The CFA franc, a bulwark against inflation
The Zlecaf should not be the tree that will hide the forest
CFA franc, banking crisis, climate emergency, Zlecaf… The Togolese economist and former minister, current UEMOA commissioner, delivers his analysis on the major economic issues of the moment. And announces in passing his candidacy for the succession of the Cameroonian Vera Songwe at the head of the Economic Commission for Africa.
At 54, the Togolese Kako Nubukpo is one of the best known African economists to the general public. He owes it above all to his positions, which for ten years, have revived the debate on the reform of the CFA franc. After having been Minister of Forecasting and Evaluation of Public Policies in the early 2010s, then responsible for the digital economy within the International Organization of La Francophonie (OIF), he is currently Commissioner of UEMOA responsible for agriculture, water and the environment. But this tireless defender of the continent’s sovereignty sees bigger, and now aims to succeed the Cameroonian Vera Songwe at the head of the United Nations Economic Commission for Africa. A candidacy that President Faure Essozimna Gnassingbé has decided to officially support at the United Nations. Grand guest of the RFI-Jeune Afrique economy this month of March, he looks back on the major issues of recent weeks, in analyzes always tinged with a political vision.
Jeune Afrique: After the bankruptcy of Silicon Valley Bank (SVB), the 16th American bank, should we fear a global financial crisis?
Kako Nubukpo: This financial crisis that is starting could take us back to 2008. It is worrying because we have never been so weak since we have spent all the resources to deal with the Covid pandemic. So there is certainly uncertainty, including for Africa.
Is rising interest rates to curb inflation also a threat to African economies?
Clearly, because it is an increase in the cost of financing. As soon as there is a rise in rates, mechanically, there is a reduction in credit applications and, as we are living in a period when the economy is convalescing, it is not easy. With what is happening, central banks may have to revise their rate hike policy.
Is the CFA franc a bulwark against inflation?
Yes, because when you have CFA francs in your wallet, you actually have euros, because of the fixed parity between the two currencies. But I believe that we have to look at the trajectory of countries over time, and I don’t have the impression that Ghanaians or Bissau-Guineans, who do not use the CFA franc for their trade, live less well than the Togolese.
Why is the reform of the CFA franc not advancing in West Africa?
Because there are two approaches. That carried by the CFA – the Uemoa -, which says that the currency is neutral, that it has no impact on the activity and advocates a monetarist management. The sole objective of this policy is the fight against inflation. And then there is the tradition of English-speaking countries like Ghana and Nigeria, which allow themselves the possibility of using the printing press to activate the economy. There is therefore no convergence around what could be a currency for ECOWAS. And we do not ask the fundamental question: what do we want to do in terms of solidarity between the States of the zone?
Could the first reform of the CFA franc come from Central Africa?
Paradoxically, yes. Even if Cemac has always been considered as the bad student of the franc zone, the homogeneity of its monetary management system can allow it to go faster. Furthermore, since the Central African States are net oil exporters, it is easier to envisage a monetary policy that makes sense for everyone.
As a supporter of a reform of the CFA franc, how do you see those who use this issue to develop more radical theses against France?
For me, that’s not a good thing. From the start, my reading of the CFA franc was centered around the notion of voluntary servitude. I have always thought that it is up to us, Africans, to build a currency that is at the service of the transformation of our economies. West African countries will have to work with all partners: France, the United States, China, Russia…
And don’t insult the future…
Above all, in my opinion, it is necessary to declare now the creation of the Eco as a common currency – not necessarily unique – because the fact of creating the Eco today will generate a convergence of minds. And postponing its implementation each time causes the announcements to lose credibility.
In terms of governance, do the reports of the Courts of Auditors of countries like Togo or Senegal on the use of Covid funds not illustrate an improvement in the situation?
Yes and no. That there are reports published by these Courts of Auditors, this proves that the executive of these States agrees to make play their role with these counter-powers. But we noticed a temptation to take control of these reports by saying that basically, they were not as serious as they should have been. We therefore always see, in our countries, this sort of step forward and backward step which defines the democracies under construction.
Do you think that money didn’t go where it should have?
The reports say in any case that there is money that has been used without visible consideration… It is up to the States to shed light on the use of resources.
Did the World Bank’s decision to freeze new financing to Tunisia – after President Kaïs Saïed’s remarks qualifying sub-Saharans as “hordes” who had come to “invade” his country – surprise you?
I’m not surprised because basically the world is moving towards a form of convergence of values. And the fact that Tunisia stood out could only engender reactions which, it seems to me, are on a par with the excitement that these remarks have provoked.
To a certain extent, is the mobility of individuals not necessary when one wants to develop African trade and economies?
Yes, it is an indispensable factor. The mobility of capital and labor factors is the primary adjustment variable when trying to build, as we are doing, an African Continental Free Trade Area (Zlecaf). This is why I have always said that this project is based more on a vision than on economic considerations. We have to be able to say what we want to do together.
Is this Zlecaf on the right track?
No, I do not think so. We must first define the degree of budgetary solidarity that we are ready to agree to between countries. You cannot equate Morocco and Gambia. The Zlecaf should not be the tree that will hide the forest of all the differences still present between the economies and between the African leaders.
Is it necessary, to create this Zlecaf, to put in place the neo-protectionism that you defend in your work?
Yes. The heart of this question does not concern Africa vis-à-vis the rest of the world, but responds to the fact that we are going to put face to face productive systems whose performances are very different. It is therefore necessary to set up the necessary funds to support those who have not yet reached the levels required to be in the competition. An example ! The Gambia’s annual GDP corresponds to 23 hours of work in Nigeria. With such disproportions, you cannot make a single market. You are obliged to set up locks so that, gradually, we can bring these different levels of productivity into competition.
You are critical of heads of state who rely on fossil fuels. Don’t you think that we cannot ask Africa to make the same efforts as the industrialized countries?
Yes, but I remind you that we are in the 21st century, not the 19th. The structural transformation of our systems will go through the preservation of ecosystems and, therefore, through negotiations with the rest of the world. Africa provides many ecosystem services to the rest of the world, with the Congo Basin forest, for example, which is the second lung of the planet. We can negotiate to create social and ecological convergence funds in return for what Africa gives up doing. We emit 4% of greenhouse gases and we represent 17% of the world’s population. This spread can be negotiated.
Isn’t it more realistic to count on one’s own resources than on international transfers, which are always insufficient?
Certainly, but my idea is to play, whenever possible, on our complementarities. Since the 1960s, as you can see, Africa has not benefited greatly from these resources. There is a kind of symmetry between the map of mineral resources and the map of poverty. The DRC, which has been rightly described as a geological scandal, imports almost all of its food. We must take another step and be more aggressive in international diplomacy.
At the end of the One Forest Summit, organized in early March in Libreville, the Heads of State announced the creation of a fund of 100 million euros to accelerate the protection of natural areas. Isn’t that a bit shy?
What matters is mobilization. One hundred million euros may not be a lot, but it can serve as a leverage effect and generate mobilization on the part of stakeholders.
In August 2022, Vera Songwe resigned as Executive Secretary of the United Nations Economic Commission for Africa. To date, she has not been replaced. Does this surprise you?
I imagine that the Secretary General of the United Nations, António Guterres, has good reason to give time to time. But the Economic Commission for Africa (ECA) should not become the “sleeping beauty”. So I hope it all goes quickly. The Commission was at the origin of the Lagos action plan, which has been at the heart of the dynamics of ECOWAS and other African regional economic communities. It has also always carried the idea of an endogenous African productive transformation, which was blocked at the time of structural adjustments. And there, we have the impression that we are returning to a moment when Africa can once again draw its own path.
Could this position interest you one day?
Not a day, right now. Anything that can help implement my vision of the continent interests me. Togo did me the honor of applying for the position of Executive Secretary of the ECA but, you know, many of us are capable of leading this institution. I already said in October in an interview with Jeune Afrique, I want to be even more at the service of my continent than I am at present.
And politics?
What I do is already politics, but not in the political sense. The duty of the African elite is to imagine a future of shared prosperity.
Source: Rfi-Young Africa
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