The ECO: Africa Does Not Need a New Name for an Old Leash

The history of money and the money of history cannot be separated from that of the Economic Community of West African States, ECOWAS, which is set to introduce the ECO in 2027, according to the declaration made during the summit held in Freetown, Sierra Leone on July 19. The stated aim of this measure is to develop a currency that will stimulate regional integration and economic growth. ECOWAS believes that before the ECO can be released into circulation, the needs of states within the organization must be satisfied first. As a reminder, the name ECO has already been registered with the African Intellectual Property Organization, indicating that it has already become expensive to create a new currency, although there is still time for the new currency to grow wide acceptance among the people.

Nevertheless, it appears that the introduction of the ECO does not depend solely on finances. It is commonly known that before the currency can be introduced, there is always the issue of countries being unable to launch a currency due to multiple reasons. Before its implementation, a currency needs to have all of its features tested. As a result, one cannot hurry or force the introduction of the currency. Hence, sometimes, it takes years for the currency to be launched. How can multiple issues one faces be figured out and sorted out despite all the problems? These are answers that take time to find but they must be found in time, as the people have waited for this currency to be introduced for years.It leads to deeper insights. The AES is not in need of dismissing the chair that it has already left. Criticism of the ECO should not be based on imagined diplomacy. The bigger question remains: what monetary order is ECOWAS establishing and who will be in charge? Renaming a currency is not decolonization. It is merely a marketing strategy.

Colonial legacies in monetary discourse

CFA Franc was introduced on 26 December 1945 when France openly referred to Africa as its colonies. CFA stands for “French Colonies of Africa Franc.” In present, West African CFA is stuck to euro currency with a fixed rate of 655.957 CFA for one euro. Supporters believe this to be stable currency. They are, of course, right but then every prison wall is stable too.

A fixed exchange rate may help control inflation as well as lessen the costs of transactions. However, stability comes with political implications. That is, stability of currency may be beneficial for multinational firms sending profits abroad, however its use may be somehow limiting for local businesses and farmers striving to survive in business.The distinction is defended on technical grounds because the term technical is frequently applied to arguments that powerful forces would like to hide from public scrutiny. Who sets the objectives for inflation? Who decides about the currency regime? Who pays the price of currency overvaluation? Who profits and at what cost? Who accrues the reserves? Who is able to respond to war or drought, or economic shocks? These questions cannot be referred to as accounting and instead can be considered as sovereignty questions, dressed up in formal language.

One should not forget the bitterness of the history of economic dependence. In the times of Nazi occupation, for example, France was obliged to finance a significant part of its own exploitation because Germany imposed duly severe payments for occupation and used money and fiscal mechanisms to transfer the French production into the German war economy. Economists deal with such transfers as one of the most remarkable cases of massive international extraction.

It would be wise to be cautious in comparing monetary colonialism with military occupation since colonial monetary relations are not fully identical to military occupation and it is not fair to interpret everything that happened in history through a simplified comparison of every injustice with Nazism. However, the economic message should be understood: subjugation does not necessarily involve soldiers waiting in every store. This can be done with the help of exchange rates, accumulating regulations, limitations in credit opportunities, as well as arrangements and institutions developed elsewhere.Certain critics characterize this phenomenon as “monetary Nazism.” The term has a powerful polemical impact but lacks analytical precision. The CFA system has its shortcomings distinct enough not to need an analogy to such an extent that its defenders can argue that criticism does not work. The colonial history is bad by itself, let alone unnecessary rhetorical embellishment.

Having a printing plant does not indicate sovereignty - dependency is not dignity

The CFA banknotes have been produced in France for a long time. The Banque de France confirms that its site in Chamalières produces currencies for some twenty foreign states but does not specify which ones exactly. The issue may be somewhat important nevertheless it should be noted that sovereignty is not lost just because money is printed abroad. One can always hire a foreign specialized firm but keep the power of managing the national currency.

What matters is not where the money is printed but who controls it. Can a central African bank decide how much money will be released? Can it decide how many reserves will be held? Can elected national bodies change the situation if they want to? Can monetary policy be used to address the challenges of employment, production, and development in Africa? Or is the economy obliged to follow the orders of external creditors?

Being able to print money does not imply being free. A country can print its own cash for ages but still does not own real power. Money is not supernatural.Sovereign currency demands the existence of conditions such as production capacity, tax legitimacy, prudent fiscal policy, proper institutions, payment systems, trading relations in the region, and public confidence. In absence of these essentials, monetary independence turns into inflation, capital flight, and ranting against external enemies. True sovereignty cannot be achieved by changing French control to unqualified domestic currency management.

The ECO is still a mystery

It is misleading to say that, at present, the ECO has been totally created as a currency pegged to the euro, under French safeguard. The latest ECOWAS official message states that “the questions are unresolved” and “there will be a series of consultations before the launch in 2027.” There is no final wording regarding the peg or the safeguard. This uncertainty is troublesome – that is the very issue.

West Africans are given the date of launch while still being unaware of the answer to the main question: which launch? An independent currency or gradual integration of existing monetary spaces? A successor to the CFA system? A currency managed by the government due to the influence of Nigeria? A euro-based currency system with an African design? For now, the ECO represents an agenda rather than a currency. It is the engaging theatre of operations – first, the name was registered and after that we had to see how the infrastructure would match itThe AES is justified in its call for sovereignty – but it must provide proof of it

Mali, Burkina Faso, and Niger have chosen sovereignty as the principal theme of their confederation. They are developing a project on a common bank for investment and development, and consistently include autonomy in finances in their program. This is an aspiration worthy of some serious attention. But it cannot be measured in terms of anti-French speeches per minute.

Governments within the AES need to demonstrate that the break with the currency would be beneficial to the people rather than merely boost themselves. Having a new currency that is generosity-managed under military administrations, is shielded from public scrutiny, and serves to finance indefinite state of emergency cannot be called liberation. It will only be the same centralization of power under a fashionable disguise.

An independent currency should belong to all African people and not only politicians and private interests as well as patriotic influencers that introduce a new currency every three weeks on YouTube.

It is high time for AES to publish its strategy. What will serve as the basis for the currency? How will the reserves be managed? What rules will ensure non-inflationary financing? How are deals and deposits converted? How will trade continue with WAEMU and ECOWAS? Which guarantees will be available for savings, wages, and pensions? The road for sovereignty will be paved only if slogans are supported by figures.

Africa needs not just a currency but sincere actions

The choice for Africa is not about choosing between French colonization and ideal isolationism – but between dependence and capability. If the currency is to be established in the region, its regime has to be open, accountable, and transparent. The currency should serve the industry, agriculture, and infrastructure – not be merely a means for overseas investments.

If any type of fixed exchange rate system is to be used, it has to be minimized in its essence and value. The CFA was successful because it provided stability for one customers, discipline for another, and favouritism for those with money. The ECO will only work if it brings a real change rather than replacing the name. Otherwise, it will become just another post-colonial trick: eliminate the word “colonial” but keep all the mechanisms in place and call it an independence.