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Burkina Faso, Mali, Niger: What possible consequences in the event of exit from the CFA franc?

The countries of the Alliance of Sahel States (AES), Burkina Faso, Mali and Niger, make the exit of the CFA franc and the creation of a common currency an essential objective. At this stage it is only a project, but questions arise about the consequences for neighboring countries. Lighting.

A 10,000 CFA franc note from the Central Bank of West African States (BCEAO). RFI/Pierre René-Worms

By: Liza Fabbian

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  • Could a devaluation of the CFA franc be feared?

“ 

Not at all

 ,” replies French monetary expert Olivier Vallée, who was technical advisor to the International Monetary Fund (IMF) to the countries of the West African Economic and Monetary Union (WAEMU). “

 A devaluation of the CFA franc is quite improbable, since its value is established at fixed parity with the euro 

,

”

 he recalls.

This is partly guaranteed by the French Public Treasury and supported by foreign exchange reserves held by the Central Bank of West African States (BCEAO).

Also readThe great guest Africa - Crisis in the Sahel: "The big problem is not the UEMOA, it is the behavior of the BCEAO"

If Burkina Faso, Niger and Mali put their plan into action, create their own common currency and exit the CFA franc, the impact will be relatively negligible for the other countries in the zone, whose GDP weighs much heavier.

Ivory Coast and Senegal are coastal countries, which benefit from significant trade flows and which have good foreign exchange reserves to support the value of their currencies. “

 In 1994, the CFA franc had to be devalued following a debt crisis,”

 Olivier Vallée nevertheless recalls. 

But there is little chance of this scenario happening again today! 

»

  • Could there be other consequences, particularly on trade?

The consequences should be quite limited, according to specialists. Moreover, exchanges already exist with countries which do not use the CFA franc without this posing a problem. “ 

Mali already trades very well with Guinea [

which uses the Guinean franc as currency, Editor’s note], underlines Olivier Vallée. 

Benin and Togo are used to trade with Ghana [

which uses the cedi, Editor's note

] and that's without mentioning Nigeria [

where the currency is the naira, Editor's note

]

, the economic heavyweight of the region

.

Also read: Mali-Niger-Burkina: a common currency, at what price?

It will of course be necessary to adapt to the new monetary signs and make certain changes in financial and commercial practices, but “

 probably nothing insurmountable 

”. Everything will in fact depend on the capacity and willingness of States to collaborate with each other.

  • Could other countries follow suit and leave the CFA franc in turn?

It is impossible to say at this stage, since we do not know if the countries of the Alliance of Sahel States (AES) will really abandon the CFA franc, leave UEMOA and therefore give up certain customs facilities at the same time. . All of this remains hypothetical for the moment.

But if that happened, there would obviously be a political risk. Researcher Ndongo Samba Sylla speaks

 of "a risk of dislocation 

"

,

 if other countries decided that, ultimately, the alternative proposed by the Sahel States was more interesting than remaining in the CFA franc, a currency which is being put back into circulation. cause for a long time in the region.

Read alsoCédéao: the departure of Mali, Niger and Burkina comes after months of tension

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