17 December 2007

West Africa: Central Bank in Stalemate as Politics, Tradition Clash

A rift between heads of state of the eight-nation West African Economic and Monetary Union (WAEMU) has left the bloc's central bank, BCEAO, with an interim governor for over two years now. A meeting of WAEMU'S council of ministers in Burkina Faso last week failed to address the issue, leaving it to a summit of presidents announced for January.

At issue is whether or not to continue with the longstanding unwritten rule of having a national of Côte d'Ivoire lead the bank. The rule originated in an agreement between the first president of Côte d'Ivoire, Felix Houphouet Boigny, and his Senegalese counterpart, Leopold Sedar Senghor. It reflected the relative weight of the two nations in the post-colonial era.

The strongest economy west of Nigeria, Côte d'Ivoire was granted the privilege of naming the bank's governor, and as the sub-region's diplomatic hub Senegal was to host its headquarters.

Four decades later, dissident voices are now questioning the tacit accord. Furthermore, consensus agreement on a permanent appointment is required, and many fear that the current Ivoirian nominee for the position of BCEAO governor, Antoine Bohoun Bouabre—a controversial figure—will not attract this.

Although Côte d'Ivoire is still WAEMU's lead nation, years of internal fighting have strained relations with its neighbors, particularly Burkina Faso, which was once accused of meddling in the country.

No country has so far announced its intention to challenge an Ivoirian bid, but it is believed that Senegal, Niger and Burkina Faso all have an eye on the bank's top spot. Should a challenge materialize, the strongest is likely to come from Burkina Faso, whose national, Justin Damo Barro, currently serves as the bank's interim governor.

France, which guarantees WAEMU's CFA Franc peg to the Euro, has remained silent on the issue. So have the other member states of the union: Benin, Guinea Bissau, Mali and Togo.

President Laurent Gbagbo officially designated Bohoun Bouabre as Côte d'Ivoire's candidate to head BCEAO last October.

The only state minister in the Ivoirian cabinet, Bohoun Bouabre is a former economics professor at the University of Abidjan. Critics blame him for the decline in domestic production of cocoa and coffee, the nation's top export commodities. As finance minister from 2002 to 2005, he oversaw the reforms that many now say have resulted in more bureaucratic hassles for producers, prompting the emergence of a parallel market.

Others view his close relationship with the president as a liability. They say Bouabre, who is also Gbagbo's campaign manager in his hometown, may not survive as BCEAO governor should the president lose the upcoming election. Yet others point to the fact that unlike previous governors, Bouabre did not rise from the ranks of BCEAO.

The Ivoirian government believes that implicit accords are as good as written law and honored as such the world over—for example, the World Bank is always headed by an American, and the International Monetary Fund by a European.

Although once in place the bank’s governor cannot favor his country of origin, for Ivoirians the contest for BCEAO leadership is a matter of pride. In 2003 the African Development Bank (AfDB) moved its operations from its statutory headquarters in Abidjan to Tunis, citing heightened insecurity as a result of the rebellion in the north. The decision was decried by many in Côte d’Ivoire’s business community, who were sorry to lose AfDB’s affluent staff.

This time President Gbagbo has threatened to withdraw from WAEMU should his country lose the battle, a threat that if acted upon may sink the monetary union altogether. Still the world's largest cocoa exporter, Côte d'Ivoire holds the biggest share of foreign currency reserves at BCEAO, an estimated minimum of 32 percent.

But a withdrawal is likely to work to no one’s advantage, not even Côte d'Ivoire’s. Le Nouveau Reveil, an Ivoirian daily, has hinted at the possibility of a compromise by publishing a shortlist of potential replacements for Bouabre.

Should these alternatives fail, the sub-region may lose what has for a long time been hailed as a model of integration on the continent.

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