Is the CFA currency bad for the African countries using it?

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The CFA is used in 12 African countries

The 12 African countries who are using the CFA currency, which is pegged to the euro and guaranteed by France, are sabotaging their own economies, French economist Bruno Tinel suggests in a piece for the Jeune Afrique newspaper.

The CFA currency is a controversial colonial legacy which former UN Deputy Secretary General Carlos Lopez described last month as an outdated monetary mechanism.

Mr Tinel and three African economists co-wrote Emancipating Africa from Monetary Servitude, a book out this month which makes the point that the CFA is not fit for purpose.

Mr Tinel writes in his piece for Jeune Afrique:

The pegging to the euro does not appropriately address the monetary needs for development in the CFA zone.”

He says the problem is that the CFA, being a strong currency, means that imports are cheap and exports are expensive, making it difficult to encourage home-grown industries.

So these countries are locked into a cycle of providing raw materials rather than adding value to them.

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