Finance ministers from the 15 African member countries of the franc area gathered Saturday in Yaounde to discuss the state of their economies that are experiencing severe turbulence due to low commodity prices.
The one-day meeting also involved the French Finance Minister Michel Sapin whom, according to organizers, was called to “offer solutions” amidst financial difficulties encountered by several members of the zone.
“Our countries economies are facing funding problems, the risks of financial instability and weak intra-regional trade,” admitted the Cameroonian Prime Minister Philemon Yang, while opening the debate.
Our countries economies are facing funding problems, the risks of financial instability and weak intra-regional trade.
In addition to France and the Comoros, franc zone includes eight West African countries (Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo) who are members of the West African Economic and Monetary Union (WAEMU) and the six Central African countries of Cameroon, Central African Republic, Congo, Gabon, Equatorial Guinea and Chad who are members of CEMAC.
Majority of these countries are heavily dependent on commodity exports and have seen their revenues fall heavily since 2014, mainly due to lower oil prices but also in wood, iron and cotton.
“The states of the region have fewer reserves. Some of them are in arrears and are facing difficulties in paying salaries,” said a source close to the talks who fears a “debt” spiral.
According to the International Monetary Fund (IMF), CEMAC countries, which are most threatened by falling oil prices, could record a deficit in their current accounts of over 8% of their Gross Domestic Product in 2016.
The meeting comes also amid persistent questions about the future of the CFA franc, the name given to the currencies used by the countries of the franc zone for 70 years, with some calling for the abandonment of the currency in favor of a 100% African currency.
Asked about this proposal at the end of a meeting with Cameroon’s President Paul Biya, Michel Sapin assured that the matter was in the hands of African leaders.
“It is the decision of the Africans that is needed, not the decision of France. And I have always shown my availability if there were proposals for changes in one direction or another, from this or that leader,” Sapin said.
The two unions – WAEMU and CEMAC – maintain the same currency, the CFA franc and account for 14 percent of Africa’s population and 12 percent of its gross domestic product (GDP).