The CFA franc which is used by 80 million people in West and Central Africa has had a good year.

Growth in the zone's 14 mainland African countries has remained firm - confounding fears that the CFA might have to be devalued following the launch of the euro.

In the West African region growth was 5.1% in 1998, while Central African members recorded growth of 4.3%.

These figures were actually slightly lower than in the previous year, but the overall pattern suggests that the CFA remains healthy.

Economic union in 2000

The African Franc Zone is divided into two distinct groupings.

The West African countries are members of the West African Economic and Monetary Union (UEMOA) and the Central countries are members of the Central African Economic and Monetary Community (CEMAC).

It is the difference in economic prospects between these two groups that forms the key to analysing the Franc Zone's performance.

The Bank of France report comes just as the UEMOA members prepare to move to full economic union in January 2000.

This involves the abolition of all remaining local-produce tariffs between member countries and the implementation of a standardised business law.

Devaluation fears

Policymakers hope this will attract greater investment from outside Africa as individual countries with low-income populations as small as 4 million are a powerful disincentive.

Differing and often chaotic national laws were a further problem for outside companies wanting to work in more than one economy at once.

Optimists say the move to the new UEMOA regime is the logical culmination of the emergency devaluation of the CFA in January 1994.

The rate was slashed from an highly overvalued CFA 50 to the French franc to CFA 100 to the French franc at which it remains ultimately guaranteed by the Bank of France.

The relatively poor performance of the Euro appears to have removed - for the time being - fears that the CFA may have to face further devaluation.

Political instability

The West African countries, including Ivory Coast and the expanding but poor Sahel economies of Mali, Burkina Faso and Senegal, rely upon exports of cotton, gold and, in Ivory Coast, light industrial products.

Mali is emerging from years of economic distress

They have successfully followed International Monetary Fund (IMF) recommendations on structural adjustment of their economies and may be seeing the benefit after years of economic pain.

But the Central African countries are in a completely different position, made worse by regional political instability.

Gabon, a major oil producer with a tiny 1.1 million population, is suffering from debt and budgetary problems, aggravated by dependence on petroleum.

Cameroon, which accounts for half the economic weight of the Central African part of the zone, is only now recovering from over a decade of economic decline and corruption.

Congo-Brazzaville, also oil-dependent, is the world's most indebted country per citizen and also trapped in a smouldering civil war.

Oil price collapse

Chad is due to become an oil producer but currently has few economic links with its neighbours in the monetary union.

Given such discrepancies, few see how the two halves of the zone can stay together.

While terms of trade for the West African countries remained broadly stable in 1998, in Central Africa they plunged by more than 20% as oil prices collapsed.

Once again, economists are muttering that the fixed value of their currency no longer reflects reality and that a split in the zone or another big devaluation is needed.

But others argue that the whole arrangement is neo-colonial and outdated, despite low inflation, tight monetary policy and steady growth in recent years.

And this is beginning to find an echo in France.

The colonial-era architects of the monetary apparatus are retired or dead.

Severing links?

Their successors are far less sentimental about links with old colonies. And some of them would dearly like to shed what increasingly looks like an outmoded arrangement.

There is no equivalent elsewhere of this system, which operates via two central banks, one for each half of the zone.

Cameroonian economist Celestin Monga is among African critics who think the CFA governments should go it alone and sever the link with France.

But others fear this would open some of the world's most disadvantaged economies to the attentions of currency speculators.