International Monetary Fund (IMF) Managing Director Kristalina Georgieva has welcomed the end of the use of a long-disputed currency tied to French colonialism in West Africa.
At a press conference in Abidjan on Saturday, French President Emmanuel Macron and Ivorian President Alassane Ouattara announced that France and the eight-nation West African Economic and Monetary Union (WAEMU) would phase out the CFA franc in favor of a new currency called the "eco."
During a three-day visit to Côte d'Ivoire, Macron told reporters that the reform was "a big step to write a new page in our relationship with Africa" and called colonialism "a grave mistake."
In a statement over the weekend, Georgieva welcomed the reforms as constituting a "key step in the modernization of long-standing arrangements between the West African Economic and Monetary Union and France."
"The announced measures build on WAEMU's proven track record in the conduct of monetary policy and external reserve management," Georgieva said.
"In recent years, the WAEMU has recorded low inflation and high economic growth, the fiscal situation has improved, and the level of foreign exchange reserves has increased."
She added that the reforms maintain key elements of stability which have benefited the region, such as the fixed exchange rate with the euro and a guarantee of unlimited convertibility from France.
The eco will remain pegged to the euro, an arrangement previously championed by Outtara, who currently leads the WAEMU. The CFA franc's fixed exchange rate against the single currency was 655.96, and keeping the peg averts uncertainty for international investors, importers and exporters.
However, the previous requirement that African nations using the CFA franc deposit 50% of their foreign exchange reserves with the French treasury has been abolished, and France will no longer hold a seat on the WAEMU-linked West African central bank.
The move could pave the way for the 15-member ECOWAS bloc, which contains some WAEMU nations, to follow suit in adopting the new currency.