Nearly 150 million people use the CFA franc daily, from Senegal in the far west to Gabon in the center of the continent.
The CFA franc is used in 14 countries, it is pegged to the euro, printed in France, and monetary policy is controlled by Western powers. As Fodi Diop, Lightning developer of Bitcoin (BTC) from Senegal, explained, “the currency is still controlled by the IMF and the French government.”
Although the official euro peg is 1 euro per 655.96 CFA francs, purchasing power has declined over time. In 1994, the World Bank devalued the CFA franc against the French franc from 1:50 to 1:100. That same year, West Africans woke up to realize that the value of their savings had been halved.
Galloire, founder of Kiveclair, a refugee project inspired by Congo’s Bitcoin Beach, told Cointelegraph that CFA “makes whole countries dependent” and “usually the poor are the ones who suffer.” He explained the situation in 1994:
“The most obvious example is 1994, when France and several prominent figures decided to devalue the CFA franc. There is no guarantee that this will not happen again, especially since the global economy is under threat.”
Before Bitcoin was created, West Africans could store their money in euros, US dollars, or on traditional stock exchanges: real estate and commodities. But for ordinary people, these opportunities are not available.
Mama Bitcoin, the first trader to adopt the cryptocurrency in Senegal, told Cointelegraph that the CFA was “disappointed.” This suggests that bitcoin might be the way out.
“Our money belongs to France, CFA is made in France, and for lack of a better word, colonial money. Bitcoin, on the other hand, belongs to everyone.”
With the advent of bitcoin and cryptocurrencies, this has become a viable option. Glooire suggests that “Bitcoin can help countries in the CFA region break free from France and reverse the dark side of colonialism.”
In Senegal, Mohamed Deng, co-founder of SenBlock, a non-profit organization that promotes and implements cryptocurrencies, told Cointelegraph that he “doesn’t like CFA because monetary policy doesn’t allow us to develop. Bitcoin is a less risky alternative to switching to an African digital currency.”
Interestingly, the hope of replacing the CFA is not limited to the main proponents of the cryptocurrency. West African governments are open about their efforts to improve the CFA and develop some autonomy.
Under current monetary policy, CFA countries are required to send more money to France than other countries due to colonial ties – there is no monetary sovereignty.
A new coin called ECO was rejected as an alternative to CFA. However, it will remain pegged to the euro and skewed towards France. In terms of digital currencies, as Dan mentions, e-Naira, the digital version of the currency of neighboring Nigeria, has influenced the views of CFA governments on digital currencies and central bank digital currencies. However, neither e-ECO nor e-CFA is planned yet.
Despite this, the potential for a stronger currency in African CFA territory is huge. The CFA region has a GDP of around $170 billion and covers 14 independent countries. This is a huge area with huge untapped resources, mostly agricultural and minerals.
Pape Aljoner, the software engineer who founded Shintsha, a cryptocurrency exchange that allows mobile money payments, told Cointelegraph: “What country could develop without its own money, or better yet, with neutral money?”
Senegalese-South African development team Shintsha, who will soon be migrating to the Mole app, has come up with an innovative way to deal with low banking levels in Africa. The exchange hopes to attract more and more Africans to bitcoin and cryptocurrencies through mobile money, an Africa-focused solution.
Mobile money, originally derived from a Kenyan invention called M-Pesa, allows SIM card holders to pay each other with credit. It is incredibly popular in sub-Saharan Africa, from Senegal to Somalia and Malawi. Orange Money is one of the most popular outlets, although Free Mobile and Wave are also available.
Countless mobile money options are available to West African citizens. Source: Cointelegraph
Jenner estimates that “over 80% of Senegal’s adult population uses mobile money, similar to other countries using CFA”. Africans use technology the same way northern Europeans use contactless payments – they have become reflective, part of everyday life.
While there is a sense of optimism in West Africa about the future of crypto and new ways to buy crypto, “education remains the biggest hurdle to overcome.” According to Noro, the founder of Bitcoin Senegal has made it his mission to promote Bitcoin adoption in his country.