The Franc Zone (FZ) brings together France and 14 sub-Sahara African countries in a common monetary area. This institutional device (fixed exchange rate CFA Franc/ Euro, pooling of foreign exchange reserves and guaranteed convertibility between the two currencies) defines the backbone of a singular economic, legal and cultural space. The FZ was designed to enhance the macro-economic stability of its African members and promote economic growth, through low inflation rates and an attractive regime for foreign direct investment. Forty years on, has the Franc Zone met these expectations?
To answer this question, we have compared the performance of the FZ countries against that of the other economies in sub-Saharan Africa across 5 indicators: the quality of the public governance, the level of human development, the quality of the legal and regulatory environment of business, the level of inward foreign direct investment and the GDP growth rate achieved. The following table provides the results of this comparison.
It is clear that the FZ economies have underperformed the other economies in sub-Sahara Africa. While one may object to or express reservations on these results and while the numbers need to be qualified and refined, they cannot be outright dismissed as they all point in the same direction.
From that comparative perspective, membership of the FZ has had no particular positive impact on the economic outcomes of these countries. Sub-Saharan Africa, as a whole, is poised to enjoy a long period of sustained economic growth in the coming decade. The countries in the FZ, which make up 16 % of the population and 12% of the GDP of Africa south of the Sahara, must therefore raise their game, individually and collectively, in the continental economic competition. If not, the performance gap with the rest of Africa will continue to widen and the issue of the benefits of the FZ will eventually come on the table.
* Sources : Mo Ibrahim Foundation
United Nations Development Program
International Finance Corporation
United Nations Conference on Trade and Development
International Monetary Fund