Following World War II, then French President Charles de Gaulle initiated la Franafrique---France's informal sphere of influence in Africa. Beyond covertly vetting and supporting African political elites, de Gaulle also created the French colonies in the African monetary zone. These zones, persisting today as the CFA, include 12 former colonies---Benin, Burkina Faso, Cte d'Ivoire, Mali, Niger, Senegal, Togo, Cameroon, Central African Republic, Chad, and Republic of the Congo---alongside Guinea-Bissau and Equatorial Guinea. Together, they comprise 14 percent of Africa's total population and contribute to 12 percent of the continent's GDP.
Originally, this arrangement ensured monetary stability in areas weakened by systematic French exploitation. A fundamental tenet of the system mandated that colonies maintain 50 percent of their foreign currency reserves in the French Treasury, along with an extra 20 percent for financial liabilities that member states were left with only 30 percent of reserves within their borders. The enduring economic trade-offs of the CFA monetary zone have translated into reduced per capita growth and mitigated progress in fighting poverty.
Without addressing issues of sovereignty, this system cannot work efficiently. The monetary zone hampers industrialization, economic development, and also dampens trade among member states. The credit-to-GDP ratio ranges between 10 and 25 percent for CFA countries, significantly lower than the approximately 60+ percent observed in other sub-Saharan African states. Moreover, the CFA franc prompts substantial capital outflows, channeling funds towards Europe, often France, due to the fixed exchange rate regime. Of the 14 CFA states, 11 are classified as "least developed" by the United Nations, and Sub-Saharan member countries rank at the lower end of the UN Human Development Index.
Moving ahead, the task lies in preserving the advantages of the CFA franc monetary zone, such as currency stability and low inflation, while navigating a shift toward a new institutional framework independent of France. After all, a monetary system that retains a former colonial power as its guarantor, will always ultimately fail to eradicate neocolonialism.
A Closer Look to China's Aid and LoansÂ
At a certain historical juncture, nearly the entirety of Africa experienced colonization. These past colonial rulers, albeit not attaining a comparable degree of "success" and foundational influence as the French, still wield significant influence over their former colonies. This manifests through substantial economic partnerships and developmental aid, and (not) surprisingly, there comes a new player into the field: China.
The heightened and swift expansion of Chinese involvement in Africa has evoked accusations of neocolonialism, drawing significant attention from European states, which assert that China is engaging in practices reminiscent of neo-colonial practices. This argument is substantiated by four key pieces of evidence. Firstly, there exists a discernible parallel with colonial powers as China adopts the strategy of extracting raw materials from African soil in exchange for cheap prices. Secondly, China's strategic use of debt emerges as a tool for establishing dominance in this relatively new market. The skepticism towards Sino-African relations traces back to the initiation of the "Going Out" strategy in the early 2000s, wherein the Chinese government actively encouraged corporations to invest overseas; the following series of visits conducted by the Chinese president Hu Jintao to African states providing loans without political conditions were also interpreted as encouraging corruption and supporting rogue states. Such accusations were claimed by many prominent figures including senior politicians such as Britain's former foreign secretary Jack Straw: "Most of what China has been doing in Africa today is what we did in Africa 150 years ago."Â
In contrast to the historical ascension of hegemonic powers, China, as an emerging force, stands out as the sole power that did not establish its state through direct military invasion or colonization, rather it executes and promotes the peaceful rise model that is driven by capital and resource acquisition.
A way to penetrate Africa's growing markets, wide energy, and natural resources is through building many projects, including but not limited to, roads, railways, bridges, dams, and economic zones. Such cooperation aligns to the mutually-beneficial aspect of the argument. Conversely, the sustainability of Belt and Road Initiative (BRI) financing, as an example, has enhanced the interrogatives of Chinese neo-colonial practices in Africa, as the sustainability of loans provided to African countries is contingent, in part, upon the productivity of the BRI projects themselves. However, the transparency of Chinese policy on its loan disbursements is of concern.
A growing apprehension concerning China's development aid to African countries is primarily rooted in the undisclosed bilateral aid figures. The absence of published data on concessional loan disbursements or repayments heightens concerns about subjecting developing countries to the risk of a significant debt crisis. Notably, the International Monetary Fund (IMF) has recently issued a warning about Africa approaching a new debt crisis, with the World Bank categorizing 18 African states as at high risk of debt distress, given that debt-to-GDP ratios exceed 50%, where approximately 20% of external debt of governments in Africa is owed to China (BBC News, 2018). Furthermore, African economies haven't industrialized yet, and therefore another dependency would emerge on China -- this time, on manufactured goods. Once factory goods from China are introduced into African economies, China would gain another foothold in the continent's economy that it could use to leverage against it.
Why is the Richest Resource Continent the Poorest?
