The French-backed West African CFA franc currency will be reformed and renamed the ‘eco,’ in what Ivory Coast President Alassane Ouattara called a ‘historic’ move on Saturday.
France, the former colonial power in the region, will withdraw from being involved in the committees of the West African joint currency.
The far-reaching reform affects the countries in the West African Economic and Monetary Union (known by its French acronym UEMOA), Ouattara said at a press conference in Abidjan, with French President Emmanuel Macron by his side.
Ivory Coast, Benin, Burkina Faso, Guinea Bissau, Mali, Niger, Senegal and Togo are the countries currently using the joint currency.
The CFA's value is pegged to the euro. There are no plans for this to change. The currency will be introduced in 2020, according to Macron.
The International Monetary Fund welcomed the reform, saying it was ‘a key step in the modernisation of long-standing arrangements’ between the UEMOA and France. The IMF also said in the statement that it was ready to lend its support in the implementation of the initiative.
For those countries that were French colonies, the franc was abolished as a currency after the end of World War II.
After independence, the currency was changed to a franc of the financial community of Africa, or Franc de la Communauté Financière Africaine (CFA).
The currency is often criticised as a relic of the colonial era, but it also provides monetary stability and encourages trade with Europe.
The managing director of the IMF, Kristalina Georgieva, praised the fact that the currency reform maintained elements of stability, such as being pegged to the euro, as being an advantage for the region.
