Association for Free Research and International Cooperation

CEMAC Extraordinary Summit: update on the currency and the economy

02.12.2019
Article from AFRIC Editorial
The Central African Economic Community (CEMAC) wants a stable and strong CFA Franc! This is the major resolution adopted at the extraordinary CEMAC Summit held on 21 and 22 November 2019 in Yaoundé, by the Central African Heads of State.
While the West African countries have already opted for the introduction of their new currency as early as 2020, the CEMAC countries have met in order to renew and adopt additional measures to consolidate and recover the sub-region's economy. In other words, this was a redefinition of the agreements with France. According to the Cameroonian presidency, the CFA Franc is seen by many experts as a hindering factor to development.

Despite the fact that some member states of the Central African Economic Community (CEMAC) want a new currency, there seems to be no way out of the CFA Franc for the moment. These concerns were raised during the Summit in the presence of representatives from France, who said France is open to discussions on the topic.

Reopening of new cooperation

In a communiqué published by Daniel Ona Ondo, Chairman of the CEMAC Commission it is said that taking into consideration the monetary cooperation with France on the CFA Franc, the Heads of State present at the summit decided to engage in an in-depth reflection on the conditions and framework for new cooperation. In this light, the President-in-Office and his peers instructed the Bank of Central African States (BEAC) to propose, within a reasonable time frame, an appropriate scheme leading to the evolution of the common currency.

As explained by Equatorial Guinean President Teodoro Obiang Nguema to the national press, the new agreements should include the issue of the BEAC’s operating account. “This account has been held by the French Treasury since independence, and CEMAC countries are entitled to only 50% of what it generates, and France keeping the other half. It is a question of increasing this percentage, which should allow a greater distribution of funds capable of providing adequate support to the economies of the CEMAC countries”. In addition to reviewing the monetary agreements, Paris should make it possible to take measures to safeguard the economies of the CEMAC countries in the case where the common currency for the sub-region experiences another devaluation.

Some analysts believe that the CFA Franc, as it stands today, is one of the main factors behind the underdevelopment of this part of the African continent. A situation that motivates Idriss Déby Itno, Chadian President, to cry out, not for an exit from the CFA Franc as many Africans think, but for an ambitious and sustainable currency.

However, no projects are carried out in the context of socio-political and economic instability. With a view to achieving the objective of a stable currency, the extraordinary summit of 22 November focused on the consolidation, flexibility and relevance of the CEMAC sub-region in its actions. Consolidation first because after the last extraordinary meeting in 2016, member States still did not have control over their economic situation. Reasons being that many countries in the sub-region depend on oil exploration and exportation, which is no longer as beneficial in the international market, which has plunged them into a crisis that is affecting their public finances. If not for Cameroon’s intervention to rescue its Chadian counterpart, the country would be plunged in a financial crisis. Equatorial Guinea on its part fell after almost emptying its trade reserve at the Bank of Central African States. These are just a few examples that are hindering the growth of the sub-region.

According to Zacharie Mbarga, a lot of efforts have been made but it is only now that CEMAC has made a concerted decision to get out of its current situation completely. He adds that it would be wise to review the economy before advocating for a new currency, because it is not money that makes a country’s economy, but it is the economy that gives value to money. It is in the same vein that President Paul Biya and his counterparts have chosen to face their challenges so that the sub-region can enable the various governments to support their development ambitions.

Cameroon’s status as a CEMAC driving force

Analyst Zacharie believes that Cameroon would be the losing country if this crisis were to continue.   Because Cameroon has the agricultural potential to boost the intra-Community market, so it is in her interest to build and rehabilitate the road and even rail networks. The community funding mechanism is the only means of enhancing the development of the Central African sub-region, as is clearly demonstrated by Nigeria, a member of the Economic Community of West African States. As the main financial actor in the area, it plays a strong role in all policies and programmes. This is the kind of leadership that Cameroon should envisage, since it has always taken the lead in bringing the border countries together, including the fight against piracy and terrorism in the Gulf of Guinea.

However, Paul Biya stressed that “we will have to be cautious and vigilant, because the tensions of global geopolitics, the volatility of commodity prices and security challenges, among others, remain a threat in CEMAC’s vision and objectives”.

With the exception of the Gabonese president who was unable to attend but was well represented, all the heads of state in the sub-region were present at the Unity Palace. Beyond the perfect nature of the meetings according to the member countries, meeting at the Unity Palace, symbol of Cameroon’s national unity, demonstrates the hope of the entire Central African sub-region, which is in search of expressive and complementary indicators of its unity.

This summit has therefore gone down in history, leaving behind hope for the implementation of the resolutions taken and that sub-regional integration and the free movement of people and goods will become a reality for the emergence of Central Africa.

The CEMAC zone includes six member countries; Cameroon, Gabon, Equatorial Guinea, Chad, DR Congo and Central African Republic. And the States of the West African Economic and Monetary Union (UEMOA), where some officials have already slammed the door on the CFA Franc, are all part of the franc zone.

The first monetary cooperation agreements around the FCFA were signed in Brazzaville on 23 November 1972. Today, following the absolute determination of the CEMAC zone, France, who has been reluctant to review the clauses of these agreements, is now willing to enter into negotiations.

Article from AFRIC Editorial

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