France’s Military Hegemony
The Pacte Coloniale Agreement enshrined a special preference for France in the political, commercial and defence processes in the African countries. On defence it agreed two types of continuing contact. The first was the open agreement on military co-operation or Technical Military Aid (AMT) agreements, which weren’t legally binding, and could be suspended according to the circumstances. They covered education, training of service personnel and African security forces. The second type, secret and binding, were defence agreements supervised and implemented by the French Ministry of Defence, which served as a legal basis for French interventions. These agreements allowed France to have pre-deployed troops in Africa; in other words, French army units present permanently and by rotation in bases and military facilities in Africa; run entirely by the French (and, incidentally, paid for by the Africans).
In summary, the colonial pact maintained the French control over the economies of the African states; it took possession of their foreign currency reserves; it controlled the strategic raw materials of the country; it stationed troops in the country with the right of free passage; it demanded that all military equipment be acquired from France; it took over the training of the police and army; it required that French businesses be allowed to maintain monopoly enterprises in key areas (water, electricity, ports, transport, energy, etc.). France not only set limits on the imports of a range of items from outside the franc zone but also set minimum quantities of imports from France. These treaties are still in force and operational today.
One of the most important influences in the economic and political life of African states which were formerly French colonies is the impact of a common currency. There are actually two separate CFA francs in circulation. The first is that of the West African Economic and Monetary Union (WAEMU) which comprises eight West African countries (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo. The second is that of the Central African Economic and Monetary Community (CEMAC) which comprises six Central African countries (Cameroon, Central African Republic, Chad, Congo-Brazzaville, Equatorial Guinea and Gabon), This division corresponds to the pre-colonial AOF (Afrique Occidentale Française) and the AEF (Afrique Équatoriale Française), with the exception that Guinea-Bissau was formerly Portuguese and Equatorial Guinea Spanish).
Each of these two groups issues its own CFA franc. The WAEMU CFA franc is issued by the BCEAO and the CEMAC CFA franc is issued by the Banque des Etats de l’Afrique Centrale (BEAC). These currencies were originally both pegged at 100 CFA for each French franc but, after France joined the European Community’s Euro zone at a fixed rate of 6.65957 French francs to one Euro, the CFA rate to the Euro was fixed at CFA 665,957 to each Euro, maintaining the 100 to 1 ratio. It is important to note that it is the responsibility of the French Treasury to guarantee the convertibility of the CFA to the Euro.
The monetary policy governing such a diverse aggregation of countries is uncomplicated for African Central Banks because it is, in fact, operated by the French Treasury, without reference to the central fiscal authorities of any of the WAEMU or the CEMAC. Under the terms of the agreement which set up these banks and the CFA the Central Bank of each African country is obliged to keep at least 65% of its foreign exchange reserves in an ‘operations account’ held at the French Treasury, as well as another 20% to cover financial liabilities.
The CFA central banks also impose a cap on credit extended to each member country equivalent to 20% of that country’s public revenue in the preceding year. Even though the BEAC and the BCEAO have an overdraft facility with the French Treasury, the drawdowns on those overdraft facilities are subject to the consent of the French Treasury. The final say is that of the French Treasury which has invested the foreign reserves of the African countries in its own name on the Paris Bourse.
In short, more than 80% of the foreign reserves of these African countries are deposited in the ‘operations accounts’ controlled by the French Treasury. The two CFA banks are African in name, but have no monetary policies of their own. The countries themselves do not know, nor are they told, how much of the pool of foreign reserves held by the French Treasury belongs to them as a group or individually. The earnings of the investment of these funds in the French Treasury pool are supposed to be added to the pool but no accounting has ever been given to either the banks or the countries of the details of any such changes. The limited group of high officials in the French Treasury who have knowledge of the amounts in the ‘operations accounts’, where these funds are invested; whether there is a profit on these investments; are prohibited from disclosing any of this information to the CFA banks or the central banks of the African states.
This makes it impossible for African members to regulate their own monetary policies. The most inefficient and wasteful countries are able to use the foreign reserves of the more prudent countries without any meaningful intervention by the wealthier and more successful countries. Most importantly, the French Government uses these funds on deposit in France as assets of France. The CFA franc devaluation of 50 per cent against the French franc in January 1994 was a great surprise to several of the African states and caused major problems for them.
The problems for the African states are growing. The coming crisis in the Euro, with the bailouts of Greece, Portugal and others will have a strong effect on the value of the Euro. With the CFA franc pegged to the Euro the value of the CFA will decline with it. The cost of commodities (petroleum products, foodstuffs, etc.) priced in dollars will grow to be a heavier burden on the African economies. Moreover, France itself is in deep financial trouble.
The International Monetary Fund (IMF) has warned recently that France will have to carry out more spending cuts to ensure it reaches its deficit reduction commitments amid lower-than-expected growth expectations. While France has predicted 2.25 per cent growth for 2012, the IMF has downgraded this to 1.9 per cent.
The French spent almost US$2 million a day bombing Libya; above the budgeted expenditure in its defence budget. France is very short of money. However, the cost of massacring Ivoirians, using tanks, helicopter gunships and Special Forces were offset against the Ivory Coast money it was holding so didn’t add to the budgetary problems. The killing of Africans in the Ivory Coast, Cameroon, Rwanda, Chad and the Central African Republic have never been the subject of a budget request to the French defence budget as the Office of the President deducts these from the tranche at the Treasury (which is why it has never been debated in the French National Assembly). To add insult to injury the French estimated that the French business community had lost several millions of dollars in the rush to leave Abidjan in 2006 after the French Army massacred 65 unarmed civilians and wounded 1,200 others. The French demanded that the Ouattara government which they had installed paid them compensation for these putative losses. Indeed the Ouattara government paid them twice what they said they had lost in leaving.
Surely the time has come for the francophone governments to ask the French for a proper accounting of the money they are holding. Perhaps the next government in the Ivory Coast will ask the French for an accounting. Wade in Senegal has asked but was never answered. The solution seems simple. Until the French give a proper accounting for Africa’s billions the African states should stop sending more to them. It is bad enough paying their overseer for the cost of his whip used to chastise them. It is wholly unreasonable to continue to do so when there is no upside, only potential losses.
Antoine Roger Lokongo is a journalist and Beijing University PhD candidate from the Democratic Republic of Congo.