Winners and losers in bank-note swap

West Africa’s central bank enrolled town criers, UN peacekeepers and even desert pilots as it pulled out all the stops for an unprecedented 10-week campaign to swap old bank-notes for new that ended last week. The Central Bank of the States of West Africa (BCEAO), which controls the CFA franc currency used by eight nations in the region, hailed the campaign as a triumph. Old bank-notes bound for the shredder had been mopped up by and large on deadline by 31 December. “It was a success,” Sambani Fall told IRIN from BCEAO headquarters in Dakar. “We’re still working on final figures but we already know that in some countries it was a great success.” A statement issued by the bank late Tuesday said that according to provisional figures a total 99.2 percent of old bank-notes had been swapped for new. But whatever the final data, there were certain to be wads of worthless currency left over in far-flung corners of West Africa, a region where the poor often pile up their savings under beds or bury them under the earth floors of their houses. In Niger, the Consumer Council ORCONI urged the bank to remember much was at stake. “We must save peoples’ savings, help the innocent holders of bank-notes”, said ORCONI president Nouhou Arzika. There was also concern at the lack of facilities for people to change their cash in the rebel-held north of Cote d'Ivoire. The BCEAO only operated one exchange centre for three days in the rebel capital Bouake right at the end of the operation. That was supposed to meet the demands of six million people in the rebel zone who have been forced to live without normal banking for over two years. The scheme to withdraw 911 billion CFA francs (US$1.86 billion) of old notes issued since 1992, was launched September 15, with the new series of notes supposed to be harder to forge. But the aim was also to prevent the laundering of buckets of cash robbed from BCEAO coffers over the last couple of years. Rebels in wealthy Cote d’Ivoire, which alone accounts for 40 percent of West Africa’s monetary mass, are suspected of financing their two-year-old insurgency with the proceeds of a raid on the BCEAO's head office in Abidjan in 2002. Many more billions of notes that had been officially withdrawn from circulation were stolen in a subsequent raid on the BCEAO office in Bouake. In Togo, an official who asked not to be identified, told IRIN that 60 million CFA francs of stolen money (US$122,500)had turned up during the bank-note swap. “The people who brought them in were not suspect,” the source said. “The notes had been through several hands so it was difficult to trace their origin.” Also in Togo, a BCEAO director told IRIN the swap had been a frank success in the small tropical country. “We did everything we could to facilitate the currency exchange,” said Kouami Amekoudji. The bank used megaphones to rally people to makeshift bank counters set up at Lome’s central market, and in far-off villages town criers banged traditional gongs to let people know the old bank-notes were about to be withdrawn from circulation. In vast landlocked Niger, a country which is mostly desert, a chartered plane ferried loads of the new brightly-coloured smaller bills to towns located in the arid north bordering the Sahara. In Guinea-Bissau around 400 police and 50 vehicles were drafted to transport the funds. A couple of boats were even roped into service to mop up old banknotes on small islands off the coast. In Mali, the bank set up more than 300 makeshift counters and sent teams to more than 130 locations to exchange the notes. But the situation was toughest in the rebel-held north of Cote d’Ivoire, where banks closed down more following the outbreak of civil war in September 2002. After neglecting the problem, the BCEAO only last week made a last-ditch three-day bid to mop up old bank-notes. It sent a 26-person team from the loyalist south to man bank booths temporarily set up in a UN building in Bouake, while members of the 6,000-strong UN peacekeeping force, backed by French troops and rebel soldiers of the New Forces, provided security “People are very disciplined, the operation is proceeding as planned,” Colonel Alassane Fall, who commands ONUCI forces in the Cote d’Ivoire rebel capital, Bouake, told IRIN. In all, the BCEAO set aside a total 255 billion CFA francs ($535.7 million) in new bank-notes to be exchanged in Cote d’Ivoire. By mid to late December, 94.3 percent of the old notes had been removed, according to Yao Sahi Kablan, the BCEAO manager there. But that still left a total 14 billion CFA francs ($29.4 million) to be collected in the country by the time the BCEAO team went into the rebel north. Much of it was in small bills and most of it was probably in the hands of poor farmers in remote villages, who traditionally keep their savings hidden at home. Any old notes left in their possession are now worthless. In a region where many people live below the official poverty line on less than US$1 a day, the smaller denominations, notes worth 500 CFA francs (US$1) and 1,000 CFA francs (US$2), are the bank-notes most in use on street-markets, in public transport and for festivities such as weddings. Just over a week before the deadline expired, BCEAO governor Charles Konan Banny said a large proportion of the smaller bills had yet to be exchanged. “Ninety percent of the notes are in,” he told Burkina Faso television. “Now the small bills are coming in too. That is all according to plan.” Across West Africa in the days leading up to the 31 December deadline, shopkeepers and street sellers had been refusing payment in 500 and 1,000 CFA franc bills in fear of not being able to exchange them. ”I didn’t want to be paid in 500s and 1,000s because I didn’t know if I’d have time to get to the bank before the deadline,” said Christine Amava, who sells rice in Lome. “I haven’t sold anything for days because of a lack of cash,” said Ami Sacko who sells cosmetics in the Malian capital Bamako. “Nobody’ll accept the 500 CFA bank-notes and there aren’t enough new 500 CFA franc coins available.” In Bamako, BCEAO director Idrissa Traore, said just before the close of the operation that 97 percent of the old bank-notes in circulation in Mali - 99.5 billion CFA francs (US$202 million) -had been exchanged. In Guinea Bissau, officials said 98.5 percent of the 10.4 billion CFA francs (US$21 million) in circulation had been converted into crisp new notes. But fears lingered that the poor would lose out. "There really should've been more time for the swap," said Moussa Aboubacar, a trader at the main market in the Niger capital Niamey. "In spite of the communications campaign, farmers probably still have old notes." Before the close of the campaign, BCEAO spokesman Madior Sylla had told IRIN that the bank had given its eight member states ample warning about the currency swap. “We’ve done everything we could to make sure people swapped the banknotes. We sent messages out on radio, not just national radio, but rural stations and community and religious networks,” he said. The CFA franc, which is backed by the French treasury, was introduced in 1945 to provide the then French colonies with a stable currency. Originally tied to the French franc, it is currently pegged to the euro at a rate of 656 CFA francs to one euro. The BCEAO issues the currency in Benin, Burkina Faso, Cote d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo. The currency is also used by seven Central African states. These have their own central bank and use different notes which are due to be swapped for a new series in early 2005.