debates on devaluation justifications, convertibility, currencies change systems, homogenous monetary zones, etc… are not consistent except if they are legitimated by reference to political economy.
Development theories met their limits trying to explain without any success the causes and effects of underdevelopment. It is time to deeply review these theories and to promote new proposals able to meet with imperatives of accelerating growth and development in countries which are left behind. Doing that, it should be possible to make them capable to more efficiently safeguard their interests, specially in a context of obligatory and unconditional application of pitiless rules of the market and the competition.
Institutional aspects remain determinant to make it sure that monetary policies, as relevant as they should be, have a chance to dispose of an adequate level of feasibility and a sufficient level of acceptability from the concerned populations.

Some conclusions and recommendations of the Symposium

The balances of the Franc Zone and the January 1994 devaluation are not so satisfactory. Exciting and passionate debates permitted the demystification of dogma which appeared at the beginning as firm. The CFA Franc (at its beginning Franc of French African Colonies and becoming later Franc of African Financial Community) in respect with the historical conditions of its creation in 1939, inside the colonial period, and regardless of the modifications made by the Accord of the French and the States members of CFA Franc in 1972 and 1973, is and remind a French and not an African currency.
The CFA Franc, a long time considered as a unlimited exchangeable currency lost this statute and since August 1993 is dependant on a restricted currency exchange system, thanks to the support of the French Treasury. In addition, the guarantee given by the French Treasury since the freedom of French colonies members of the French Zone is in reality based on a system which defends French Treasury interests. States members of the Franc Zone accepted to put 65 % of their exchangeable currencies in the French Treasury commune operation account. If they need more currency than their deposit they are individually required to limit their demand to a convened level and they pay for the advanced part made by the French partner. The French Treasury commune operation account constitutes of an efficient mechanism to manage in solidarity currencies exchange flux between Franc Zone and the rest of the world.
The management monetary policy of the Franc Zone by the French partner generated effects specially in respect of macroeconomic stability and low level of inflation. But, relevant interrogations appeared related to the pertinence of : i) the ideological fundamentals making growth and development dependent on imperatives of macroeconomic stability and lack of inflation only ; ii) among Franc Zone member countries, the advantage given by the system to strong economies penalizes weak ones ; iii) the methods which fix the optimum level of the rate exchange between CFA Franc and French Franc , Euro or others currencies.
The January 1994 devaluation causes are not so evident and so consensual and their effects had not met the expected objectives. Concerning the causes, the bad economic situation of member countries of the Zone during the 80s were similar to those of non members countries of the Zone which had not devaluated and their situations had not been worst that the first. The 1980s had been named the lost decade for the whole African Continent. The given justifications to devaluate remain insufficient. The momentum and the conditions of the CFA Franc devaluation as well as its importance (50% in once, except the Comoros) had not met a consensus during the debate.
Concerning the economic and social effects of devaluation, it had been recognized that the devaluation had not modified the level of dependency, vulnerability and fragility of CFA Franc economies. Encouraging indices noticed after the devaluation depended principally from the international environment, the growth of exportable commodities' prices benefited to countries member of the Zone as well as to the others African countries. Further, at the social level, with the devaluation the poverty situation had since worsened in the Franc Zone countries.
Had the CFA Franc and its monetary Zone facilitated the subregional and the regional integration as expected ? The assessment of the level of exchange in the Zone and between the Franc Zone and other African Countries is not specially favorable to such thesis. In the contrary, the link between the CFA Franc and the Euro is creating grave interrogations regarding the potentiality that the new European statute of African members of Franc FCFA could seriously disturb the fragile relations inside the Association Europe/African, Caribbean and Pacific Countries.
The scenarios and perspectives of the Franc Zone remain opened. During the presentations and the debates, many scenarios had been reviewed giving to the participants the opportunities to assess the advantages and disadvantages of each of them. The following scenarios had been considered :

i) The link of the CFA Franc to the Euro in the same conditions that it was linked to the French Franc. In this case, the French Treasury will continue to assume a certain control on Central Bank activities of the concerned countries. In that case, on the first January 1999, the CFA Franc will be linked to the Euro at the level of exchange between the French Franc and the Euro as it will be decided on the 31^st December 1998. The principal problem which appears in this scenario is the real risk for CFA Franc countries competitiveness if the Euro will be drawn to higher level by the Mark. Unfortunately, the advantages expected from the access to a wide European market will be insufficient to compensate the disadvantages of effects of the exchange rate between a high level Euro and others currencies ;
ii) The independence taken by the Franc Zone from both the French Franc and the Euro. Accepting that the French Treasury will no longer assume any control on a new and free CFA Franc monetary Zone like wise it will not assume a guarantee of convertibility of the CFA Franc. This scenario came with important interrogation on the capability of State members of the Zone to assume their commune monetary policy, managed in solidarity and in respect with implementing a convergent monetary and financial economic policy.
iii) The backing out of the French Zone with a return in each country to the practice of national monetary policies, regardless of the specific importance of the economy. Many little countries in Africa and in other Regions manage with more or less efficient national monetary policies.
iv) The integration of an autonomous French Zone in larger subregional or Continental monetary Zone. The creation of a unique African currency is an old dream of the period of decolonization. It is a difficult political, economical and monetary challenge. But it is also an exciting scenario for those who believe in the future of Africa, even in a globalization approach, with its three poles global village. Obviously, a single African monetary and economical market will be a wonderful achievement, giving the Continent the power to debate in the future at the global level as well as with Europe and other partners.

The Information drawn from experiences of the non member Franc Zone countries are useful. The communications and debates around such experiences convinced those participants who were hostile to withdraw the FCA Franc from the French Franc and the Euro. Even excessive monetary practices implemented in Angola, Guinea and other countries which experimented on central planning policies had been considered as fruitful and helpful giving in the future to policy makers examples of decisions to be avoided. The independent Tunisian monetary policy presented as an independent and success story had been followed by a rich debate on the feasibility of such experience in the future Franc FCFA Zone if its member countries decided to withdraw from the Franc and/or the Euro Zone. During the debate, it had been agreed to facilitate in the future meeting between Countries members of the CFA Franc and African countries non members like North, West, East or South African countries.
The continuation of thought and the implementation of concerted information and shared documentation mechanisms constitute a consensual imperative. The Dakar Symposium had been considered as a magic moment when hundred of Africans demonstrated a real capacity together to think, debate and propose autonomously analysis and alternative solutions regarding a very sensible item. The debates have been widely opened thanks to rich communications which were based on many different theories and practices.
The presentations and debates were high level scientific and professional skills with interesting exchanges on performance of conceptual and methodological instruments (reference is made to debates on the limit of theories of real or required exchange rates, optimum monetary zone, real currency comparative exchange, etc). The participants had been audacious when they assessed the applicability in an underdeveloped and fragile context, like the African one of the dogmatic unique and dominant thought. They assessed with the same independence the alternative theories if their implementation led to insufficiencies and excess. They put courageous acts timely debating on the pertinence of the link of the CFA Franc to the Euro even if at the political level decisions had been already taken.
Had the Dakar's Symposium and its debates been considered as sterile and useless ? In the contrary, participants unanimously considered that it is of the highest importance to pursue the debates and to complete proposals to feed the future bargaining between CFA Franc Zone and its French, European, African and other countries and institutions partners. Up to the Year 2002 and even after, there is a real space to debate and to propose the best conditions for Africa to draw a benefit from this very special historical situation. The participants convene to organize other international Symposium on a yearly bases. Meetings, workshops, seminaries should be organized on a subregional level to open the dialogue to African countries using different currencies and to representatives of the civil societies. CODESRIA, ECA, UNDP with its Regional Bureau for Africa economic programme and other interested partners will support the process.