The XAF Currency: Shared Wealth or Shared Struggle?

What is the XAF and Where is it Used?

The XAF currency, formally known as the Central African CFA franc, is the official currency of six countries in Central Africa: Cameroon, Chad, Central African Republic, Republic of the Congo, Equatorial Guinea, and Gabon. This regional currency is issued by the Bank of Central African States (BEAC), headquartered in Yaoundé, Cameroon.

Despite being shared among nations with vastly different economies and natural resources, the XAF maintains a fixed exchange rate with the euro (€), pegged at 1 EUR = 655.957 XAF. This peg, backed by the French Treasury, is one of the most defining — and controversial — features of the currency.

The Historical Roots of the CFA Franc

The acronym "CFA" originally stood for "Colonies Françaises d'Afrique" (French Colonies of Africa), reflecting its colonial origin in 1945. Today, in Central Africa, it officially means “Communauté Financière Africaine” (African Financial Community), but the historical undertone continues to influence debates around economic sovereignty and dependency.

Over time, the CFA franc zone was split into two: XAF (for Central Africa) and XOF (for West Africa), each with its own central bank and jurisdictions, but both maintaining the same peg to the euro and parity in value.

Currency Peg: A Double-Edged Sword

Stability and Low Inflation

The euro peg has been both praised and criticized. On the positive side, it ensures monetary stability and low inflation. Investors often consider the XAF more predictable than other African currencies prone to volatility. This arrangement also offers a guaranteed convertibility into euros, supported by the French Treasury.

Limited Monetary Flexibility

However, this comes at a cost. Member countries cannot independently adjust interest rates or devalue the currency to respond to economic shocks. As a result, economic growth is constrained, especially when inflation or global commodity prices shift.

When global oil prices plummet — a crucial factor for oil-exporting countries like Gabon and Equatorial Guinea — these nations cannot use currency tools to cushion the blow. Their monetary hands are effectively tied.

XAF and the Economy of Central Africa

The six XAF-using countries are rich in natural resources — from oil and gas to timber and minerals — yet many struggle with underdeveloped infrastructure, governance issues, and external debt. Despite currency stability, these nations face:

• Unequal economic development

• High unemployment rates

• Low regional integration and trade

The shared currency does not automatically translate to economic cohesion. In fact, the lack of fiscal harmonization often limits the XAF’s effectiveness as a unifying force.

Recent Calls for Reform

In recent years, debates around currency reform have intensified. While West Africa (XOF zone) has already initiated steps to replace the CFA franc with the “ECO”, the Central African region remains more cautious.

Critics argue that the currency peg to the euro restricts economic sovereignty, and that reliance on the French Treasury is outdated. Some economists call for a floating regional currency, or at least a shift in monetary governance to reflect African realities rather than European preferences.

However, others warn that abandoning the euro peg without solid economic reforms could trigger currency instability, inflation, and investor flight.

Summary: The Paradox of the XAF

The XAF currency is more than just a medium of exchange — it is a political and economic symbol. It embodies both the legacy of colonial administration and the modern struggle for African economic independence.

Whether viewed as a stabilizing anchor or a shackle on growth, the XAF remains central to the future of Central African economies. Any path forward must balance monetary stability with the need for sovereignty and flexibility, particularly in a world where global shocks can quickly disrupt small, interconnected economies.

In a region rich in potential but challenged by complexity, the future of the XAF is not just about currency — it's about who controls the levers of economic destiny.