A Comparative Analysis of the CFA Franc in West African Exports

A Comparative Analysis of the CFA Franc in West African Exports

Economics

Export Competitiveness under a Fixed Peg: Lessons from the CFA Franc Zone(1994-2025)

Naël Bassiere

2025

This research investigates the impact of the CFA franc's fixed exchange rate regime on the export competitiveness of West African Economic and Monetary Union nations. While the CFA franc is recognized for fostering monetary stability and low inflation, there are ongoing concerns that it may lead to an overvaluation of real exchange rates, thereby hindering export expansion. The study contrasts the performance of WAEMU member states specifically Côte d'Ivoire, Senegal, Mali, and Burkina Faso with that of non-CFA West African countries, including Ghana, Liberia, and Sierra Leone. Particular attention is paid to crucial sectors such as agriculture and textiles, which are significant contributors to regional income and employment. The methodology employed involves a panel data analysis covering the period from 2010 to 2025. This analysis utilizes data on export volumes, real effective exchange rates, and key macroeconomic indicators sourced from databases like UN Comtrade, IMF DOTS, and the World Bank. The quantitative findings are supplemented by qualitative insights derived from interviews and policy reports. The results suggest that WAEMU countries have experienced slower export growth and diminished price competitiveness in comparison to their non-CFA counterparts. The CFA franc appears to have restricted the capacity of WAEMU exporters to adapt to external economic fluctuations, particularly within price-sensitive industries. Concurrently, the stability provided by the CFA franc continues to be valuable for maintaining low inflation rates and fostering investor confidence. The paper advocates for WAEMU policymakers to consider adopting greater exchange rate flexibility or an adjusted peg as part of the proposed Eco currency framework. It also emphasizes that any monetary policy adjustments should be complemented by reforms aimed at enhancing trade and infrastructure. Future research is recommended to incorporate firm-level data and to explore the prevalence of similar dynamics within the Central African Economic and Monetary Community zone.