From Colonial Franc to Euro Peg: The Full History of the CFA Franc

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The CFA franc is one of the most controversial currencies in the world, viewed by critics as a direct relic of French colonialism and a mechanism for maintaining French economic influence over its former African colonies. It is not one, but two separate currencies used across 14 African nations, still pegged to the Euro.

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Here is a full history and detailed breakdown of the CFA franc.

1. Origin and Historical Evolution

The CFA franc was officially created on December 26, 1945, by a decree from the French provisional government, shortly after France ratified the Bretton Woods Agreements.

 

Date Acronym Meaning Context
1945–1958 Colonies Françaises d’Afrique (French Colonies of Africa) Created to avoid imposing the post-WWII devaluation of the French franc onto the colonies, thereby maintaining their purchasing power in relation to other currencies.
1958–1960 Communauté Françaises d’Afrique (French Community of Africa) Changed during Charles de Gaulle’s ‘French Community’ concept as the colonies moved towards independence.
Post-1960 West Africa: Communauté Financière Africaine (African Financial Community) Used by the countries in West Africa (UEMOA).
Post-1960 Central Africa: Coopération Financière en Afrique Centrale (Financial Cooperation in Central Africa) Used by the countries in Central Africa (CEMAC).

The Neocolonial Mechanisms

Despite independence, the two CFA zones maintained a system of monetary cooperation with France built on three controversial pillars:

  1. Fixed Exchange Rate: The CFA franc was fixed to the French franc (at a rate of 1 FF = 50 CFA francs for 36 years), and since 1999, it has been fixed to the Euro (€1 = 655.957 CFA francs). This guarantees stability and low inflation but sacrifices the monetary sovereignty needed to adjust the currency value to local economic needs.

  2. Convertibility Guarantee: The French Treasury guarantees the free and unlimited convertibility of the CFA franc into Euros. This is a key stabilizer, but it comes at a cost.

  3. Reserve Deposit: Historically, the central banks of the CFA zones were required to deposit 50% (and at times, up to 65%) of their foreign exchange reserves with the French Treasury in an Operations Account. This rule was the most heavily criticized aspect, viewed as a “colonial tax.”

1994 Devaluation

The most significant event in the CFA franc’s modern history was the massive 50% devaluation imposed by France in 1994. The parity shifted from 50 CFA francs to 100 CFA francs per French franc. This move was intended to boost the competitiveness of the African economies but led to immediate severe hardship, massive price inflation, and a loss of purchasing power for citizens.

 

2. Countries Currently Using the CFA Franc (2025)

The CFA franc is split into two separate, though mutually convertible, currency zones. In total, 14 African countries use a form of the CFA franc.

 

A. West African CFA franc (XOF)

  • Currency Issuer: Central Bank of West African States (BCEAO), headquartered in Dakar, Senegal.

  • Member Countries (8):

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    • Benin

    • Burkina Faso

    • Côte d’Ivoire

    • Guinea-Bissau (former Portuguese colony, joined 1997)

    • Mali

    • Niger

    • Senegal

    • Togo

Note on Reforms: In 2020, France agreed to end the obligation for the West African zone (UEMOA) to deposit 50% of its reserves with the French Treasury and withdrew French representatives from the BCEAO board. This move, however, has not yet resulted in the formal launch of the replacement currency, the Eco, which remains delayed (latest target is 2027).

 

B. Central African CFA franc (XAF)

  • Currency Issuer: Bank of Central African States (BEAC), headquartered in Yaoundé, Cameroon.

  • Member Countries (6):

    • Cameroon

    • Central African Republic

    • Chad

    • Republic of the Congo

    • Equatorial Guinea (former Spanish colony, joined 1985)

    • Gabon

Note on Reforms: The Central African zone (CEMAC) has been slower to reform. As of 2025, the requirement to deposit foreign exchange reserves with the French Treasury remains in place for the XAF.

 

3.  Countries That Left and Rejoined

Leaving the CFA zone is a powerful statement of monetary sovereignty, but it carries immense risks to financial stability, as demonstrated by the few countries that have attempted it.

Country Year Left Status Rejoined? Context
Guinea 1958 Permanent Exit No Led by Kwame Nkrumah ally Sékou Touré, Guinea became the first to reject the French Community and left immediately, adopting the Guinean franc.
Mali 1962 Temporary Exit Yes (1984) Adopted the Malian franc. The new currency suffered severe depreciation and economic turmoil, leading to Mali’s re-entry into the West African CFA zone (UEMOA) in 1984.
Mauritania 1973 Permanent Exit No Left to adopt its own currency, the Ouguiya.
Madagascar 1973 Permanent Exit No Left to adopt the Malagasy franc, and later, the Ariary.
Algeria, Tunisia, Morocco Varies (1958–1964) Permanent Exit No Left the French Franc zone after gaining independence in the Maghreb region.

The Lesson: The CFA franc offers stability and convertibility, but at the cost of sovereignty. Countries that left experienced immediate economic disruption and inflation, demonstrating the severe challenge of forging a new, independent monetary policy. Mali’s return is often cited by proponents of the CFA franc as evidence of the system’s inherent stability being superior to unbacked national currencies.

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