The CFA Franc Zone: Possible Structural Reforms

Abstract

This article has sought to identify the main possible reforms that could enable the Franc area, if not to become an optimal currency area, at least to move closer to one.

On the political level, research has shown that policies for the allocation of production factors (fertile land, modern working tools, financial resources) are less favorable to the food sector than to the agricultural export sector.

By prioritizing the objectives of the modern agricultural sector over the superior means in terms of quantity and quality devoted to it, this option has made the extroversion of the economies of the PAZFs inevitable. Their dependence on the outside world has been a brake on inter-African trade and, by ricochet, an obstacle to endogenous development.

Compared to the secondary sector, the PAZFs have a poorly developed industrial fabric limited to a few industries processing agricultural products or extracting and/or processing mining raw materials.

All in all, the PAZFs appear to be small-scale economies, fairly highly extroverted and whose specialization in the production and export of raw materials makes them particularly vulnerable to exogenous factors.      

To overcome this impasse, we have proposed in this article reforms aimed at making the economic integration of the PAZFs an instrument of endogenous development of these countries by taking into account the factors at the origin of these characteristics.

Thus, in the first part of this article, we approached the issue of structural reforms by considering that they imply the need to meet certain preconditions related to education, health, infrastructure and the transformation of rentier economies into productive economies. As for the structural reforms themselves, they have been identified as factors of change and development of the agricultural and industrial sectors with a view to intensifying intra-CFA zone trade and promoting self-centred development of the PAZFs