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He has recently published L’urgence africaine: Changeons le modèle de croissance , Odile Jacob Editions, Paris, September 2019.
What analysis do you make of the Togo government’s approach to managing the COVID crisis, the measures taken and initiatives such as the cash transfer programme “Novissi”?
Togo decided to deal with COVID-19 by quarantining people by region. There are five regions in Togo: from north to south Savanes, Kara, Central, Plateaux, and Maritime. It was possible to move about within each region but not to move from one to another. At the same time, the government banned the “Zemidjans”, which are the widespread motorcycle taxis which you find throughout the country. It was a difficult choice between keeping lock-down, which certainly reduced the risks of the pandemic spreading, and the urgent need for those people with little or no access to any form of social security to leave their homes and find income-generating activities. The majority of working people are in the informal sector, and rely on daily income rather than a monthly salary. In practice, the government did not implement the ban on motor-cycle taxis, given the evident risks to public order this might have provoked in a country in which our economic dynamism depends greatly on the Zemidjans, which is such a popular means of transport, though with its own dangers. It is cheap and ensures that the links between the different markets in Lomé and the interior of the country can operate effectively. So, in terms of the trade-off between lock-down and continuing economic activity, I should say we were somewhere in the middle. Some institutions were shut down, like our universities, religious buildings, bars and restaurants, all of which reduced the risk of infection, while at the same time recognising that we needed to maintain some level of public services. For those in government employment, we adopted a continuous working day, thereby reducing working times. Throughout, there was no shutdown of public services. The Government established a special health centre dedicated to COVID treatment, which generated a lot of argument about the effectiveness of the treatment methods, since we are in a country which has, for example, few ventilators. The official figures tell us of twenty deaths in Togo from the pandemic, which puts us with those other countries in which the death-rate has been very low. It seems that such low mortality is quite widespread – if you take the whole of the continent, in mid-August 2020, Africa has had 3% of the global deaths despite our population representing 17% of the global total. However, perhaps we should be careful about making bold statements, as in the last few weeks there has been a resurgence of cases in South Africa, Algeria, Egypt, Nigeria and Ghana. But overall, it is clear that COVID has been weaker and less virulent than had been feared. Even if we accept that our statistical services are not brilliant, people know each other well and if there is an unexplained death in the family, it gets reported. Despite this subjective proxy measure, we can nevertheless state without too great a risk of being proved wrong, that Togo and sub-Saharan Africa have been spared too great a loss of life, for which I am profoundly grateful. The multiple information campaigns sensitising people to the importance of wearing masks, and keeping a safe distance from others, have certainly played their part, as has the closing of land and air frontiers.
How do you view the economic response in Togo, and how might the pandemic affect economic and monetary policy in Africa?
So far as the economic response is concerned, for a number of years the Ministry of Development in Togo has been trying to reach the poorest and most vulnerable groups in society, through the National Fund for Inclusive Finance (FNFI). This mechanism has been in place for the last 7-8 years, and has gradually expanded, providing a means to get resources directly to those in greatest need, but with the duty of reimbursing such funds. Hence, the COVID response was greatly aided by the work done over previous years to set up this system for monetary transfers, known as Novissi, which enabled the government to respond rapidly to people’s immediate financial needs. Having said that, it would be good to evaluate rigorously the actual impact on those Togolese households who did receive money, and to understand why numerous people were excluded. This micro-economic response is similar to the “bolsa familia” put in place in the 2000s for poor households in Brazil by President Lula.
From a macro-economic point of view, Togo had launched her National Development Plan (PND 2018-2022) two years ago, with three major priorities: the first has been to make Togo’s port at Lomé a logistical hub, building on the country’s corridor position in West Africa, which offers critical transport routes to landlocked countries further north. The second is based on establishing “agro-poles”, which can become centres of agricultural and food processing, and the third is investment in social services and strengthening human capacity. One of the lessons Togo might draw from the pandemic is whether they have got the right balance between these three priorities: the third had been allocated fewer resources than the first and second, but COVID has shown up the blind-spots in Togo’s development and more broadly in Africa, in terms of resources devoted to the SDGs, and above all to health. This crisis has shown us that the African continent needs to give greater attention to social services, education, health, training and even data collection, since we need more effective statistical agencies.
Reflecting on Senegal’s amendments to their national development plan ‘Plan Sénégal Emergent’ (PSE) and other African countries who are also now adjusting their development plans, do you think Togo will need to make changes to its National Development Plan (PND)?
It is inevitable that we will make changes to the PND and revise our macro-economic projections, since we had not taken a pessimistic scenario into account. Rather, we had assumed an on-trend case with GDP growth of 5% and a second, more optimistic scenario of 7% per year. The World Bank reckons that African countries as a whole are likely to see their GDP fall by 5%. At the start it was predicted closer to a 2% fall in GDP, but now it is looking more like 5%. Given the significance of the GDP growth rate for all other macro-economic indicators, Heads of State in the West African Economic and Monetary Union (UEMOA) have just suspended the application of convergence criteria, given the likely damage from this unexpected blow from the pandemic. For all African states and elsewhere across the world, economic models will need to be re-run to take into account the fall in GDP. So far as I can see, Togo has no choice but to revise its national plan in two respects: first by reallocating resources between the three priorities to give greater attention to social dimensions, and second to work through the consequences of this fall in GDP resulting from the global economic recession and its impact on the nation’s economy.
As a specialist in monetary questions, how do you think the pandemic will affect monetary policy, and a range of short and long term options for monetary and fiscal reforms related to the CFA Franc?
Let’s start by recognising that the Central Bank for West African States (BCEAO) has injected some 800billion FCFA (equivalent to US$1.45b) into our economic space, which breaks significantly with traditional doctrine which had followed a strongly monetarist line, shaped by a desire to avoid inflation. I salute the BCEAO’s decision to align its policy with those of central banks across the world which have been pursuing a range of unconventional monetary measures. I am convinced that this crisis constitutes a “ruse de la raison” (in the Hegelian sense)[i], so that African financial and monetary institutions understand that we should no longer try and follow dogmas designed for western economies, but adapt the tools we have to hand for our own purposes and contexts. Over the last 15 years, I have been one of a group of people arguing for a much more engaged and ambitious policy to be played by our central banks and national development banks, given the range of challenges we face as countries. We’ve needed to experience this crisis which, while not hitting us too hard on the health front, has brought home the urgent need to update and re-think the role played by our banks. We must better understand and map out the channels by which monetary and financial measures feed through into the real economy. The next step will be to orient the actions of our monetary and financial system to support funding of African industrial champions. Many of our entrepreneurs do not get sufficient access to credit and, even when they do, the interest rates are prohibitive – in double figures! African financial systems and institutions need to provide the capital needed by our continent so we can develop effective value chains, particularly in the agro-industrial field. Let me give you the example of peri-urban farming – a truly local form of farming, which has been a life-saver during the lockdown, because the very short supply chains involved have enabled food to be grown locally, which has replaced food imports which have been blocked by the closing of national boundaries. Peri-urban agriculture never gets properly funded because bankers fear the risks involved, and think they cannot get sufficient guarantees in case of failure. We have work to identify what form of assets would be acceptable to bankers in exchange for funding peri-urban farming enterprise and the associated value chains for food and cash crops – coffee, cocoa, cotton - which could offer employment. It has always astonished me that we only process 3% of the cotton we grow in West Africa. I think the monetary and financial systems have a big part to play in making liquidity available which will ensure we get over the crisis, without too many bankruptcies – recognising that there is a clear difference between a liquidity crisis and a solvency crisis. Most of all what a central bank needs to do in a crisis is ensure sufficient liquidity – take the division of responsibilities in the Euro zone, governments are taking solvency in hand while the central bank ensures sufficient liquidity. But given the very tight budgetary margins our governments operate under, its not impossible that we’ll need to ask our central banks to go beyond the liquidity crisis and manage the solvency crisis as well, so that there are not too many enterprises that have to shut down.
On the question of the CFA Franc, where are we now? Does the economic context shaped by the pandemic have an impact on the reform agenda?
Let me say there are two important dimensions to this question, the first of a symbolic or political form which relates to the name given to the money, and the second which concerns the role of the currency within the wider region. Taking the first dimension, foremost for a currency is its function as a unit of account. As I have frequently noted, the name you give to your currency relates to your identity and it is not by chance that the Japanese don’t count in Euro, nor do the Americans count in Yen. The CFA Franc refers back very clearly to the French colonies of West Africa, so choosing a new name has to be a very good thing. As a result, I have welcomed the decision taken December 21st 2019 in Abidjan by the French and Ivoirian Presidents to change the name of the CFA Franc. How might we change the name of the CFA Franc? When the Heads of State announced they would call it the ECO, I reminded them straight away that ECO is the name of the regional monetary system which ECOWAS has been discussing, and that there are already criteria established for joining the ECO. If you say that the ECO is going to take the place of the CFA Franc, that creates a real difficulty of acceptance for those ECOWAS members which are not already in the UEMOA zone. From a pragmatic point of view, could we not find another name for the currency which could subsequently be integrated into the future ECO zone, or would this entail too many costs (collection of old notes, reissue of new notes, protection from fraud, etc.)? We would have to undertake this issue of a new currency twice in a short space of time were we to follow this route and start by moving away from the CFA Franc but using a name different from the ECO (such as Koris, Wari, etc…). Such a rapid shift from one money to a second and then a third might dispel the confidence which you need amongst the public, and which constitutes the gauge of success for any new monetary system.
The fundamental question today concerns the more strictly economic role of the money: how might we bring about a successful transfer from the CFA Franc to the ECO, and ensure the ECO zone works optimally? On the one hand, let’s take the reform of the Franc zone in both West (UEMOA) and Central (CEMAC) Africa which is itself the subject of huge complexity on which I have worked for the last 15 years. And on the other, there is the proposed adoption of a common monetary system for ECOWAS, which itself poses questions about optimal monetary policy design in a region where the economic cycles of member states are not synchronised. In sum, for me there are three big challenges:
i. Doing away with the colonial and post-colonial symbolism of the acronym CFA
ii. Creating a money for the ECOWAS region which wishes to pursue closer integration and needs to consider the desired level of collective solidarity, such as a federal budget, and how much shared policy-making they will agree to, given that some level of this coordination is indispensable for any monetary union.
iii. Choosing the right level at which to exchange the national currency for this new regional money, a question which is not limited to a situation of monetary union. Ghana will ask itself the question – what should be the rate at which we exchange the cedi for this new money, as will Nigeria relative to the naira. We need answers to this question which align with the economic objectives we are seeking.
Given these three overall challenges, there are at least four possible scenarios to consider:
The first concerns the ECO-CFA with a fixed exchange rate with the Euro, and the progressive addition of ECOWAS states to the UEMOA grouping (such as Ghana, Guinée, Liberia, etc.). This is the most accepted scenario at present, given that it’s the UEMOA member states which respect most of the criteria for convergence established for adherence to the ECO.
The second scenario could be one in which rather than converging towards the UEMOA states, there is a movement towards the ECOWAS member states which have the closest convergence in terms of GDP/head. Taking this scenario and criterion, the three model countries are Cape Verde, Nigeria and Ghana, rather than the francophone countries.
The third scenario offers the option of “monetary co-habitation” within the ECOWAS region, with UEMOA states taking on the ECO-CFA while an ECO-Naira comes under the aegis of Nigeria, for which the frontier would be the actual West African Monetary Zone (ZMAO). This is in fact the second monetary zone of West Africa which since 2002 had proposed to establish its own monetary system with the name of…. the ECO!
The fourth scenario would involve a monetary duality at the heart of ECOWAS, with the ECO as the common money but this running alongside each country’s current currency, which would be retained at a level which was brought into line with the ECO which alone could be used for transactions with the rest of the world. This dual system is what Chile knew with its peso and the Unidad de Fomento. The European Monetary system also had in the past a payments scheme, even before the Treaty of Rome in 1957, and later with the ECU which constituted a unit of account though not a form of money which could be used for ordinary transactions. Such a scheme had already been thought up by the Senegalese economist Daniel Cabou in 1960, which he termed the “African Payments Union”, then taken up by the Egyptian economist Samir Amin in 1969 as requested by Nigerien President Hamani Diori.
As becomes clear, the decisions being made right now should not be thought of as an end in themselves, but as the beginning of an era during which economists, politicians, philosophers, African historians and geographers, and Africanists more generally, could help decision-makers put into place what I call “systems for shared prosperity”. This is the task around which I want to organise in the next few months a colloquium at the University of Lomé titled “Which money for what kind of development in West Africa?”
With my last question, I’d like to hear your analysis of future relations between the EU and Africa, notably in the run-up to the next summit in late October.
The EU seems not to know how best to act in relation to Africa, with the big international shake-up in ideas caused by COVID, and that the EU paradoxically demonstrates herself with the massive recovery plan announced with 750 billion Euros pledged and the embryonic federal budget. We’ve clearly come to the end of unbridled neo-liberalism and we’re seeing a return to more nationalistic approaches to trade and globalisation. Governments and regional groupings have been in the front line during the pandemic, and its become clear that the approach to regulation which we’ve witnessed for the last 50 years has run its course, where we produce a good in one part of the world and export it to the other side of the planet, given the need to limit carbon emissions. This way of doing business cannot work anymore, and today it is clear that global value chains can no longer be chains of dependence for Africa. Given the huge gap in agricultural productivity between Africa and EU, of 1 to 400, how can it be right that Europe demands that Africa opens her market to European goods and services? We have to leave free trade behind and shift to fair trade. If the EU wants a real partnership with Africa, I see three things they need to take to heart:
First, the re-establishment of economic sovereignty is unavoidable for Africa if the continent is to become a true economic partner: we have spoken about money, we could go onto to look at budgets with all the work required to expand the fiscal space so we can properly fund our public policies and establish counter-cyclical economic policies;
Second, is the need to insert short-circuit development chains into African development models: there is no sense in growing chickens in France to export to Senegal, or bringing powdered milk from the Netherlands to Togo. Instead we must encourage local production of chickens and milk, which both generates local employment and also reduces the carbon footprint associated with the distribution of these products;
The third challenge concerns our need to process and transform our raw materials here, thereby creating value, knowledge and skills, inclusive growth and jobs. This third challenge is at the heart of my book “L’urgence Africaine: Changeons le modèle de croissance” and as a result I won’t go into this point in greater detail here and now;
To finish off, I would say that the philosophy of a sincere partnership should involve the strengthening of capacities within Africa in order to address the three issues outlined above. Rather than the demand by Europe that Africa should open up her markets, because international competition is such that in current circumstances Europe sees Africa as a captive continent. The EU should not underestimate the strong demand for emancipation, for freedom by African youth and this is one of the reasons behind the slow progress made by the Economic Partnership Agreements being concluded to follow the Cotonou agreement of 2000. Its been 20 years that we’ve not been able to go beyond the Lomé Convention of EU/ACP countries, despite the effort invested by those on both sides, because there are a number of fundamental difficulties, such as the non-execution clause which allows for unilateral action by the EU to suspend cooperation with an ACP state. There is also a problem associated with how ACP states which are not LDCs are treated, that’s to say those with intermediate income status. So overall, there are two important aspects – a general push for the emergence of a new inclusive development model, which takes account of ecological factors, and an ongoing learning process whereby the African continent is no longer considered Europe’s exclusive domain, or hunting ground.
If this is the starting point, then everything is negotiable between Africa and the EU. The rational basis for my views above make even more sense given the anxiety towards a wave of African migrants expressed in the works of a number of European researchers. The best means to reduce the risks of such a migratory peril which is largely fantasy (take a look at the work of François Heran who demonstrates the exaggerated nature of the migration statistics) would be for Africa to become economically stronger, so that those seeking to make their way to Europe do so as a life-choice, rather than for reasons of daily survival. I would plead for an African demography chosen by Africans, because you cannot tell everyone to stay home and equally constrain them to be under-populated. It doesn’t make any sense and is difficult to justify if you keep in mind one of the fundamental principles of international relations, that of people’s right to self-determination. I have a deep conviction that Europe and Africa, due to their geographic proximity, and close cultural ties, could build together a shared future on the basis of both sides winning from this. In particular, Europe could be the sound-box for Africa’s voice to resonate loudly in the global grouping of nations, with Europe next to Africa and for Africa. To do this, it needs a real shared development path, and we need absolutely to avoid the temptation of perpetuating a hegemony founded on pillage and the institutionalisation of historically asymmetric relations.
Professor Nubukpo is also Director of the Observatory for sub-Saharan Africa at the Jean-Jaurès Foundation in Paris, researcher at the Centre for International Cooperation for Agronomic Research for Development (CIRAD), Member of the Scientific Council for the French Development Agency (AFD), and Board Member for the Foundation for Agriculture and Rural development in the world (FARM). He is fellow of the Institute for Advanced Studies in Nantes, and is a former Oxford-Princeton Global Leader Fellow.
[i] Hegel believed that reason governs the world and that we are evolving towards a more rational, moral and free state.
