What is the XAF (Central African CFA Franc)?

The XAF (Central African CFA Franc), backed by the French treasury and pegged to the euro, is the official currency of six central African countries.

Key Takeaways

  • The XAF (Central African CFA Franc), backed by the French treasury and pegged to the euro, is the official currency of six central African countries.
  • The XAF (Central African CFA Franc) is the official currency of these six countries: Cameroon, Central African Republic, Chad, Republic of the Congo, Equatorial Guinea, and Gabon.
  • Circulation of the XAF (Central African CFA Franc) is in banknote denominations of 500, 1,000, 2,000, 5,000, and 10,000 francs.

Understanding the XAF (Central African CFA Franc)

The XAF (Central African CFA Franc) is used by the members of the central African currency union, 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 "Communatué financière d'Afrique," which translates to the African Financial Community in English.

Circulation of the XAF (Central African CFA Franc) is in banknote denominations of 500, 1,000, 2,000, 5,000, and 10,000 francs. 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. The current exchange rate is 1 EUR = 655.5 XAF.

The XAF has its roots in France’s African colonial empire. France ruled over much of West and Central Africa starting from the middle of the nineteenth century through the middle of the twentieth century. In 1910, the French government established French Equatorial Africa, which was 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. This money 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.

Affect of Six Economy on the African Franc

In 1964, the establishment of the Customs and Economic Union of Central Africa happened with the signing of the Treaty of Brazzaville. Signatory countries are Cameroon, the Central African Republic, Chad, the Republic of Congo, and Gabon. Equatorial Guinea, the only former Spanish colony in the monetary union, joined it in 1983 and adopted the Central African CFA franc as its currency a year later. The Bank of Central African States formed in 1972, replaced the Central Bank of Equatorial Africa and Cameroon as the currency manager and the region ’s banking supervisor.

The culture and economy of the six countries who use the Central African CFA franc are diverse.

  • Even though the public debt of the Republic of Cameroon has decreased, the country still 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 2017 shows an annual gross domestic product (GDP) growth of 3.2%, with a yearly inflation deflator of 2.8%.
  • The Gabonese Republic has abundant petroleum resources that make up nearly half of the country's income. World Bank data from 2017 shows an annual gross domestic product (GDP) growth of 1.1%, with a yearly inflation deflator of 1.3%.
  • Holding one of the worst worldwide records on human rights violations and human trafficking, the Republic of Equatorial Guinea has abundant oil reserves. Crude oil provides all of the country's income. World Bank data from 2017 shows an annual gross domestic product (GDP) growth of a negative 3.2%, with a yearly inflation deflator of 12.5%.
  • The Republic of the Congo is a significant oil producer state and accounts for most the country's GDP. There is an unequal distribution of wealth among the population. World Bank data from 2017 shows an annual gross domestic product (GDP) growth of 3.2%, with a yearly inflation deflator of 2.8%.
  • A series of conflict 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 2017 shows an annual gross domestic product (GDP) growth of negative 4.6% with a yearly inflation deflator of 14.6%.
  • 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 list it as one of the most unhealthy places in the world to live. The primary export is industrial diamonds. World Bank data from 2017 shows an annual gross domestic product (GDP) growth of 4.3%, with a yearly inflation deflator of 4.5%.