On 11 February 2024, the head of Niger’s ruling military junta, General Abdourahmane Tiani, spoke of the possible creation of a common currency with Burkina Faso and Mali. “The currency is a first step toward breaking free from the legacy of colonisation,” he said on national TV, referring to the CFA franc inherited from French colonisation.

Burkina Faso, Niger and Mali, three former French colonies, have experienced military coups in recent years. They’re now all ruled by military regimes. They also formed a new defence alliance, known as the Alliance of Sahel States (AES).

The Economic Community of West African States (Ecowas) has condemned these coups and imposed sanctions on the countries involved. In response, these countries decided to withdraw from Ecowas. However, they remain members of the West African Economic and Monetary Union (Uemoa). Uemoa has a common currency, the CFA franc, which is issued by the Central Bank of West African States (BCEAO).

The BCEAO and the Banque de France are bound by cooperation agreements that include the deposit of a portion of foreign exchange reserves at the Banque de France and France guaranteeing the CFA franc.

Thierno Thioune, an expert on monetary policies and unions between west African states, analyses the potential implications and feasibility of launching a new currency for the AES member countries.

What conditions must be met for a multilateral currency to work?

To successfully launch and maintain a multilateral currency, several key factors must be considered.

First, macroeconomic and budgetary policies must be closely coordinated. Rigorous harmonisation of economic and budgetary policies between participating countries is imperative to guarantee the stability of the currency’s value and prevent trade imbalances. This will help maintain the confidence of economic players and promote regional growth.