ABIDJAN, IVORY COAST, JAN. 12 -- A major currency devaluation dealt a severe economic jolt across French-speaking West Africa today, leading stores to double prices and opening another gap in the region's longstanding relationship with its former colonial rulers in France.
The measure, taken by the 14 countries of the African Financial Community (CFA) currency zone on Tuesday, was designed to increase domestic production and investment over time by generating a boost in exports. But for now, people in countries such as Ivory Coast, Benin, Gabon and Togo saw only skyrocketing import prices.
At one Abidjan supermarket, the price of a quart of French-made ice cream soared to the equivalent of $20. In a panic buying spree, consumers cleared store shelves of imported goods, keeping one step ahead of the price changers. Prices on most locally made products remained the same.
Unlike most neighbors, CFA countries never had to worry about the fluctuation of their currency. It has been fixed to the French franc for 45 years, promoting stability and economic ties.
The French currency role in these countries -- Senegal, Central African Republic, Togo, Ivory Coast, Benin, Mali, Niger, Chad, Burkina Faso, Cameroon, Gabon, Congo and Comoros, as well as Spanish-speaking Equatorial Guinea -- has been a major tool for French political influence.
The new CFA exchange rate was fixed at 100 CFA francs to the French franc, down from 50 to 1. That sent up import prices immediately, because Africans in the CFA zone now have to pay twice as many CFA francs for 1 French franc's worth of goods, putting many imports out of their reach.
"It will put off our coming into the CFA franc zone," said Thomas Perko, regional representive for General Motors, which has outlets in English-speaking Nigeria and Ghana, both of which have floating currencies.
The International Monetary Fund had long pressed franc-zone nations to devalue. The high exchange rate encouraged smuggling through non-franc countries and prompted capital flight.
The IMF urged France to support devaluation as a means for its former colonies to recover from a decade-long economic slump -- largely brought on by a drop in commodities prices. France conditioned additional development aid on economic reform and encouraged increased cooperation between its former colonies and the IMF.
But France has not entirely cut ties. It announced post-devaluation bilateral debt relief of $4.2 billion for CFA countries, the Reuter news agency reported. The IMF is to lend at least $1.5 billion to help ease the way, the agency added.
Importers and consumers dependent on foreign products will suffer the effects of devaluation immediately. Lebanese businessman Ali Hammoud said he lost thousands of dollars in less than 24 hours because he failed to convert his CFA francs before devaluation. "I never, never thought the CFA was going down," he said. "I have nothing left in my shop. What do I do, go to Lebanon? I don't know Lebanon. I have two children to feed."
People who eat locally produced food can expect to be adversely affected as the price of imported fuel increases, affecting transport costs.
Burkina Faso, Mali, Chad and Niger, some of the world's poorest countries, could suffer more because the desert nations do not have sufficient agricultural and industrial capacity to offset price rises in imports.
Some franc-zone countries already have taken measures to soften the blow. Senegal announced a 10 percent pay increase for civil servants. Last summer it had lowered salaries by 15 percent as part of a structural adjustment program. Burkina Faso, Benin and Ivory Coast announced price controls.
The devaluation came a month after the death of Africa's longest serving president, Felix Houphouet-Boigny of Ivory Coast, who helped lead the region to independence but had always urged maintaining close ties with France.