🔅 Breaking Up With the CFA Franc: Economic Sovereignty or Uncertainty?
Plus, Gold-Pegged Gambles and Infrastructure Expansions: Africa's Bold Economic Moves
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Farewell to the CFA Franc: A Financial Freedom Quest or an Economic Wild Ride?
Burkina Faso, Mali, and Niger recently gave the deuces to the West Africa political union ECOWAS, and now, they've set their sights on their next big breakup: the CFA franc currency. 35-year-old army captain turned Burkina Faso's top dog, Ibrahim Traore, is leading the charge against what he calls the "bonds of slavery."
These three amigos didn't just stop at giving French troops the boot, shrinking a U.N. mission in Mali, and exiting ECOWAS. No. They're also eyeing an exit from the euro-pegged CFA franc, despite economists waving red flags about the complexities and risks of dumping it.Â
The trio's finance ministers are already brainstorming a new monetary union, and Niger's Abdourahamane Tiani is all in, calling this move a step away from French "colonisation."Â
However, switching currencies is not as simple as swapping SIM cards. It involves setting up a whole new central bank, and there's a messy web of shared reserves, debts, and potential financial isolation from international markets. Not to mention the potential for economic shockwaves that could hit like a bad hangover, with experts warning of GDP plunges and inflation spikes.
The CFA franc, a relic of French colonial rule, is a hot potato of debate. Critics slam it as a growth-stifling, overbearing parent, while supporters claim it's the stabilizing force in a volatile region. Yet, with agricultural economies struggling under its weight and most trade happening in dollars, not euros, the push for a breakup is gaining momentum.
Zimbabwe's Currency Gamble
Zimbabwe Finance Minister Mthuli Ncube, in a move that could either be a stroke of genius or a desperate Hail Mary, announced plans to link the Zimbabwean dollar to something a bit more... sparkly. That's right, gold.
The Zimbabwean dollar, which has been on a free fall, dropping about 40% since the start of the year, desperately needs a superhero. Enter the shiny allure of pegging the currency to gold. It's a bold, brave idea that might work... or will it?
Ncube's plan, still wrapped in the mystery of future announcements, is designed to keep the money supply and inflation at bay. It's an attempt to bring some stability to a currency that's been as volatile as possible. But let's not forget that Zimbabwe has been down the rabbit hole of economic woes before, with hyperinflation leading to the country's attempt to reintroduce a local currency in 2019 (after a decade-long affair with the U.S. dollar). Still, that move did not yield enough in terms of stability.
Kenya's SGR Adds 300 New Wagons
Kenya has decided that its Standard Gauge Railway (SGR) wasn't quite standard enough. So, they've bagged themselves an additional 300 wagons from China. This marks the first wagon haul since the SGR's grand debut in 2017, a $3.2 billion testament to infrastructure ambition. Fifty of these shiny new wagons were unveiled this week, with the rest of the gang expected to roll in later this month.Â
Among these metallic beasts are special container wagons equipped with power plugins for cold storage. Why, you ask? To keep Kenya's horticultural exports as cool as cucumbers. This is a big deal for Kenya, considering horticulture is one of its main export sectors.
Nigeria: Budget-Friendly Wonderland or Just a Mirage?
In a recent head-turner, Bayo Onanuga, the Nigerian president's special advisor, claimed Nigeria is the cheapest date in Africa regarding living costs. This bold statement was made to clap back at a political rival who dared to suggest President Bola Tinubu's economic recipes were cooking up nothing but trouble for Nigerians.
According to the online bargain bin, Numbeo, Nigeria does indeed wear the affordability crown—but hold the applause... This regal ranking is only among 23 surveyed African countries, not the full 54-member royal court. Nigerians are currently wrestling with a Hulk-sized inflation rate, mourning the loss of fuel subsidies, and dealing with a plummeting currency.
South Africa Sending 2,900 Soldiers to the DRC
South Africa is gearing up to send 2,900 troops to the eastern Democratic Republic of Congo as part of a plan by the Southern African Development Community (SADC) to bring stability to the region. The troops will be active from Dec '23 to Dec '24, with a budget of 2 billion rand ($105.75 million).
The SADC, a regional 16-member squad, said "Yes" to this mission last May. And just in time, too. The M23 rebels are advancing onto Goma, a regional strategic city. The instability in DRC has killed hundreds of thousands of people and displaced more than 7 million.
Food for Thought
“A bird that flies off the earth and lands on an anthill is still on the ground."
— Igbo Proverb