Eight West African countries have agreed to change the name of their common currency to the Eco finally cutting ties with the CFA franc.The CFA franc, linked to former colonial ruler France has always been condemned for its representation of neo-colonialism.
Since 1945, the CFA franc has been the currency used by French colonies, and the usage of the currency continued after independence.
Reports indicate that the Eco will still be pegged to The euro but the rule that member states keep 50 percent of reserves with French treasury will be removed. Furthermore, the French representative on the board of regional central bank will be removed, giving autonomy to the body.
Commenting on the development during a news conference Ivory Coast's President Alassane Ouattara was quoted by Reuters saying, "This is a historic day for West Africa." French President Emmanuel Macron was also at the news conference. President Macron said the decision to adopt the Eco is a "historic reform."
Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo currently use the currency. All the countries are former French colonies except Guinea-Bissau.
The CFA is divided into two, the Economic and Monetary Community of Central Africa (CEMAC), which includes Chad, Cameroon, Central African Republic, Gabon, Equatorial Guinea and Republic of Congo, and the West African Economic and Monetary Union (WAEMU).
The proposed changes will only affect the West African form of the currency, and not the Central African CFA .
This latest announcement has been received with positive reactions and paves the way for further integration of the continent.
Supporters of a single currency say it will facilitate trade, lower transaction costs and payments amongst ECOWAS' 385 million people.
The Eco is expected to be adopted in 2020.The target launch date for the regional bloc of countries in West Africa's single currency has been postponed several times; in 2005, 2010 and 2014; since the concept first arose in 2003.
A report by the African Development Bank Group (AfDB) indicates that for countries to meet the 2020 deadline for the single currency, the region needs to align with its monetary and fiscal policies expeditiously.
Countries are required to meet a ten convergence criteria, set out by the West African Monetary Institute (WAMI), by the 2020 deadline. The primary four being: a budget deficit of not more than 3%, an average annual inflation rate of less than 10%, Central Bank financing of budget deficits should be no more than 10% of the previous year's tax revenue and gross external reserves worth at least three months of imports.
Brief history of the CFA franc
The CFA franc was created in 1945 after the 1944 Brettons Wood Agreement which saw the world usher in a new global monetary system with the U.S dollar replacing the gold standard. The Brettons Wood agreement cemented America's dominance as a world economic power. The CFA franc is tied to the Euro, and follows the fluctuation of the Euro. The creation of Eco, the newly proposed West African currency designed to replace the CFA franc by 2020 led to an official separation with the Euro.