A common currency in the Sahel: behind the political logic, an economic risk

General Tiani, head of the Nigerien junta, announced on February 11, 2024 the launch of a reflection by the AES on leaving the Franc Zone and the creation of a common currency, to recover their “total sovereignty” and stop being the “cash cow” of France. If the reasons for leaving the Franc Zone are above all political, this exit will have significant economic and financial consequences.

This is not the first time that a country has left the CFA franc zone (Guinea in 1960, Mauritania and Madagascar in 1973 or even Mali between 1962 and 1984). However, the specificity of this announcement lies in the desire to create a currency common to three states, relatively homogeneous in terms of GDP per capita or economic structures. What they have in common is very rapid demographic growth, a certain isolation, the importance of cereal agriculture and livestock breeding, but also mining production, particularly gold. To these are added cotton for Burkina and Mali, and uranium and oil for Niger. Finally, for these three countries, income from migration to coastal countries plays a very important role. The AES is therefore closer to constituting an optimal monetary zone than the ECOWAS, which is much more heterogeneous.

Source: CONFLITS