After showing, in “From the Naira to the Franc, the same servitude,” that the monetary regime does not decide the productive fate of an economy, and then identifying, in “What money cannot do,” the limits of the monetary instrument itself, economist Dr. Chérif Salif SY addresses a question that these two observations leave open: on what grounds does dependence become readable and decidable? This ground has a name, the exchange rate.
By Chérif Salif Sy
Money is not a neutral instrument that the State uses to stabilize prices: it is a social relationship, and most African disputes over monetary sovereignty go astray because they fail to start from there. Suzanne de Brunhoff established this as early as 1973: what is called “monetary policy” is less a capacity for control than an ideological form under which a constrained state practice is revealed. A central bank does not “control” money like adjusting a thermostat. It manages a constraint that it did not create and can only sanction, through devaluation or reform, when this constraint becomes unbearable.
Applied to the CFA franc, this reading sheds light on what the institutional vocabulary leaves in the shadows. The CFA franc is not primarily a technical device: it is an arrangement where dependence takes the concrete form of being anchored to the euro and having external convertibility guaranteed. The 2019-2020 reform eliminated, for the WAEMU, the obligation to centralize half of the foreign exchange reserves in a French Treasury operations account and removed French representatives from the BCEAO bodies. The euro peg and French guarantee remain, and the CEMAC zone retains its operations account. Calling this a monetary hierarchy is not a militant stance: it is a more accurate description than the language of “stability” and “credibility,” because it refuses to take declared objectives as the reality of practice.
However, this framework does not explain everything, and clarity requires marking its limit. It admirably shows why a monetary reform cannot do what is asked of it. It remains silent on the exchange rate regime to adopt in the future, on reserve management, on the pace of unpegging. Explaining everything by imperialism risks absolving what is a matter of reversible national choices: the quality of public spending, rent capture, the use of an existing and sometimes unused margin. This is why it must be supplemented with another tradition, that of dependence, which looks at the real place of an economy in the international division of labor.
Money does not lead to development.
The exchange rate is the precise point where these two readings converge. The dependence tradition starts from an asymmetry: peripheral economies export primary products and import high-value-added goods. The ongoing deterioration of the terms of trade confirms this. Indeed, for resource-intensive African economies, the setback that began with the end of the 2014 super-cycle has only been partially erased. Furthermore, the World Bank, in its October 2025 forecasts, expects a decrease in global prices of raw materials by about 7 percent in 2025 and another 7 percent in 2026, reaching their lowest level in six years and the fourth consecutive year of decline. With the same effort, the periphery gradually obtains fewer currencies for what it sells, and its currency remains under pressure.
However, dependence alone does not explain why some currencies are demanded for themselves and others are not. While no currency is universally legal tender, some are de facto: the dollar and a small circle of key currencies concentrate the reserve function. A peripheral currency sits at the bottom of this hierarchy. It is not accumulated; it is disposed of as soon as uncertainty rises. Pressure on the exchange rate then comes less from the trade deficit than from the preference of agents, including nationals, for international liquidity.
From this overlap arises a lesson that both sides of the African debate symmetrically ignore. Dependence alone leads to the belief that the exchange rate would be resolved solely through productive transformation: improve the value chains, and the pressure would recede. This is true in the long term, insufficient in the short term, as confidence in a currency has its own inertia. The purely monetary analysis leads to the opposite belief, that the way out involves a monetary act, changing the peg or regaining issuance. Nigeria has its own currency, and the naira collapses. In fact, the official rate went from around 360 nairas to a dollar in 2020 to nearly 1,360 in June 2026. This loss represents about 73 percent of its value in dollars, with most of the drop following the 2023 float. The countries in the franc zone have a stable currency and remain dependent. Formal monetary sovereignty does not change the position in the division of labor.
Therefore, an exchange rate regime is sustainable only if it satisfies two constraints at the same time: what the economy can durably gain in foreign currencies, and the conditions under which the world accepts holding its currency. A rigid peg maintains credibility at the expense of transformation, by overvaluing the currency: a possible interpretation of the franc zone. A floating rate allows the currency to find its level but faces the hierarchy if it is not held as a reserve, and depreciation turns into flight: a possible interpretation of the naira.
The debate thus moves beyond the lazy alternative between sovereigntists and orthodox. The former must be told that taking back control of issuance is not enough, as the monetary hierarchy is established differently. The latter, that the stability of a peg is not a virtue in itself, as it can freeze the subspecialization it claims to protect. Between the two constraints, there is a narrow margin, and it is, or is not, used according to the internal configuration of power. The same exchange rate regime protects a transformation where the State captures rent to invest and entrenches dependence where it redistributes it to the clientele. The exchange rate of a peripheral economy is never simply a mirror of a trade balance, nor the pure effect of a hierarchy suffered. It is the place where the real position of an economy in the world’s labor is read together with the use that a power makes of its share. A currency is never worth more than what the society that carries it produces and what its State consents to do with it.
