The countries of the Economic and Monetary Community of Central Africa (CEMAC), have been suffering from a shortage of access to foreign currencies for quite some time. This has penalized households and businesses, across these countries. Hugely affected by the fall in oil prices, six countries, which are members of the CFA franc zone have pegged their currency to the euro by a fixed exchange rate. Since the middle of 2018, it was difficult for these countries to obtain foreign currency. In recent months, things have gone from bad to worse. According to a survey conducted in the first quarter of 2019, 71% of the region’s businesses consider the difficulty to access foreign currencies a major concern. Earlier, availing foreign currency from their banks, businesses had to wait only for two or three days, nowadays the wait is over a month and more. The fall in oil prices in 2014 (oil was the main provider of foreign currency in the area) devastated the economies of the six countries in the area.
Foreign exchange reserves of the Bank of Central African States (BEAC), which guarantees the CFA-euro franc bond, have collapsed, leaving the specter of devaluation. In 2017, IMF extended the assistance programs for four of the six countries in the zone, such as Gabon, Chad, Cameroon and Central Africa. This was coupled with the rise in oil prices from 2017, which provided an opportunity for building up foreign exchange reserves. But the follow-up action was weak and during the trajectory in which the oil prices ruled high, none of these countries could beef up their foreign exchange reserves, leading to the present crisis.
