Exploring the Implications of Mandatory Reforms of XAF and XOF on the Economic Revival of French-speaking Countries

Abstract

Promoting and facilitating economic development in French-speaking African countries continues to pose a significant and formidable challenge. These countries' economies operate within a perpetually tense macroeconomic environment, both domestically and externally, characterised by a substantial degree of monetisation and a predominantly import and export trade centred around primary goods. The promotional endeavours initiated during the early 2000s as part of new regional partnership policies have yielded varied and nuanced outcomes in numerous instances. However, they have often been met with mitigated effects and, in some cases, have been severely stunted due to the emergence of fresh structural issues. These issues include the exacerbation of duality caused by agricultural underdevelopment, the mass migration from rural areas, and the affliction of the natural resources curse.

Moreover, the challenges these nations face have been further compounded by the crisis regarding the fiscal functions of the state and the destabilisation of the regional monetary system for both export and domestic currency absorption. A more comprehensive and targeted approach is necessary to address these multifaceted challenges and foster sustainable economic growth and development. To overcome these obstacles, French-speaking African countries must prioritise diversification and value addition within their economies. This entails reducing the overreliance on primary goods exports and expanding into sectors with higher value-added potential, such as manufacturing and services. By promoting the development of local industries and encouraging foreign direct investment, these countries can stimulate job creation, enhance technology transfer, and boost productivity.

Furthermore, addressing the issue of agricultural underdevelopment is crucial for achieving long-term economic sustainability. By investing in rural infrastructure, providing farmers with access to modern farming techniques, and improving market linkages, these countries can enhance agricultural productivity and reduce rural-urban migration. This, in turn, can help alleviate poverty, improve food security, and contribute to overall economic growth. Additionally, French-speaking African countries need to manage their natural resources effectively. While natural resources can present valuable opportunities for economic development, they also pose significant challenges, including environmental degradation and resource mismanagement. Implementing sustainable and transparent resource governance practices is vital to ensure that the benefits of natural resource extraction are maximised for the long-term well-being of the population.

Furthermore, addressing these nations' fiscal challenges requires strengthening the state's capacity to mobilise domestic revenues and efficiently allocate public resources. This involves implementing comprehensive tax reforms, improving tax administration, and enhancing public financial management systems. These countries can improve their fiscal sustainability, reduce reliance on external financing, and create a conducive environment for private sector investment. Lastly, regional cooperation and integration play a pivotal role in overcoming the challenges faced by French-speaking African countries. By deepening regional economic integration and promoting intra-African trade, these nations can unlock economies of scale, enhance competitiveness, and attract more significant investment. Strengthening regional institutions, harmonising trade policies, and facilitating the movement of goods and services are imperative to foster a more integrated and mutually beneficial regional economy.