The CFA franc is the name of two currencies used by 210 million people (as of 2023) in fourteen African countries. The West African CFA franc (XOF) is used in eight West African countries, while the Central African CFA franc (XAF) is used in six Central African countries.
It's important to note that although the two currencies are commonly called CFA franc and (currently) have the same value, they are not interchangeable.
The ISO currency codes are XOF for the West African CFA franc and XAF for the Central African CFA franc.
Both CFA francs have a fixed exchange rate (peg) to the euro guaranteed by France: €1 = F.CFA 655.957 exactly.
To ensure this convertibility guarantee, member countries were required to deposit half of their foreign exchange reserves with the French Treasury, but this requirement was dropped in 2019 (effective in 2021) for the West African CFA franc. This requirement remains unchanged for the Central African CFA franc, which wasn't reformed in 2019.
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Origins of the CFA Franc
The CFA franc was created on 26 December 1945, along with the CFP franc. The reason for their creation was the weakness of the French franc immediately after World War II. When France ratified the Bretton Woods Agreement in December 1945, the French franc was devalued in order to set a fixed exchange rate with the US dollar.
New currencies were created in the French colonies to spare them the strong devaluation, thereby making it easier for them to import goods from France (and simultaneously making it harder for them to export goods to France). French officials presented the decision as an act of generosity.
The CFA franc was created with a fixed exchange rate versus the French franc.
Map of countries using the CFA Franc.
Historical Exchange Rates
- 26 December 1945 to 16 October 1948 - F.CFA 1 = 1.70 French franc.
- 12 January 1994 to 31 December 1998- F.CFA 1 = F 0.01.
- 1 January 1999 onwards - F.CFA 100 = €0.152449 or €1 = F.CFA 655.957.
Evolution and Criticism
In 1960, the period of global decolonization began, marking the end of European empires on the African continent. France disappeared from the map, leaving behind the CFA franc, a legacy of colonization, which circulates in almost all former French possessions in Africa.
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Over time, the number of countries and territories using the CFA franc has changed as some countries began introducing their own separate currencies. The countries of the CFA franc zone are seen as the preserve of the former guardian power, France, which leads to situation that sometimes fuels rumors of a devaluation of the CFA franc.
Critics point out that the currency is controlled by the French treasury, and in turn African countries channel more money to France than they receive in aid and have no sovereignty over their monetary policies.
In January 2019, Italian ministers accused France of impoverishing Africa through the CFA franc, and criticism continued from various African organizations.
Example of XAF to USD Exchange Rate Chart.
Recent Developments
On 21 December 2019, President Alassane Ouattara of the Ivory Coast and President Emmanuel Macron of France announced an initiative to replace the West African CFA Franc with the Eco. Subsequently, a reform of the West African CFA franc was initiated. In May 2020, the French National Assembly agreed to end the French engagement in the West African CFA franc.
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On April 25, 2023, the subject of the CFA franc was discussed at the ministerial meeting of the Economic and Monetary Community of Central Africa (CEMAC) and France. The French perceive the guarantee provided to the CFA franc, and the assurance of its convertibility, as a pillar of economic stability for the region.
CFA Franc Today
CFA francs are used in fourteen countries: twelve nations formerly ruled by France in West and Central Africa (excluding Guinea and Mauritania, which withdrew), plus Guinea-Bissau (a former Portuguese colony), and Equatorial Guinea (a former Spanish colony).
There are two different currencies called the CFA franc: the West African CFA franc (ISO 4217 currency code XOF), and the Central Africa CFA franc (ISO 4217 currency code XAF). They are distinguished in French by the meaning of the abbreviation CFA. The Central Africa CFA franc (XAF) is known in French as the Franc CFA, where CFA stands for Coopération financière en Afrique centrale ("Financial Cooperation in Central Africa").
Key Facts About XAF and USD
| Currency | Central African CFA Franc (XAF) | US Dollar (USD) |
|---|---|---|
| ISO Code | XAF | USD |
| Central Bank | Bank of Central African States (BEAC) | Federal Reserve System |
| Exchange Rate System | Fixed exchange rate (pegged to the euro) | Floating exchange rate system |
| Safe-haven currency | No, regional currency | Yes |
| Countries of Use | Cameroon, Chad, Congo, etc. | United States and certain other countries |
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