By Chérif Salif Sy*
What we call “monetary policy” in Africa is a convenient fiction, a screen that covers the raw reality of power relations between peripheral states and financial centers in the North. Suzanne de Brunhoff posed this in the early 1970s: money is not a neutral instrument that the state can use at will to smooth out cycles. It is an objective constraint, the material embodiment of the law of value on the global market. In Africa, this constraint takes different forms depending on the areas, but it produces the same effect everywhere, subordination. Whether it’s the Franc CFA pegged to the euro, the Nigerian Naira, or the Ghanaian Cedi subject to IMF conditions: the illusion is the same. Wanting to reform the currency without touching the productive structures that support it is like changing the thermometer to bring down the fever. The crisis of the Franc CFA and the promises of the African Continental Free Trade Area can only be understood in this light, as a struggle for the reproduction of the general equivalent in a hierarchical world system.
A false boundary between the Franc Zone and national currencies
The common mistake pits the countries in the Franc Zone against other African states that have their central bank and currency. The former are presented as victims of monetary colonization and the latter as models of regained sovereignty. This dichotomy does not hold. It confuses formal monetary sovereignty with real economic autonomy. Nigeria, Ghana, Kenya, Egypt have their central bank, issue their paper money, and theoretically set their key rates. Their room for maneuver remains narrow, sometimes more precarious than that of UEMOA members. The difference is not in nature. It lies in the degree and modality of submission to external constraints.
Outside the Franc Zone, the constraint does not go through an operations account in Paris. It goes through debt denominated in strong currencies and dependence on essential imports. When Ghana or Zambia borrows on international markets, they borrow in dollars or euros, while their tax revenues are in Cedis or Kwachas. This asymmetry creates a structural vulnerability. Any depreciation of the local currency mechanically increases the debt service. To reassure creditors and curb capital flight, these central banks implement severe restrictive policies. They maintain interest rates sometimes exceeding 20 or 30 percent, which strangles credit to the real economy. This monetary austerity dictated by fear of speculation closely resembles the budget discipline imposed by the convergence rules of the CFA zone. The priority remains the same on both sides: external stability, therefore the ability to pay debts and import, against domestic production.
Two mechanisms, the same accumulation blockage
The transmission mechanism differs, but the result is the same: productive accumulation is blocked. In the CFA zone, the fixed parity acts as a visible straitjacket. It prohibits competitive devaluation and requires internal adjustment through wage and public expenditure compression. Outside the CFA zone, exchange rate flexibility acts as an illusory safety valve. Successive devaluations, sold as boosts to competitiveness, quickly turn into inflationary spirals. Several sub-Saharan economies with national currencies have experienced inflation rates regularly exceeding 15 percent per year over the past decades. This inflation raises the cost of essential goods, impoverishes the lower classes, and destroys local savings. It does not stimulate domestic industry, which largely depends on imported inputs whose cost explodes as the currency depreciates. Devaluation becomes a transfer of wealth, from local producers to currency holders and importers.
Brunhoff distinguished between the current management of money and the constrained nature of this management by the place of the national currency in the international order. This distinction can be extended to speak of sanction. In countries with national currencies, daily management appears more autonomous. Governors announce technical measures, adjust mandatory reserves, intervene in the foreign exchange market. Autonomy is superficial. As soon as pressure on the balance of payments becomes too strong, the sanction falls, in the form of an adjustment program negotiated with the IMF. Deficit reduction, price liberalization, privatization of state-owned enterprises: these conditions are decided in Washington or London, not in Accra or Lagos. The central bank then loses all latitude. It becomes the local executor of a policy decided elsewhere, and its sovereignty is reduced to the technical implementation of decisions made by creditors.
The fetish of reserves
The composition of foreign exchange reserves makes this even clearer. Whether it is the BCEAO or the Central Bank of Nigeria, reserve assets consist mainly of US or European debt securities. African savings thus finance, through a detour, the development of Northern countries. In 2022, cumulative reserves in sub-Saharan Africa exceeded 200 billion dollars, a significant portion of which was invested in low-yielding real terms assets, while states borrowed at usurious rates to balance their budgets. This financial aberration gives substance to the Marxist fetishism of money. Money seems like a neutral thing, a store of value, when it is actually a social relation of domination. Holding dollars does not make one powerful as long as one remains trapped in circuits that value these dollars against local economies.
The sovereigntist illusion fuels the idea that leaving the Franc CFA would solve all problems. The experience of neighbors teaches otherwise: leaving the Franc Zone does not automatically lead to prosperity. By staying in the zone, Senegal and Ivory Coast have experienced relative price stability, with average inflation often below 3 percent in recent years. Ghana and Nigeria have faced extreme volatility, with inflation peaks exceeding 40 percent during recent crises. This zonal stability comes at a high cost in terms of unemployment and deindustrialization, but it provides a predictable framework for extractive investors. Outside the zone, monetary instability scares away long-term productive investment and fuels short-term speculation like import-export trade. In both cases, the model remains outward-looking. It does not produce for the African domestic market; it exports raw materials and imports consumer goods.
The AfCFTA and the monetary obstacle
The AfCFTA aims to overcome this fragmentation through a continental market. It encounters a monetary obstacle. How can spaces whose currencies are not convertible with each other be integrated? A Burkinabe trader who wants to buy manufactured products in Kenya most often goes through the dollar. He sells his CFA francs for dollars, then buys Kenyan shillings with those dollars. This double conversion incurs heavy transaction costs, estimated at 5 to 10 percent of the value of intra-African trade. These costs weigh on the competitiveness of African products. They reinforce the position of foreign currencies and marginalize local currencies. The AfCFTA risks becoming a free trade zone for Western or Asian goods, served by efficient payment systems, while trade between Africans remains hindered due to the lack of a common monetary architecture.
Projects for a single currency, with the ECO at the forefront, face the same reality. A common currency is not just a political decision. It requires a real convergence of productive structures. If member economies remain competitive in exporting raw materials and complementary in importing manufactured goods from elsewhere, the common currency will reproduce the internal tensions of the eurozone, but worse. The “Germany of Africa” does not yet exist. Without an industry capable of absorbing labor and creating added value, the monetary union becomes a deflationary straitjacket. The law of value imposes itself through internal devaluation, wage cuts, precarity, and budget austerity. It is the trap of purely commercial integration without prior industrial transformation.
What real monetary sovereignty demands
Therefore, we must move away from the binary debate between CFA reform and the creation of a new national currency. The question is not symbolic; it is structural. Real monetary sovereignty requires control of financial flows. This involves capital controls to prevent the flight of wealth. It requires firm regulation of illicit transfers, estimated by UNCTAD at over $80 billion per year for the continent. It demands a banking system oriented towards financing national production rather than real estate speculation or the purchase of foreign debt. African commercial banks, within and outside the zone, prefer refinancing from the central bank or investing in lucrative public securities over lending to industrial SMEs. The banking rate remains low, often below 20 percent of the adult population, excluding the majority of economic actors from the formal circuit.
The Asian experience offers a counter-model. China, South Korea, Japan have turned their monetary and exchange rate policies into industrial weapons. They have maintained competitive exchange rates, controlled capital movements, directed credit towards priority sectors. They did not aim for absolute financial stability in the Western sense; they aimed for productive power. Africa now has a broader political space to attempt a similar path. The emerging multipolarity, with the rise of the BRICS, opens up alternative financing and partnerships. The yuan is being used in some commercial settlements. Local currencies can be used for bilateral trade and reduce dependence on the dollar. These opportunities will not be seized by decree. They require that monetary policy stops contradicting industrial policy, and that taxation serves both.
The state must become a strategic economic actor again, not to replace the market but to structure supply. It must invest in energy and digital infrastructure that lowers production costs. It must protect nascent industries until they become competitive. The central bank supports this transition by providing long-term liquidity, even tolerating moderate inflation as long as it serves productive investment. This requires breaking away from the neoliberal orthodoxy that reigns in Bretton Woods institutions as well as in African central bank councils, in the Franc Zone or not. The independence of central banks, an untouchable dogma since the 1990s, deserves to be revisited. A central bank freed from popular pressures but subject to international financial markets is not independent. It is captive.
Democratizing currency
Public debate remains trapped in a false consciousness that pits stability against growth. The dilemma is deceptive. Price stability without growth is deadly stagnation. Growth without monetary stability is an inflationary illusion. Real stability lies in employment and production. It is measured by an economy’s ability to meet the needs of its population with its own resources. Currency should serve this objective. It is not an end in itself, much less a tool of external domination. Unions, social movements, civil society must address this issue. Monetary policy is too important to be left to bankers and IMF experts alone. It affects the price of bread, teachers’ salaries, access to healthcare.
Demanding transparency in central bank accounts, parliamentary oversight of international monetary agreements, publication of beneficiaries of bank refinancing, these are concrete demands that democratize sovereignty. The AfCFTA will only succeed if backed by deep monetary cooperation. This does not mean an immediate single currency. It means first a multilateral clearing system capable of settling transactions in local currencies, exchange rate coordination to avoid devaluations that impoverish neighbors, financial harmonization against money laundering and tax evasion. The technical infrastructure exists. It is the political will to break established rents that is lacking.
The colonial legacy weighs heavily without being a fate. African elites have often found their interests in the existing system. Import-export rent, commissions on debt, offshore investments offer bright individual prospects where they ruin the community. Changing currency will not change anything if these elites remain aligned with external interests. Monetary rupture must be a social rupture, accompanied by a redistribution of economic power towards local producers, farmers, artisans, national industrialists. Brunhoff reminded us that the capitalist state cannot control everything, as it is caught in the contradictions of the global market. Yet it retains margins. It can choose national accumulation over subordinate integration.
Monetary freedom is achieved through real economic transformation. As long as Africa exports raw materials and imports finished products, its currency will remain the instrument of its own dispossession, whether it’s called Franc, Naira, or Rand. Sovereignty is not a legal status. It is a productive capacity.
*About Chérif Salif Sy
Chérif Salif Sy is a Senegalese economist, researcher, and consultant. Former technical advisor on economic issues to Senegalese President Abdoulaye Wade, he now heads his own consulting firm. Since 2016, he has been a member of the Scientific Committee of the International Review of Development Studies, heir to the famous Third World Review. Secretary-General of the Association of Senegalese Researchers (ACS) and the Senegalese Association of Economists (ASE), he is also a member of CODESRIA and the Third World Forum. A recognized figure in African economic thinking, he regularly addresses issues of development, governance, and public policies.
