West African CFA Franc (XOF)

Key takeaways

• The West African CFA franc (currency code: XOF) is the common currency of eight West African countries that belong to the West African Economic and Monetary Union (WAEMU).
• It is issued by the Central Bank of West African States (BCEAO) in Dakar, Senegal, and is subdivided into 100 centimes.
• Historically pegged to the French franc, the XOF is now fixed to the euro: 100 CFA francs = 0.152449 euro.
• The XOF is distinct from the Central African CFA franc (XAF), though both share the same fixed parity against external currencies.

What is the XOF?

The West African CFA franc (XOF) is a regional currency used by member states of WAEMU to promote monetary stability and economic integration. It circulates in coins and banknotes and is regulated by the BCEAO.

Member countries using the XOF:
* Benin
* Burkina Faso
* Côte d’Ivoire (Ivory Coast)
* Guinea-Bissau
* Mali
* Niger
* Senegal
* Togo

Combined, these countries have a reported spending power in the tens of billions of dollars, reflecting the economic scale of the union.

CFA stands for Communauté Financière d’Afrique (African Financial Community).

How the XOF is pegged

The XOF was originally pegged to the French franc. When France adopted the euro, the peg was carried over and the XOF has a fixed exchange rate to the euro (100 CFA franc = 0.152449 EUR). This fixed parity aims to provide exchange-rate stability for trade with the Eurozone.

Historically, the arrangement included requirements for member countries to deposit a portion of their foreign-exchange reserves with the French Treasury (initially around 65%, later reduced to 50%), which helped guarantee convertibility but also drew criticism over sovereignty and colonial-era ties.

Brief history

• Introduced in 1945 after World War II to replace the French West African franc, the CFA franc was created to prevent devaluation spillovers from changes in metropolitan France’s currency.
• The currency provided a stable unit of account for former French colonies that retained close monetary ties to France after independence.
• Economic pressures in the 1980s and early 1990s led WAEMU members, in consultation with France and the IMF, to devalue the CFA franc by 50 percent and implement fiscal and monetary reforms. These changes were followed by notable GDP growth in the late 1990s.
• The euro replaced the French franc in 1999, and the CFA franc’s parity was adjusted accordingly to maintain the fixed relationship with the new European currency.

XOF vs. XAF

There are two different CFA francs in use in Africa:
* XOF — West African CFA franc (used by WAEMU members listed above).
* XAF — Central African CFA franc (used by countries in the Central African Economic and Monetary Community, CEMAC).

Although XOF and XAF are separate currencies issued by different central banks, they have historically maintained the same exchange value against external currencies because both are linked to the euro under similar arrangements.

Implications for trade and policy

The fixed peg to the euro provides exchange-rate stability that can facilitate trade and investment with the Eurozone and among member states. However, the arrangement constrains independent monetary policy and has been the subject of political debate about monetary sovereignty and the legacy of colonial financial structures.

Conclusion

The XOF is a regional currency designed to foster monetary stability and integration among eight West African nations. Its long-running peg to a European currency—first the French franc and now the euro—offers predictable exchange rates for external trade but also ties member economies to policies and arrangements that have provoked ongoing discussion about reform and sovereign control.