Thursday, January 6, 2011

The Servitude of the Colonial Pact

Professor Mamadou Koulibaly, Speaker of the Ivorian National Assembly and Professor of Economics, sheds light on the economic devastation caused to the African member states of the CFA (Communauté Financière d'Afrique - French Community of Africa) zone through their continued link to the French currency - the Franc - in the past and today to the euro. In this informative interview with New African's Ruth Tete and Soh Taadhieu, Professor Koulibaly does not mince his words as he calls for a total split and the creation of an independent currency free of colonial baggage.

Could you explain to our readers, what are the principle mechanisms of the CFA Franc Zone?

The CFA franc region represents a state-controlled zone of cooperation with, interestingly, the levers of control based in Paris, from where the priority is the interests of France. The satellite states that are members of this zone are dispersed in West and Central Africa. The operational logic driving the functioning of this zone brings to mind a similarity with the way the Eastern European states were linked during the Cold War to the former Soviet bloc through the Warsaw Pact.

The principals of monetary cooperation between France and the member states of the CFA zone were formulated in the 1960s in a colonial pact which was reviewed in the monetary cooperation convention of 23 November 1972 between the member states of the Banque des Etats de l'Afrique Centrale (BEAC) (Bank of Central African States) and the French Republic on one hand, as well as in the cooperation agreement of 4 December 1973 between the member states of the Union Monétaire Ouest-Africaine (UMOA) (or the Monetary Union of West African States) and the French Republic on the other hand.

Just before France conceded to African demands for independence in the 1960s, it carefully organized its former colonies in a system of compulsory solidarity which consisted of obliging the African states to put 65% of their foreign currency reserves into the French Treasury, based on the convertibility, at a rigid exchange rate of the CFA - a currency France had created for them.

Although the administration of the CFA currency was entrusted to a common central bank (comprising BCEAO and BEAC), these so-called African banks were only African in name. The reality is that they have no clout and are nothing more than huge bureaucratic institutions which have no monetary policies of their own. They exist to give the CFA countries the impression that they too are masters of their own monetary destiny, which in reality is not the case. The African CFA zone countries continue to this day, to perpetuate a system put in place by their former colonial master.

How would you describe the balance-sheet of the CFA countries since

their membership of this monetary union?

The CFA franc zone has engendered a long-running debate which continues to raise new arguments among economists. In a general sense, what we should not forget, as we go along, is the privileged relations between France and the CFA countries which have conferred on France huge advantages in terms of market outlets for its goods and services. For the CFA countries, their monetary balance sheet, when viewed beyond the figures and statistics occasionally issued via official reports, is one of a long history of perpetual secrecy by France whose sole concern is to preserve its interests.

For instance, the foreign reserves of the CFA African states are deposited in the French Treasury, but no African country is capable of telling you exactly how much of this hard-earned foreign reserves belong to them. Only France has privilege to that information. Yet, these funds which are deposited in the French Treasury in the so-called Operations Accounts are expected to generate interest whenever the amounts register a surplus in relation to the import financing needs of the African countries concerned. These Operations Accounts, according to the monetary cooperation agreements signed between France and the CFA zone countries, are supposedly expected to have unlimited overdrafts, contrary to all the basic rules of the French public accounting procedures.

However, the French authorities have carefully tried to conceal in the African central bank statutes, measures that are sometimes preventative, aimed at avoiding a situation whereby the Operations Accounts become indebted on a permanent basis. Critical matters concerning the operations of the CFA franc are kept top secret and only French Treasury officials are in a position to give the exact amount of money belonging to the CFA zone countries held in the Operations Accounts. Only these French officials can give the level of remuneration as well as the cost of maintaining these accounts. The whole system is shrouded in secrecy; it is opaque and authoritarian.

The CFA zone economies are very vulnerable. The effects caused by the operational mechanism of the CFA franc are asymmetric: The most wasteful countries in the zone are able to use the foreign reserves of other more economically prudent countries. The monetary solidarity of the CFA zone countries benefits the richest of them and encourages the exploitation of the poorest in the zone. The existence of a stable and unified monetary system has not led to the emergence of an efficient and major banking/financial system in the CFA countries. Of the 107 banks within the CFA countries, 42 were declared bankrupt in 1990. The banking networks which were constituted thereafter are strongly dependent on the banks in metropolitan France.

France encourages the CFA countries to live far beyond their means. What difference can you see between Gabon, a member state of the CFA zone whose foreign currency reserves are deposited in France, and Ghana which has its own currency and is not a member of the CFA zone? Or between Cameroon and Kenya? Benin and Tunisia? The balance-sheet that you asked about can be found in the answers to these comparisons.

The CFA zone has been in existence for more than 60 years. How do you explain this long period, despite the negative effects that it continues to produce in the CFA countries?

A: This long period, in my view, is due to the influence of France over the Francophone African countries, although those in favour of the CFA franc use the following arguments to justify their support: monetary guarantee which generates an influx of capital; austerity measures in monetary policy which limit the risks of inflation and maintain an equilibrium in the external balance and credibility of the CFA franc.

However, the CFA proponents pretend not to see the political and financial repression which successive French presidents have exercised over their African counterparts who have tried to leave the CFA zone system. We are witnesses to a number of repressive measures aimed at preventing the growth of any ideas of emancipation from the CFA: the recent crisis relating to uranium in Niger, gold in Mali, petrol in Chad, raw materials and the transfer of public utility shares in Côte d'Ivoire and the crises in Rwanda, DRCongo and Senegal, all to protect French interests.

When Senegal recently announced oil discoveries in Saint Louis, the country turned to Venezuela to help in its exploration instead of France. This was seen in Paris as betraying the cooperation agreements that tie all CFA countries and their resources exclusively to France. Added to this is the nature of the African elites and the political class who, during this long period, have continued to pretend that they don't have the necessary expertise to manage their own currency in a responsible and efficient manner just like Western experts and their Asian counterparts do.

Instead, they are content to see African states being reduced to the level of taxpayers for France (remember the 65% of hard currencies that the 14 CFA zone states are obliged to deposit yearly in the French Treasury!). Yet, our people neither have French nationality nor access to the public goods and services made available to other French taxpayers. All this has led to a situation that can only be described as voluntary servitude which has conditioned the population and other economic operators into believing that there is no chance for survival outside the Francophone system.

This is a pity because this belief is totally false. The world out there is vast and open; it only requires that one develops a keen desire to integrate into it freely and responsibly through trade and not through foreign aid which has the effect of conditioning the mind and transforming people into beggars. Everyday, globalization creates millions of opportunities which do not profit us because we are trapped in inefficient systems.

A meeting of finance ministers from the CFA zone was held in Paris on 14 October 2007. This meeting is traditionally held in prelude to the autumn meeting of the World Bank and IMF. You were at one point the minister of finance of Côte d'Ivoire, and in that capacity you perhaps participated in these meetings. Many Africans say nothing good ever comes out of these gatherings to benefit the African people. What is the case exactly?

No, I never participated in those meetings when I was the minister of finance. But most the CFA countries are practically weak and on a drip. They can therefore not bring their weight to bear on decisions taken during the finance ministers' meetings. It is, therefore, reasonable to wonder why they keep participating in such meetings in which they don't even have an effective voice. These countries are in effect saying they are irresponsible and convinced that France can do all for them and do better than the rest of the world. Our countries prefer to take things easy even if that means endangering employment, revenues, savings and private investments. We are, in fact, accomplices to the poverty trap in which we find ourselves.

Could you cite at least three major reasons which would justify why African states should break away from the CFA franc?

To begin with, the CFA franc is financially repressive, unfair, and morally indefensible. It has created a zone of state corruption. During elections in France the CFA zone countries are constantly solicited to provide private funding to French politicians, an obligation that has no justification whatsoever. This has always been a requirement from successive French presidents. The fact that the CFA countries provide their French counterparts with bags loaded with money at every election has been a source of numerous conflicts and provides room for other forms of corruption.

It's these connections that continue to perpetuate French monopoly in the CFA countries, despite the globalization of the market. Under the pretext of assisting poor countries with French tax-payers' money, it is in fact the political class of France and Africa who enrich themselves in an illicit manner and this alone is justification enough to break up and reject the CFA zone system. Economic and financial liberalization cannot happen when there is a fixed exchange rate, and an artificially maintained zone of economic influence. In fact, the emergence of tensions within the international monetary system and the financial crisis of this last few years incline one to think that the choice of the exchange regime is dependent on the type of commitments undertaken by monetary authorities.

And yet, the voluntary limitation of the CFA countries regarding monetary policy freedom has led to increased official worries about a possible devaluation of the CFA franc.

After the break with the CFA franc that you advocate, what monetary future do you propose for the African countries?

Given the stakes involved, the reforms that are called for must be in the financial and monetary spheres. A currency must resolutely be at the service of the economy. It must adapt to the prevailing contexts. To that effect, efforts must be made to enable countries to protect themselves against asymmetric shocks, improve macroeconomic convergence and adjustment as well as to be able to finance their development. t has become vital today for the CFA franc to acquire its own existence, free of colonial stranglehold. It is high time that the African countries assumed the consequences of freely pursuing macroeconomic policy without allowing France to direct it for them. There is no magic in that. It suffices that we make a decision to freely assume our own policies and to be responsible. Freedom only has meaning when it is accompanied by responsibility.

After the break, the ex-CFA zone must construct its own system based on simple principles. These include:

* establishing direct access to international markets without having to pass through a tutor (read France); and

* without a monetary guide (read France);

* establish a simple fiscal system and not complicated tax codes that are incomprehensible; have flexible exchange rates vis-à -vis major currencies.

In order to achieve this, the CFA countries have two options:

* Either they create independent national currencies with flexible parity as was the case with the European Union national currencies before the advent of the euro. This option can only prosper if the banks are free and private, and the central banks independent to put in place credible monetary policies.

* The second option is that African countries can get together and create a unique and common currency with a unique and common central bank for all, independent of politicians and a single economic policy (monetary and budgetary).

Whatever the option that may be adopted by the African countries, the states must be democratic and clearly spell out the ownership rights of their populations, and then allow the people the freedom to decide whether they wish to mortgage these rights. Everything starts with the rights of ownership accorded to the people, rights which would then free people from poverty. After that, free trade will do the rest.

In 2005, you published a book entitled, "Les Servitude du Pacte Colonial” (The Servitude of the Colonial Pact). Could you briefly explain what this book is about and in particular about the message it conveys?

The purpose of the book was to put at the disposal of the public the "colonial pact" which is the foundation on which the Franco-African Cooperation Agreements are built. It's a hereditary model organized by Gaullist France on the eve of the independence of Francophone African states, aimed at indirectly controlling the management of the Francophone countries. The book aims to expose the texts which are used to organize, French state interventions despite the theoretical end of colonialism in the 1960s. According to this Colonial Pact, when Francophone African presidents came to power, die were expected, to manage their countries as though on behalf of Paris.

Independence was thus nothing more than the transfer of the competence of the Elysée Palace (the seat of French presidential power) to the African presidents who owed allegiance to a master based in Paris, and not to their own people over whom they govern. Paris, dictated the policies that they must adopt. The book shows how the Defense Agreements are in reality commercial agreements protected by Paris which obliges Francophone African states to maintain French military bases on their soil, and these soldiers are ready to intervene in any Francophone African state to chase recalcitrant leaders and replace them with more docile ones.

In this book, you will discover that France has monopolistic ownership of all raw materials in the Francophone African countries, both in the soil and on land. After reading the Colonial Pact, the public would then understand how France organized self-serving measures to ensure that it retained all colonial prerogatives after giving independence to the African states. In reality, France may have physically withdrawn the colonial administration of the time, but through these Colonial Pacts, it continues to be omnipresent in Francophone Africa and still enjoys all the colonial advantages of yesteryear.

The true independence of the CFA zone countries has, in reality, been confiscated by Paris. A key lesson is that we must collectively denounce this Colonial Pact. Every African, whether Francophone or not, must be morally shocked. When President Sarkozy of France was in Dakar, he acknowledged that colonisation was a crime against humanity but he refused to repent for it. Africans must denounce all agreements and systems that distance Africa from economic markets. The Colonial Pact is a permanent betrayal of African ownership - it is full of diplomatic witchcraft.

Has the book achieved anything?

I suppose yes. I wanted to share my convictions with a large number of Africans and friends of Africa. That they may be in a better position to weigh the dangerous effects of the Colonial Pact, the state-controlled leadership and principally the administration of the economy as a source of poverty in our countries; In Africa we do not need alms, our problem is not the lack of money. My conviction is that we must first of all clearly state our ownership rights over our own land and the resources in our soil which were taken away by the colonialists when they conquered our countries, and still being taken away through the Colonial Pact.

Lastly, I wanted, via the book, to let the world accept that Africa urgently needed individual liberty, limited government, free markets, open society and peace which can only result from economic and political freedom.


osarhieme said...

I just read about the"colonial pact"in the february 2011 edition of New African magazine and i decided to get more information on it and i came across this article online.I am deeply sadden to know the extent and depth of such a pact on africa's political and economic life.If Gbagbo and his combrades stand to change the status quo,we,the masses give them our support.

Leo Kanisani said...

thanks Osarhieme for you comments you must have heard the EU observer chief make comments that the elections were fair and democratic yesterday and that Quattara should be given to rule IC.

Observer reports from certain African civil society groups confirmed substantial irregularities.
The Observer Mission of the African Union noted “serious acts of violence, namely losses of human lives, infringement of physical integrity, intimidations, and abduction attempts and damage to electoral material,” including cases where Mr. Gbagbo’s representatives were “unable to participate in any polling process” in an entire district. The mission documented over 70 polling stations where results were “signed either in the absence of [Mr. Gbagbo’s] representatives, or by themselves under… constraint,” concluded that the ballot process in those locations “could not be held in the transparent way which is essential for the honesty of the ballot,” and noted that the events “constitute[d] an important technicality” in the election. The mission called for “careful assessment from the competent institutions… to determinate their impact on the ballots”.
A coalition of 21 non-governmental organizations under the umbrella of the Coordination of the Observers from the International Mission of the African Civil Society (COMISCA), reported that “some active members and representatives of the LMP Party were prevented from voting freely, ballot boxes were carried by men in uniform precisely in the Korhogo, Mankono, and Seguela areas, [they] witnessed… manhandling of some persons inside the polling stations, the ballot secrecy was violated and instructions on how to vote were given by some members of the polling stations, some corporal and material damages were recorded as well.” COMISCA ultimately concluded that the circumstances “strongly called into question” “the democratic process” .
CEPECA, The Organization of the emissaries for the promotion of credible elections in Africa, “denounced the violence and barbarous deed perpetuated on [Mr. Gbagbo’s] representatives,” noting among other irregularities that Mr. Gbagbo’s representatives were in places prevented from voting and subject to verbal and physical attacks, that ex-rebels took ballot boxes to unknown places, that “there was stuffing of ballots on a large scale” and “serious infringement of human rights,” and that section agents gave orders favoring the opposition.
An EU-funded domestic coalition of 134 civil society groups under the umbrella of the Convention of Ivorian Civil Society (CSCI), the largest civil society coalition in the Ivory Coast, dispatched over 1,000 monitors to 38% of the polling stations. They noted late and insufficient election material, violence and intimidation at polling stations, destruction of ballots and ballot boxes, multiple voting, barring of voters, barring of monitors, and the insecure transfer of ballots, including attacks on convoys .
The African Civil Society for Democracy and Electoral Assistance, OSCADAE, concluded that “the credibility of the polling was strongly called into question” in some of the stations where, among other irregularities, “candidate representatives, notably from [Mr. Gbagbo’s party], were prevented from doing their duty” and “physical attacks were recorded” .

Anonymous said...

Having just read 'The Colonial Pact' in the Feb 'New African'I feel so dispondant. I'm an English man happily living in Tunisia. I am so proud of the Tunisian's that have said 'enough is enough'.
I only wish the CFA members would find that same courage and that France would find political creadability.
We are after all living in 2011 not the dark ages.
R J C..

Rahman Ramsis Bayong said...

I acquired my february issue of New African yesterday and upon reading about the colonial pact i felt incensed and utterly depressed. I live in Ghana and I can't fathom why any African country let alone the CFA using countries continue to deal with France. The colonial pact is criminal and smacks of dictatorship.

In its current state, its worse than the rstate of afffairs when France was still ruling francophone Africa.
The pact must be Abrogated immediately! We Africans are not chicken. Why should any country obligatorily first sell its produce to France before selling to other countries even when France may not be buying at a fair price?
Gbagbo, from the irregularities and the France nonsense of a colonial pact, am solidly behind you

Everything under the Sun said...

I am utterly shocked to read about the colonial pact, as a South African we are hardly exposed to such nonsense by our media, we are only made to believe that its Africa Big Man that are problem to the development of Africa only to find western countries on a full time looting spree

Anonymous said...

'The Colonial Pact' in Feb 'New African' was also my reason to seek further knowledge on The Colonial Pact. As a dane living in Zambia my knowledge of the francophone African History is limited, and Your article is an enlightment on a for me unknown absurd leftover from the colonial times. The crisis in Ivory Coast can be seen in a whole new light. You give the arguments for these countries to break out of the CFA, but is the strength to built up a sustainable system present? Here I have a generation of african men in mind, who seems to replace objectivity with subjectivity. Let's build a world (read trade agreements, etc.), where the same effort is equally rewarded.

Does your book from 2005 come in an english translation? Search on the english title returns no results.

Anonymous said...

There is nothing wrong in this arrangement so long as it is an admission of the incapacity of the African countries to effectively manage their own monetary or financial environments. Look at Nigeria with its huge earnings obtained from oil exports for several decades and tell us how much of that money has been reinvested in Nigeria. What is the fate of Greece, Ireland, and Portugal that opted join a common European currency (the Euro) but are today in default and require bailout that comes largely from the German treasury? In contrast to the import of your article, over the decades, we have witnessed more countries joining the CFA zone than at the time of independence. Why would Equatorial Guinea join the CFA zone with all its oil wealth ... or Mali which had once flirted with its own independent currency coming back into the zone ... or Sao Tome & Principe knocking on doors of the CFA to become a member?

Anonymous said...

Anonymous, it seems like all your comment is trying to do is to provide a justification for the enslavement of these countries through this regime. The issue is the percentage of these countries monies they are forced to hand off to France, and which are not accounted for. So, are you telling me that stealing this 65-85% of these peoples' monies is some form of help to them? And this has been going on now for about 60 years. To understand why Equatorial Guinea might have joined in, imagine their leaders want to steal their monies silently .. aha, now you get the picture? .. They collude with France and that is an easy and ready made way to take as much of their nation's money as the leaders want .. leaving the rest for France to do as she pleases .. and expectedly, without accounting for it.