This page is an excerpt from Issue 1 / Chapter 2
Why was France so interested in Cameroon?
Why were colonies worth fighting bloody wars over?
The entire reason European nations wanted colonies was to get raw materials from them for cheap, then force the colonies to buy goods manufactured by the colonizers. If you think back to your high school American history class, the American Founding Fathers were incensed by the British policy of mercantilism, which did exactly that: the British got cheap raw materials from the American colonies because it was illegal for the Americans to seek a better price by selling to the Dutch, for example. And since it was illegal for the American colonies to import Spanish manufactured goods, for example, they were forced to pay high prices for British goods because the British didn’t have to compete on cost with anyone. In all, the Founding Fathers realized that the colonies were being impoverished in order to boost the British economy.
This is precisely why France held Cameroon as a colony. Ramadier and Ahidjo aspired to maintain this unfair relationship so that France could maintain the major benefits of colonization despite Cameroon being independent on paper. The key instrument that allowed this to happen was the CFA franc.
In Africa’s Last Colonial Currency, Fanny Pigeaud and Ndongo Samba Sylla exhaustively document the many ways the CFA franc impoverishes the 15 African countries that use it, Cameroon included. We will get the idea of how harmful the CFA franc is by looking at just one aspect, but keep in mind throughout this section that we’re only scratching the surface of how exploitative this setup is.
The most important feature of the CFA franc is the fixed exchange rate. If you’ve ever traveled to another country, you had to exchange your US dollars for the currency of the country you were visiting. Obviously, you can’t buy anything in US dollars in Toronto, for example, so you have to exchange US dollars for Canadian dollars. The exchange rate determines how many Canadian dollars you get when you exchange an American dollar.
Exchange rates are normally determined by the market. For example, one US dollar has always been worth more than a Canadian dollar – a single US dollar will get you 1.2 Canadian dollars, for example. That’s because more people want US dollars than Canadian dollars – there are more people who want to trade their Canadian dollars to get US dollars than there are people who want to trade in their US dollars to get Canadian dollars. The US dollar is considered strong relative to the Canadian dollar; the Canadian dollar is considered weak relative to the US dollar.
It is unfortunate that the words “strong” and “weak” are used to describe currencies because the terms imply that it’s better to have a strong currency than a weak one. But that’s not necessarily true. Continuing with our example, the fact that the Canadian dollar is weak relative to the US dollar has advantages for Canada. Because one US dollar is worth more than one Canadian dollar, a US dollar can buy more Canadian stuff than it can buy American stuff. That creates an advantage for Canadian companies that export goods for sale in the US; a product manufactured in Canada will cost less in the US than that same product made in America, simply because of the exchange rates.
By contrast, since a Canadian dollar cannot buy as much American stuff as Canadian stuff, items that Canada cannot make on its own and must import from the US are more expensive. Canadians have to pay higher prices for imported goods simply because of exchange rates. In sum, there are positives and negatives of having a strong currency; there are positives and negatives of having a weak currency.
The CFA franc does not work like this. Rather than the exchange rate being determined by economic conditions – the relative number of people trying to trade a CFA franc for a French franc – the exchange rate is fixed. It was initially set at 1.7 CFA franc for 1 French franc, though this has been changed a few times (and obviously had to change when France adopted the Eurodollar).
So, a French franc was worth nearly twice a CFA franc. You might think that means that the CFA franc is very weak. In fact, the CFA franc was very strong – were market conditions allowed to take their course, the CFA franc would have been far, far weaker – the exchange rate could have been 3, 4, or even 5 CFA francs to one French franc. So in practice, the CFA franc was far, far stronger than it should have been.
Thinking back to our example, the fact that the US dollar is a little bit strong relative to the Canadian dollar means that Canadian exports to the US are less expensive, while US imports into Canada are more expensive. With this in mind, it starts to become clear why an artificially strong CFA franc is so detrimental to Cameroon, and so beneficial to France. Because the CFA franc is so strong, any goods it imports from France are artificially very, very cheap. This gives French companies a huge advantage – French-made goods will always be cheaper than Cameroonian-made goods simply because of the exchange rate. This reproduces one of the major advantages of colonization – rather than using military force to do so, exchange rates highly incentivize or force Cameroonian consumers to buy French-made goods, thus profiting French corporations. It also stifles the development of domestic Cameroonian businesses, which are forced to compete with deeply subsidized French goods.
Remember, exchange rates affect not only imports but also exports. A strong currency means that Cameroonian products are artificially expensive when exported to other countries. This means that coffee grown in Cameroon for the European market will be more expensive than coffee grown in Guatemala or India, for example. The result is that Cameroon has a very difficult time selling its exports. Because Cameroon’s economy is based primarily on exports, the CFA franc guarantees that Cameroon will remain a desperately poor country – all so French corporations can make a little more profit exporting to Cameroon.
In addition to the exchange rates, Ahidjo agreed to banking regulations that seem reasonable on paper but in practice make it extremely difficult for the banking system to make loans. Ahidjo also agreed to import restrictions that create practically insurmountable obstacles for Cameroonian companies to import goods; since Cameroon has a negligible manufacturing base, restrictions on imports stifles the development of Cameroonian commerce. The French control the boards of the central banks of the CFA franc countries; there is nowhere else in the world where such an outrageous arrangement exists and it would be like Pakistan controlling the American Federal Reserve. Ahidjo also committed Cameroon to depositing all of its foreign currency reserves in Paris.
With all of these unfair arrangements, is it any wonder Cameroon is one of the poorest countries in the world?
To tie this all together, let’s return to your high school American history class. Imagine King George has just been brought the Declaration of Independence. “The American colonies are too profitable,” he says. “We must go to war.”
“But wait,” says an advisor, “there might be a better way. What if we were to give the American colonies independence, but with significant strings attached. What if, instead of using outright military force and coercion to profit from the colonies, we used currency and banking regulations? I’ve devised a series of currency and banking rules that, if accepted by the Americans, would maintain all the advantages of colonization.”
This is what’s meant by the term neocolonialism: rather than forcibly stealing labor and wealth with a military and police state, countries like France allow their colonies to be nominally independent while exploiting them with unfair trade, currency, banking, and other arrangements. And rather than use their own military and police state, they prop up dictators to ensure the victims of this system don’t have a say in their government. As the mercenary armies, villagization, pacification zones, and massacres demonstrate, neocolonialism can be just as violent as colonization, and perhaps even more insidious to reverse. And Ahidjo and Biya’s rule as dictator proves that neocolonialism can be just as repressive: Bonus Chapter 2 details Ahidjo and Biya’s notorious secret police, brutal and corrupt internal security forces, concentration camps, censorship, and more. Finally, as the CFA franc demonstrates – again netting the French an estimated hundreds of millions to billions of dollars per year – it can be just as profitable.