XAF (Central African CFA Franc)

What Is the XAF (Central African CFA Franc)?

The XAF (Central African CFA Franc) is the official currency of six central African countries. Launched in 1945 as the franc of the French Colonies of Africa, it is backed by the French treasury and pegged to the euro.

Understanding the XAF (Central African CFA Franc)

The XAF (Central African CFA Franc) is used by the members of the central African currency union, also known as the Economic and Monetary Union of Central Africa and includes Cameroon, Central African Republic, Chad, Republic of the Congo, Equatorial Guinea, and Gabon.

CFA stands for "Communauté Financière Africaine," which translates to the African Financial Community in English.

Banknotes of the currency are issued in denominations of 500, 1,000, 2,000, 5,000, and 10,000 francs, while coins circulate in denominations of 1, 2, 5, 10, 25, 50, 100, and 500 francs. The Bank of Central African States manages and issues the currency. As of Aug. 16, 2022, one euro is valued at 656 XAF.

History of the XAF (Central African CFA Franc)

The XAF has its roots in France’s African colonial empire when France controlled much of West and Central Africa from the middle of the nineteenth century through the middle of the twentieth century. In 1910, the French government established French Equatorial Africa, a federation of French colonial possessions in Equatorial Africa, extending northwards from the Congo River into the Sahel.

The colonies of French Equatorial Africa used the French Equatorial franc as the official currency of the region and was in circulation from 1917 until 1945, when the Central African franc replaced it. As the countries in this region gained independence from France, they kept the Central African franc as their currency.

In 1964, the Customs and Economic Union of Central Africa evolved with the signing of the Treaty of Brazzaville. The signatory countries were Cameroon, the Central African Republic, Chad, the Republic of Congo, and Gabon. Equatorial Guinea, the only former Spanish colony in the monetary union, joined in 1983 and adopted the Central African CFA franc as its currency a year later.

In 1972, the Bank of Central African States was formed, replacing the Central Bank of Equatorial Africa and Cameroon as the currency manager and the region ’s banking supervisor.

The 6 Economies of the XAF

The cultures and economies of the six countries that use the Central African CFA franc are diverse.

• The Republic of Cameroon struggles with an impoverished, subsistence farming population. Cash crops are coffee, sugar, and tobacco, but the country also has a growing industrial sector. World Bank data from 2021 shows annual gross domestic product (GDP) growth of 3.5%, with a yearly inflation deflator of 3.2%.
• The Gabonese Republic has abundant petroleum resources supporting half of the country's income. World Bank data from 2021 shows annual GDP growth of 1.5%, with a yearly inflation deflator of 13.2%.
• The Republic of Equatorial Guinea has abundant oil reserves. Crude oil provides all of the country's income. World Bank data from 2021 shows annual GDP growth of -0.9%, with a yearly inflation deflator of 18.2%.
• The Republic of the Congo is a significant oil producer state, with oil accounting for most of the country's GDP with an unequal distribution of wealth among the population. World Bank data from 2021 shows annual GDP growth of -3.5%, with a yearly inflation deflator of 18.2%.
• Conflicts and violence have crippled the Republic of Chad since its independence in 1960. This uncertainty has ranked Chad as one of the poorest countries in the world on the Human Development Index (HDI). World Bank data from 2021 shows annual GDP growth of -1.2%, with a yearly inflation deflator of 7.2%
• The Central African Republic has deposits of uranium, crude oil, diamonds, and gold, but remains one of the poorest countries in the world. The HDI lists it as one of the most unhealthy places in the world to live. World Bank data from 2021 shows annual GDP growth of 0.9%, with a yearly inflation deflator of 3.3%