Since the monetary reform agreed on 21 December 2019 between WAEMU and France, the debate on the CFA franc has revolved around a persistent misconception: treating money as if it were wealth itself. …

A concrete reform, a largely misframed debate

On 21 December 2019, the member states of WAEMU (UEMOA) and France signed a new monetary cooperation agreement that, among other things, closed the operations account at the French Treasury and transferred to BCEAO all the reserves that had previously been centralised there. The same text confirms the fixed parity with the euro at a rate of 655.957 CFA francs for one euro and maintains France’s unlimited convertibility guarantee.

Against this backdrop, several economists from the region stress that the controversy over the CFA franc rests largely on a confusion between money – a unit of account and medium of exchange – and real wealth, meaning productive capacity and capital accumulation.  Recent analysis of West Africa’s monetary architecture underlines that the 2019 reform changes governance and reserve management without altering the nature of the euro‑anchored currency‑board regime.

Money, wealth and political misunderstandings

The harshest critics of the CFA franc attribute the poverty of WAEMU and CEMAC member countries to the currency alone, as if changing the exchange‑rate regime were sufficient to generate wealth, independently of saving behaviour, productivity trends or institutional quality.  Conversely, some defenders of the system present the CFA franc’s stability as a substitute for industrial policy, overlooking the fact that a strong currency cannot make up for an undiversified productive base.

Today the CFA franc remains the shared name of two distinct currencies – XOF in West Africa and XAF in Central Africa – covering a total of 14 African states, with different legal and institutional anchors but the same principle of a fixed peg to the euro.  The revised agreements provide for France’s withdrawal from BCEAO governance bodies while maintaining a guarantee mechanism, fuelling debate over how much monetary sovereignty has actually been gained.

The exchange‑rate regime does not, by itself, determine wealth

IMF staff point out that the main constraints weighing on WAEMU countries stem less from the name of the currency than from low export diversification, dependence on commodities and persistent fiscal deficits, which limit room for manoeuvre even under a stable exchange‑rate regime. Aggregate BCEAO balance‑sheet data published before the reform show that CFA franc stability did not prevent fiscal positions from deteriorating when commodity prices turned.

The history of the franc zone shows that states sharing the same currency have recorded very different growth trajectories, confirming that the exchange‑rate regime alone does not determine the creation of real wealth.  The medium‑term scenarios under discussion – deepening internal reforms, moving to a broader ECOWAS (CEDEAO) currency or unilateral exit – will only deliver gains if they come with structural reforms in taxation, trade integration and infrastructure financing.

The cost of confusing money and wealth in Africa’s policy debate

By treating money as if it were wealth, part of the public debate reduces monetary reform to an identity issue, whereas franc‑zone decision‑makers face concrete trade‑offs between external stability, growth financing and debt sustainability.  Studies on a possible transition to the ECO underline that the real test for West Africa will be whether it can preserve price stability while financing large‑scale infrastructure and industrial investment, whatever the name of the currency.

The current principles of monetary cooperation – fixed parity, convertibility guarantee and fiscal discipline – provide a clear framework for investors but narrow the scope for adjustment via the exchange rate, forcing the debate back onto the real levers of productivity, diversification and public‑sector governance. The long‑term options identified by regional institutions converge on one point: without a shared clarification of what is expected from money – stability, external credibility, regional integration – and what belongs to wealth creation – investment, innovation, human capital – CFA franc reform will remain a symbol more than a tool for transformation.

Next milestones for decision‑makers

BCEAO must still fully operationalise the end of reserve centralisation and the autonomous management of repatriated assets, which requires choices on reserve‑management strategy and monetary communication to markets.   For investors, the key milestones to watch are how internal WAEMU reforms interact with broader ECOWAS currency discussions, in order to assess whether the distinction between money and wealth eventually finds its way into both legal texts and economic policy.