by article 104.C.2 of the Treaty). Considering that the Treaty's most important criteria are a
defieit of less than 3% and a debt of less than 60% of the GDP, and that as things stand, only
three countries (Germany, Luxembourg, Ireland) out of fifteen meet the two public financecriteria, it is easy to foresee the perpetuation of the dependence of African countries, which
would no longer be masters (not that they have ever wished to be) of their own developmentprocess. Such a process requires the countries concerned tp freely orient their economic policy towards the improvement of the investment level, and therefore, towards economic growth. To
meet these requirements, there is need to effectively construct a regional economic space.2.2 Rnari tn salvation: effectivg CftHStniCtiffH* "f a regional economic SP8C6
109. Europe is aware that the monetary Union offers a great advantage. It is for this reason that in the next few months Europe intends to reach a stage where a single currency will be
issued by a single central bankibr all Union member countries. This monetary Union will help
to further strengthen the economic Union that was gradually set up earlier, and whose origins
date back to the signing, in 1957, of the Rome Treaty instituting the European Atomic Energy
Community (known as Euratom) and the European Economic Community (popularly known asthe Common Market), comprising six countries: Belgium, France, Italy, Luxembourg, the
Netherlands and the Federal Republic of Germany. The set-up, in 1968,of a common external
tariff (CET) consolidated the customs cooperation among the six countries of the EuropeanE/ECA/ESPD/EXP
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Economic Community. However, the adoption in 1985, and signature in 1986 of the Single European Act (SEA), providing for the enforcement of the single Market on 1st January 1993, was the decisive step towards the realization of the European Union.
110. The anticipated single market will be built upon the following four principles: the free movement of goods, services, capital and persons within member States.
(i) - free movement of goods is based on the abolition of customs barriers between member countries;
(ii) - free movement of services pertains to the realization of the freedom to deliver services. This mainly concerns travel, insurance, banks, television, etc. Service providers are authorized to sell their services in any country of the Community, provided that they abide by regulations of their countries of origin as well as those of the Community;
- free capital flow pertains to the abolition of exchange controls, thereby promoting the harmonization of financial markets, and intensifying competition among financial institutions. The result should be a decline in the cost of banking intermediation, and the standardization of returns on capital assets;
- free movement of persons concerns the free movement of workers, and the prohibition, in employment, of every form of discrimination on the basis of nationality, in order to establish a single employment market.
111. Creation of the single European market is expected to strengthen competition among enterprises in the Community, which might lead to increased production and the improvement of the standard of living by between 3 % and 4%.
112. In African countries of the franc area, however, monetary cooperation was not accompanied by any real construction of a regional economic space. It should be pointed out that according to the traditional model, the process of economic integration follows successive stages; four major phases are discernible:
(0 - the free trade area (FTA), a space within which goods and services move freely. Each country abolished protectionist barriers against its trading partners. This was true of the European Economic Community between 1958 (date on which the Rome Treaty came into force) and 1967 (date on which the Customs Union came into
force). It is, likewise, true of the North American Free Trade Agreement (NAFTA) signed in 1992, by the United States, Canada and Mexico and which came into force on 1st January 1994.
(ii) - the Customs Union (CU), a free trade area endowed with a common external tariff. Every member country applies the same customs duties to third countries. This was true of the EEC between 1968 and 1992 (during which the European single market came into force).
(iii) - the Common Market (CM), a Customs Union in which production factors are completely liberal. There are no obstacles to the free movement of workers and capital between countries. There is a possibility for actual competition between enterprises of the various member countries. One example is the EEC which became a Common Market from 1st January (date on which the Single European Act came into force).
(iv) - the Economic and Monetary Union (EMU), a Common Market in which States coordinate their economic policies and establish a common currency, with the object of achieving total integration of the area's economies.
113. Some authors" consider this model to be fantasy because it has not been universally verified. African countries of the franc area confirm this. Here, the first to be established was the Monetary Union. To-date, Customs Unions operate solely for each of the area's subregions.
The same is true of what is known here as "Economic Communities".
114. In 1990, trade between CEDEAO countries represented a mere 3% of the subregion's total international trade.14 For their part, BEAC countries conduct 45% of their trade amongst themselves, and over 50% with West African countries, but particularly with France.35 There
33 J. TCHUNDJANG POUEMI: Mnnnaie. servitude et liherte: la repression monftaire de rAfrique: Editions Jeune Afrique, Paris, 1981, p. 232.
34 C. EBOUE: "La zone franc, frein ou aide au de'veloppement", LARE, UniversitC de Bordeaux I, June 1992, p, 13.
33 idem
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is need for these countries to concert their efforts to reverse this trend, since intra-African trade could provide the bases for less dependent economic growth. The countries ought to commit themselves to changing the nature of their exports, gradually specializing in complementary production, and ultimately re-orienting their trading activities, initially by focusing on intra-area trade. This is the prerequisite for the much sought-after economic independence.
CONCLUSION
115. Both institutional and operational development of the franc area indicates that African countries have opted for a special form of monetary cooperation; that which involves determining their currency's parity (the CFA franc) in relation with a peg (the French franc), in a fixed relationship. The exchange rate between the CFA franc and the French franc seems to have remained stable between 1948 and 1994. At some point, however, the rate's external stability was disrupted in certain countries of the area. But these countries defended the parity -in force, believing that the instability was not due to the over-valuation of the CFA franc, but rather to a number of constraints related to debt cost and the decline in receipts of primary export products. Under pressure from certain international organizations in 1993, these countries consented to a devaluation of their currency. The move was calculated to help them resume growth and decrease poverty. Although by happy coincidence the GDP increased in 1994, it must be acknowledged that the populations' standard of living was drastically affected.
Meanwhile,the financial situation of these countries hardly improved. For one thing, they are as indebted (if not more so) as ever; for another, they are incapable of mobilizing the resources needed to satisfy their funding requirements.
116. Proponents of the devaluation of the CFA franc acknowledge that such a measure can not single-handedly pave the way for African economic recovery. They are aware that it has no impact on the international demand for primary products. And they overlook the reaction of neighbouring countries (Nigeria, Ghana, Gambia, etc) which can also institute competitive devaluations. They maintain that devaluation is the first stage in a rigorous process that should culminate in total economic reform. But can such reform, at least, preserve the populations' standard of living? It is rather doubtful, given that with the advent of the single currency in the European Community, African countries of the franc area expect to be launched into a new monetary operation, which, should they choose to join a future ecu area, would compel them to adopt even more restrictive budgetary and monetary measures. But has the time not come for them to cut the umbilical cord, maintenance of which has so-far forced them to take political measures that are sometimes inconsistent with the demands of economic development?
O R
O N N
Annex I: Developments jn the value of the CFA and CFP francs.
mark and Swiss franc in French franCS
1 Sep. 1939 8 May 1945
26 Dec. 1945 26 Jan. 1948
18 Oct. 1948 27 April 1949 20 Sep. 1949
27 Dec. 1958 10 August 1969 18 Dec. 1971 13 February 1973 2 June 1989
1382 13.33 13.33 11.27 10.59 493.70
5.55 5.11 4.60 6.69
H. GERARDIN: I* ?nne franc Paris, 1989, p. 63.
irf <* institutions.