Other authors have highlighted that CFA zone members benefit from lower inflation and better fiscal discipline compared to similar developing countries, particularly other sub-Saharan African countries. But this relative stability has not resulted in increased attractiveness of the area for foreign investors.
Full Answer
What are the benefits of being a CFA?
A higher salary is certainly a benefit of the CFA. As mentioned above, CFAs often find work in the most recognizable global financial firms. And it’s no secret that these companies tend to pay a premium.
Does the CFA make sense for non-finance professionals?
However, the CFA also makes sense for non-finance professionals. Perhaps you work closely with investment or finance employees. In this case, you may choose to pursue the CFA to broaden your knowledge and, again, to stand out from your peers. Specifically, the CFA can benefit accountants, auditors, lawyers, and senior managers in operations.
How many countries are CFA societies in the world?
Currently, CFA societies are in more than 70 countries. These figures are impressive, and, more importantly, they provide you with extensive networking and job opportunities. In fact, CFA societies often post job openings from companies that are specifically looking for charterholders.
What is the CFA franc?
The CFA franc is one of two regional African currencies backed by the French treasury with pegging to the euro. It can refer to either the Central African CFA franc, or the West African CFA franc. They are separate currencies.
Which African countries use CFA?
There are eight independent African countries that use the West African CFA franc: Burkina Faso, Ivory Coast, Mali, Niger, Senegal, Togo, Guinea-Bissau and Benin. The currency serves a huge combined population of 105 million people and is an essential diplomatic link between West African countries today.
In what ways does the stability of the currency benefit CFA nations?
It provides monetary stability, which gives our states and our partners greater financial visibility. It also brings inflation under better control, compared with most other countries on the continent.
How many African countries are using CFA?
14 countriesThe CFA franc zone consists of 14 countries in sub-Saharan Africa, each affiliated with one of two monetary unions.
How does the CFA franc work?
One euro equals 655.96 CFA francs. Central African CFA franc, symbolized by the abbreviation XAF in currency markets, is the official currency of six member nations, and the West African CFA franc, symbolized by the abbreviation XOF in currency markets, is the official currency of eight member nations.
What are the advantages of an economic focus on natural resources for many African nations?
Africa's natural resource economy contributes greatly to the continent's built environment, or human-made buildings and structures. The largest engineering projects and urban areas are directly linked to the production and trade of resources such as water, oil, and minerals.
What is the wealthiest country in Africa?
Here are the 10 richest countries in Africa:Nigeria ($514.05 Bn)Egypt ($394.28 Bn)South Africa ($329.53 Bn)Algeria ($151.46 Bn)Morocco ($124.00 Bn)Kenya ($106.04 Bn)Ethiopia ($93.97 Bn)Ghana ($74.26 Bn)More items...
What countries belong to the Central African monetary Union?
The Central African Economic and Monetary Community (CEMAC) is made up of six States: Gabon, Cameroon, the Central African Republic (CAR), Chad, the Republic of the Congo and Equatorial Guinea. With a total population of about 37 million, it covers a total surface of around 3 million km2.
What is the CFA pegged to?
the euroSince the 1940s, the CFA has been pegged to European currencies—first to the French franc, and, since 1999, to the euro. Until recently, the CFA countries deposited 50 percent of their reserves in the French Treasury in return for a convertibility guarantee.
What is the meaning of CFA in Cameroon?
The Central African CFA franc (French: franc CFA or simply franc, ISO 4217 code: XAF) is the currency of six independent states in Central Africa: Cameroon, Central African Republic, Chad, Republic of the Congo, Equatorial Guinea and Gabon.
Which African countries pay colonial tax to France?
Understanding the Colonial Tax This arrangement is why critics say that the 14 countries are paying a colonial tax. The member countries include Gabon, Mali, Niger, Senegal, Benin, Togo, Burkina Faso, Congo-Brazzaville, Ivory Coast, Chad, Central African Republic, Equatorial Guinea, Cameroon, and Guinea-Bissau.
Does France get money from Africa?
As of January 2014, 14 african countries are obliged by France, through a colonial pact, to put 85% of their foreign reserve into France central bank under French minister of Finance control. They are effectively putting in 500 Billion dollars every year to the French treasury.
What resources did France get from Africa?
In exchange for military protection against attempted coups and the payment of hefty kickbacks, African leaders guaranteed French companies access to strategic resources such as diamonds, ores, uranium, gas and oil.
Why are the economies of the CFA zone under-financing?
The economies of the CFA zone are also under-financing due, in particular, to the restrictive policies of their central banks. Indeed, the level of financial development (the ratio between M2—a measure of money supply—and GDP) is 26 percent for the West African Economic and Monetary Union and 16 percent for the Central Africa Economic ...
What is the CFA franc zone?
The CFA franc zone is an economic and monetary area composed of two completely separate and independent unions: the West African Economic and Monetary Union and the Central Africa Economic and Monetary Community. The countries in this zone are mostly former French colonies that, after independence, signed monetary cooperation agreements with France. The agreements have two main implications: They guaranteed the convertibility of the CFA to the French franc (the euro since 1999) and pegged the CFA franc to the French franc, and later to the euro. In return for the CFA franc guarantee, members of the zone had to deposit at least 65 percent (recently renegotiated to 50 percent) of their external reserves into special accounts held by the French treasury.
Why is the CFA franc important?
Supporters of the CFA franc arrangement contend that it safeguards the member countries against irresponsible governments that juggle interest rates or print money. With French backing and management, the CFA franc is unlikely to follow the Zimbabwean dollar whose value eroded after political turmoil and intense hyperinflation.
Which countries have left the CFA?
Some have done so already: Algeria, Guinea, Morocco and Tunisia exited the CFA zone shortly after independence. What is to stop other countries from following suit today? This arrangement’s longevity may lie in the grander scheme of La Francafrique, the catch-all term for the cosy, often corrupt relationship between France’s leaders and its former African colonies. France is the major guarantor of the African political elites’ power, as demonstrated by its frequent military interventions on the continent. French leaders, meanwhile, solicit campaign contributions from their African counterparts and rely on their influence to promote French interests in the region.
How many CFA francs are in circulation?
The arrangement remains much the same 70 years later. Technically, two separate CFA francs are in circulation, each with its own central bank, in Central and West Africa.
What was the impact of France's unexpected 1994 devaluation on the CFA?
The sharp increase in the cost of living incited by France’s unexpected 1994 devaluation exposed the vulnerability of CFA countries. The currency ossifies these countries’ economies and prevents them from pursuing policies that may be more successful at promoting inclusive growth, argues Sanou Mbaye, a Senegalese development consultant and a former senior official at the African Development Bank.
Why can't CFA members use their reserves as collateral?
In addition, CFA members cannot use these funds as collateral to obtain credit because the reserves are held in the name of France. With French representatives on the boards of both CFA central banks, they are almost entirely dependent on French approval to set their own interest rates, or to control the amount of money within their economies – a basic policy tool for governments. They are reliant to a large degree on France to manage their currency and, through that, their economies.
Is the CFA zone good for Africa?
The CFA francs are overvalued and thus hinder exports while making imports cheaper (benefitting the African elite)… Although this does not necessarily prove that membership in the CFA is responsible for holding those countries back, it suggests at best that it does not help .”
Can the French exchange CFA francs?
That fixed exchange rate can change, but only with French approval.
Why did the African countries pool their reserves?
Last, in order to ensure convertibility and a fixed rate, the countries’ monetary reserves were pooled; the African countries kept theirs in Francs, and France guaranteed the value of African currencies in relation to the French Franc. This arrangement brought into effect an “operations account” opened by the French Treasury for three African and Madagascan issuing institutions, responsible for monetary policy, which stored their reserves in the account. In principle, there is no limit to the amount the operations account can be overdrawn. Today, its reserves equal 50% of their net foreign assets.
Who burned the 5,000 CFA?
In 2017, activist Kémi Séba , the president of the NGO Urgences Panafricanistes, burned a 5,000 CFA Franc note. His shock action sparked fresh discussions surrounding the currency.
What are the lessons of Mali and Guinea?
The bitter lessons of Mali and Guinea. We must learn from others’ mistakes: over a 22-year period (1962-1984), Mali had a painful experience with its currency. Upon its exit from the CFA zone in 1962, the country conducted an expansionist monetary policy, leading to the devaluation of the Malian Franc in 1967, followed by a coup d’État ...
What is the most stable monetary zone in the world?
Today, the West African Economic and Monetary Union is the most stable monetary zone in the world. What it needs, above all, is to establish a resource processing economy, and to improve the business environment, in order to create increased added value and lower unemployment.
What are the issues before discussing a single currency for the region?
Before discussing a single currency for the region, other issues must be dealt with: intra-regional trade must be developed, clearing houses should be established, and the optimum currency area needs to be examined.
Which country has its own currency?
Guinea-Conakry, larger and richer in natural resources than Senegal, has had its own currency since 1960. What effect does the Guinean Franc have on the country’s development? The real question lies elsewhere. Why should we, in the short to long term, resist a single currency for the Economic Community of West African States (ECOWAS) countries? These eight countries—Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo—are worth a collective 58.966 billion CFA Francs, that is, $102.2 billion (the equivalent of 22% of Nigeria’s GDP). Côte d’Ivoire, which represents 35.2% of the economy of the zone, has never shared governance of the Central Bank. As a result, the zone’s monetary policy responds more to the needs of Cote d’Ivoire than to that of the member States.
Is the franc zone an exchange system?
However, the Franc zone is not only an exchange system, but also one of economic cooperation. Historically speaking, there were three hallmarks to the exchange system in African countries of the Franc zone:
Why are CFA charterholders important?
Similarly, professionals who work with people in financial roles are also interested in the CFA charter. Professionals outside of the typical finance roles are attracted to the CFA because it allows them to broaden their knowledge. Even more importantly, this designation helps them stand out from their peers. These professionals include accountants, auditors, lawyers and senior management in operations. Financial firms are seeing the value of having CFA charterholders in other areas outside their trading desks.
How many countries have CFAs?
Not only can CFAs be found in all major cities around the world, but CFA societies are now present in more than 70 countries. The number of CFAs is impressive, and it also gives you an unparalleled network that you can leverage for your career.
How many CFA charterholders were there in 2003?
There were 85K CFA charterholders in 2003. However, there are now 154K charterholders and 227,000+ candidates working hard towards the designation. At the same time, CFA passing rates are stagnant at a low level. If your current or future position requires this title, it’s better to start preparing for the CFA exam now.
How much does a CFA cost?
This is understandable as the CFA investment will cost you anywhere from U.S. $3,000 to $9,000. While expensive, it is still much more affordable than a typical MBA program.
What is the most important designation in finance?
1. The CFA Is the Most Prestigious Designation in Finance and Investment. First, if your goal is to invest professionally, then you are already aware of the reputation of the CFA Institute (CFAI) and its charterholders.
What is a CFA designation?
A CFA designation provides the most value for research analysts and asset managers. These professionals are involved in portfolio management, pension funds, hedge funds, and fund of funds.
What is the difference between CFA level 2 and level 3?
In contrast, Level 3 becomes very specialized in the areas of portfolio and wealth management.
What is the CFA benefit?
Specifically, the CFA can benefit accountants, auditors, lawyers, and senior managers in operations. Financial firms see the value of having CFA charterholders in areas outside their trading desks.
Why do people choose CFA?
Many professionals pick the CFA because they don’t want to spend the time and money on an MBA program.
How many countries recognize CFA charter?
Again, the CFA charter has global acclaim. The CFA Institute reports that 40 countries and territories formally recognize the charter. As such, some countries waive part or all of the requirements for licensed professionals, typically in the field of investment and trading. Therefore, you can travel to other parts of the world to work and not have to worry about clearing certain regulatory obstacles. The CFA Institute reports that charterholders receive waivers from licensing exams in 27 countries.
How many CFA charterholders are there?
According to the CFA Institute, there are more than 167,000 CFA charterholders around the world. And, the number keeps growing. You can find CFAs practically anywhere, especially as more local CFA societies begin to emerge. Currently, CFA societies are in more than 70 countries.
What is the difference between CFA level 2 and level 3?
In contrast, the CFA Level 3 exam is highly focused on the areas of portfolio and wealth management. Level 3 also introduces essay questions that require you to combine many topic areas and apply them to real-world scenarios.
Why did the CFA institute stop surveying?
But the CFA Institute has ceased their annual salary surveys because they simply found that too many factors affected average salaries among members. However, we can use the last CFA Institute salary survey to show that the premium among charterholders was substantial at 54%.
How many levels are there in CFA?
It also covers everything directly or indirectly related to the finance and investment industry. In particular, the CFA exam consists of 3 parts or levels. These levels focus on the same 10 topics, with each level getting progressively more difficult.