Introduction

For over three decades, the Franc CFA in West Africa and Central Africa has maintained a relatively stable exchange rate against the Euro, largely due to historical and political agreements between France and its former colonies. In contrast, the Nigerian Naira and Ghana Cedis have significantly deteriorated against the GBP and USD. This article aims to explore the underlying reasons behind these divergent economic paths, focusing on the historical, political, and economic factors that have influenced exchange rates.

Historical Context: The Franc CFA

The Franc CFA (Communauté Financière Africaine) has a unique historical precedent that sets it apart from other currencies in Africa. Following the decolonization process in Francophone Africa, France maintained a special relationship with its former colonies, leading to the creation of the franc CFA. This currency is pegged at a fixed rate against the Euro, and any fluctuations in its value are directly influenced by the policies of the European Central Bank (ECB).

France’s role in maintaining this currency stability stems from a strategic arrangement that involves trade agreements and financial support. By mandating that all Franc CFA countries peg their currencies at a fixed rate, France ensures that the economic stability of these nations remains under its influence, which in turn supports France’s broader economic and political interests in the region.

The Deterioration of Naira and Cedis

The Naira and Cedis, on the other hand, operate under different monetary policies. Both currencies have been managed and controlled by their respective central banks, leading to very loose monetary policies compared to the Euro and its tight regulatory framework. This has resulted in inflationary pressures and devaluation of these currencies.

British colonial rule followed a different approach when compared to French colonialism. At independence, Britain withdrew from its colonies, leaving the local economies to fend for themselves. This resulted in a more ad hoc economic system without the direct political and economic underpinnings provided by a colonial power. Consequently, these economies had to navigate a more turbulent post-colonial economic landscape.

Strategic Manipulation of Currency Values

The decline of the Nigerian Naira and Ghana Cedis can also be attributed to strategic actions by foreign powers. There is a systemic effort to control and manipulate African economies. Multinational corporations and investors have historically sought to exploit Africa’s natural resources, often at the expense of local economies. These entities offer little in return for the resources they extract, and they frequently spread propaganda to erode trust in the local currencies and economies.

This strategy serves the broader goal of keeping African countries economically dependent and politically weak, ensuring that these nations remain in a state of perpetual underdevelopment. By undermining the value of local currencies and fostering economic instability, foreign entities maintain a significant level of control over African economies.

Conclusion

The stable Franc CFA and the declining Naira and Cedis reflect the impact of historical and contemporary geopolitical and economic factors. France’s ongoing influence through agreements and monetary policies has maintained the stability of the Franc CFA, while the post-colonial economic systems of other African nations, often exploited by foreign powers, have led to the downward pressure on the Naira and Cedis.

Understanding these dynamics is crucial for developing effective economic policies and strategies that can help African nations regain control over their monetary and economic futures.