France's financial future is at stake (CFA), a core interest of France I believe. Sadly, there will be a conflict of some sort involving NATO / Western nations. But, I don't expect to see a massive amount of equipment heading there as Ukraine have taken up most of it. It's rather interesting to see Africa light up just as Western MSM have begun to parrot that the Ukrainian project has failed.
This is Russian propaganda.
France has
68m people and nominal GDP of
2 784 billion USD in 2023 at exchange rate of 1,05-1,10USD = 1EUR
CFA franc is split into two areas - West African CFA franc and Central Africa CFA franc.
West African CFA area includes Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo which
combined have estimated nominal GDP in 2023 of
178,5 billion USD. That's
6,4% of France's GDP.
Central African CFA area includes Cameroon, Central African Republic, Chad, Republic of the Congo, Equatorial Guinea and Gabon with
combined estimated nominal GDP in 2023 of
109 billion USD. That's
3,9% of France's GDP.
Combined all CFA countries have
182m people and nominal GDP equal to
10,3% of France's GDP.
Factor of
30.
CFA francs were
pegged to the French franc which means that since 1999 both are
pegged to the Euro which is managed by the European Central Bank, and not the the Bank of France.
A
currency peg ensures
convertability of volatile currency by underwriting the balance in the bank emitting that currency with reserves of another bank emitting currency to which the volatile currency is pegged. This type of relationship involves a limited amount of liquid capital necessary to facilitate the fractional reserve. A currency peg therefore is a political arrangement more so than an economic one and doesn't constitute any type of economic union or cooperation between the economies. It literally means that France keeps an additional stack of euros for CFA and CFA agrees to coordinate monetary policy with ECB.
Without those guarantees most of CFA countries would see their currencies being wiped out by inflation and either formally pegged to another currency or back to EUR or replaced by it, at great cost to the economy which would degenerate into barter/black market dynamics.
Euro has lost 17,3% to the dollar in the last 10 years.
Exchange rates of select African currencies to USD in the same period:
- Sudanese Pound -99%
- Angolan Kwanza -88%
- Ghanian Cedi -81%
- Nigerian Naira -79%
- Zambian Kwacha -72%
- Congolese Franc -63%
- Mozambican Metical -53%
- South African Rand -47%
- Algerian Dinar -41%
- Kenyan Shilling -39%
- Botswana Pula -36%
- Tanzanian Shilling -35%
- Ugandan Shilling -31%
- Mauritanian Rupee -31%
Cheaper currency can boost exports and provide short-term economic benefit but
only if the exports have high added value like manufacturing and if the decrease in value is relatively small, ideally 5-10% to provide competitive edge without causing major restructuring to capital goods markets.
When a currency loses value significantly 25% or more then the cost on the economy begins to be significant. When the economy relies on export of goods which have low added value like natural products or mineral resources and doesn't produce high value added products on its own to satisfy demand then it becomes impossible to acquire necessary goods and the living standards drop precipitously.
It also typically leads to competitive devaluation as countries in the region begin to race to the bottom to maintain their exports.
Obviously the people who get rich are the people who are closest to the stream of new money to benefit from money creation via
Cantillon effect.
Therefore CFA franc paradoxically
benefits the economies of those countries by preventing inflationary plunder that would inevitably occur under local currency. Those countries receive montary policy of a rich developed service-oriented economy which is more advantageous to an under-developed agricultural economy because with access to modern technology it is possible to start a service sector
without a large industrial economy.
It was
not the intention of the creators of CFA in 1945 but it is the
unintended consequence that is an obstacle to inflationary practice that would enrich the oligarchs and kleptocrats ruling the countries.
This is why ECOWAS plans to create a common currency "eco" by 2027 instead of introducing national currencies. It is an attempt to coordinate inflationary practices of the entire region and likely with the leading role of Nigeria which wants to impose eco as means of controlling monetary policy of other countries as competitors.
So why France wants to keep the CFA franc?
Because of French pride and benefits for the connected companies and banks that mostly hide their profits from such arrangement.
CFA area is simply too irrelevant for either the French public or economy to notice unless there's a terrorist attack. It's an afterthought on the sidelines that has existed for close to 80 years without much awareness of the public.
France liked keeping influence on the cheap. Not when it costs something but national pride requires that they keep up appearances.
This graphic is from the Economist so those are
millions of USD, not "
milliards" (billions). Most countries have trade in the range of barely 0,5-1 billion USD. Even the much publicised uranium from Niger is less than 10% of total import which can be easily replaced by other, better sources.
This is how little the region actually matters for the French economy.
The problems in Africa are entirely African-made. Africa is like a pathological child from a pathological family. Typically for such cultures it rejects calls to reform and seeks to externalise blame for its own failures. Such mindset is extremely dangerous because it invites predatory forces - like contemporary Russia - which will exploit the mindset to its advantage and impose the cost on the exploited country.
And this is exactly what we're seeing here. This is Rybar presenting a coup as saving the country, predictably for FSB run operation:
If you compare the map with map of population density of Niger, Mali and Burkina Faso it is obvious that the problem lies predominantly in Mali and (especially) Burkina Faso and
not in Niger which is largely unaffected and where insurgencies cross over the border regions from the affected nieghbouring countries.
In Burkina Faso insurgency affects over 1/3 of population. In Mali close to 1/4. In Niger close to 1/5.
We may therefore consider the insurgencies to be a form of invasion from Mali and Burkina Faso and the coup to be a foreign intervention by failing juntas of Mali (since May 2021) and Burkna Faso (since Sept 2020) aided by Russia via Wagner. For 2 and 3 years respectively those juntas failed to address the situation in their own countries - even though that was the justification for the coups - so they decided to co-opt Niger as a "solution" because actually solving the problem would deprive them of their legitimacy.
If a military junta claims internal threat as justification to claim power then it will
never resolve that threat to stay in power.
Correction: Nigeria has 3 JF-17
Their serviceability is doubtful. They were delivered from Pakistan in 2021 in a deal from 2016 for just three fighters and there were reports of technical issues like structural cracks and malfunctioning systems. It is very likely that they were not new aircraft but reconditioned or used ones and the intention of the deal was only to prepare the ground for future purchases of JF-17 and not to deliver working aircraft.
In any case
four is the absolute minimum to maintain
one working machine in combat readiness and it still requires the level of professionalism that Nigerian Air Force simply doesn't have. If they had six then one or two could be available for combat duty. With three it's
zero. It flies when it
can fly, not when it
has to.
It doesn't need to bomb targets with their Su-30s. Algerian Air Force has 24x Wing Loong drones with 32 hours of endurance at 200 kph and 12x ATGM hardpoints each. It just needs to clear the region around the capital of Nigerian anti air. Since Nigeria has just 1 squadron of fighters, and they're all short ranged, that won't be too hard for even just 1 squadron of Su-30s.
This is not a serious analysis but a poorly informed fantasy in the vein of Tom Clancy that starts with awful strategy and ends with even worse tactics. I don't have time for that.
