History

Monetary cooperation between Africa and France has its origins in the franc zone, established by the decree of September 9, 1939. As the World War II had just begun, the aim was to preserve the French empire from severe exchange rate fluctuations. France and its overseas territories form a single monetary area, with free capital movements, common currency regulations and centralised foreign exchange reserve management; their currencies are freely convertible between themselves, with fixed parities. In December 1945, alongside the Bretton Woods negotiations, a single currency was created in French-sovereign African territories: the franc of the French Colonies of Africa (CFA franc), which in 1958 became the franc of the French Community of Africa.

After their independence, achieved between 1958 and 1960, most of the sub-Saharan African states that emerged from the French colonial empire chose to maintain close cooperation ties with France. The colonial note-issuing banks were transformed, giving rise to the Central Bank of West African States (BCEAO), with the African Financial Community franc (XOF) as its currency, and the Central Bank of Equatorial African States and Cameroon (BCEAEC, future BEAC), which issues the Central Africa CFA franc (XAF). The agreements concluded between France and the members of each of the monetary unions set out the principles of cooperation: maintaining fixed parities, freedom of transfers, centralisation of foreign exchange reserves and an unlimited guarantee of convertibility through the transaction accounts. The French administration and the Banque de France also provide substantial material and technical support to note-issuing banks.

As of March 1965, the finance ministers of the franc zone meet every six months, prior to the annual and spring meetings of the International Monetary Fund (IMF).

New monetary cooperation agreements were signed in November 1972 for Central Africa and in December 1973 for West Africa. They marked a turning point in the partnership between France and its African partners, with the latter taking greater responsibility for the governance of their central banks. The reduced weight of French representatives on the boards of directors of BEAC and BCEAO thus went hand in hand with the gradual Africanisation of executives and the transfer of the headquarters of the two institutions from Paris to Africa, to Yaoundé (Cameroon) for BEAC in 1977 and to Dakar (Senegal) for BCEAO in 1978. In return for its guarantee, however, France continues to participate in the management and oversight of these central banks.

Signing up to cooperation agreements is always a free and sovereign choice of the states involved. Some countries, such as Mauritania (1972) and Madagascar (1973), have also left them. In contrast, Mali concluded a bilateral agreement with France in 1967, before joining the West African Monetary Union (WAEMU) in 1984. The Comoros became independent in 1975 and signed a monetary cooperation agreement with France in November 1979. The Central African Monetary Union (UMAC) was enlarged in 1985 to include Equatorial Guinea and the West African Monetary Union (WAEMU) in 1997 to include Guinea-Bissau.

The 1990s saw the strengthening of regional integration and the replacement of the French franc by the euro. In order to address the decline in the economic competitiveness of African partners, a 50% devaluation of the CFA franc and a 33% devaluation of the Comorian franc were carried out on 11 January 1994 - the only ones seen since 1948. This devaluation was accompanied by a deepening of monetary unions, with the adoption of the constitutive treaties establishing the West African Economic and Monetary Union (WAEMU) and the Central African Economic and Monetary Community (CEMAC), on 10 January and 16 March respectively.

The adoption of the euro by France does not affect the monetary cooperation agreements, which remain in force. France and its African partners remain solely responsible for their implementation. A decision of the Council of the European Union is nevertheless necessary in two cases: either in the event of a change in the scope of the agreements - such as the accession of a new country - or in the event of a change in their nature - such as a the French guarantee or the exchange rate peg being called into question. When it was introduced on 1 January 1999, the single European currency replaced the French franc as the monetary anchor for the CFA and Comorian francs, with no change in parity.

The agreement signed in 2019 with the WAEMU member states changed the monetary cooperation framework for these countries. Under the provisions of the new agreement, France has become a financial guarantor. The BCEAO's transactions account with the French Treasury was closed and the French Republic no longer appoints a representative to the Central Bank's governing bodies, except if its guarantee might be called upon.