Rhodesia and Nyasaland - The economy

-tE- S T fD I C T E D EA-60 0 TWUs document was prepared for internal use in the Bank. In making it available to others, the Bank assumes no responsibility to them for the accuracy or completeness of the information contained herein. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT THE ECONOMY OF THE FEDERATION OF RHODESIA AND NYASALAND June 6, 1956 Department of Operations Europe, Africa and Australasia Prepared by: A.M. Kamarck CURRENCY EQUIVALENTS £1 Rhodesian - £ I Sterling £1 U.S. $2.80 £ 1 million - U.S. $2.8 million A TABLE OF CONTENTS Basic Data . . . . . . . . . . . . . . I Gnaral . a c . . . . . . . . . . . . . . . . . . . 1 1. Geea Bakr 0 0 0 1 A. Natural Setting . . . . ............ 1 B. 1story and Government . . . . . . . . . . . . . 1 0. Description of the Economy . . . . . . . . . . . 2 The Two Economies . . . . . . .. .... .. 2 Economic Geography . . . . . . . . ..... 2 Structure of Econoy . . . . . . .... .. 3 D. External Accounts . . . . . . . . . . . . . . . 5 II. Economic Growth.... .. . .......... 7 III. African-European Relationships . . . . . . . . . . . 9 IV. Public Investment Programs . . . . . . . . . . . . 13 Transport.. . . .......... . 14 Electricity . . . . . . . . . . . . . . . . . . 16 Financing the Investment Programis . . . . . . . 18 V. Creditworthiness and Conclusion§ . . . . . . . . . . 20 List of Charts, Tables and Maps . . . . . . . . . . 25 Appendix A - Public Finance .... . . .... .. 26 Apendix B - The Customs Tariff . . . . . . . . . . 37 BASIC DATA Federation of Rhodesia and NYsaland Area: 476,000 square miles Population. June 1956 estims,te: European - 250,000 African - 7,000,000 Other - 30,000 Gross National Product, 1955 estimate: £310 million (0870 million) Grose Investment: % of G,N.P. 19,54) Financed by domestic savings 26 Net import of capital 6 Total 32 Per Caita G.N.P.: £40 ($110 equivalent) Average earnings of European employees: £1,000 ($2,800 equivalent) i i of African employees: £ 65 ($180 equivalent) 1954 Trade Total Exports: £153 million Total Inorts: £125 million of which: of which: Copper 60 % Durable Producers Tobacco 17 % Goods 38% Asbestos 4-% Raw Materials and Gold 4% Fael 27% All Other JzLi Consumers Goods _jg 100 % 100% 1954 Balance of Payments (£ millions) Total exports of goods and services 163 Total imports of goods and services 22 10 Net income payments abroad -29 Net transfers (immigrant remittances, etc.) +1 Balance of current account -16 Net capital imports - Total Public External Debt, December 31, 1955: £126 million Total External Assets (mainly sterling) December 31. 1955: Governments, Governmental Agencies & Currency Board £62 million Companies and Banks £88 FEDERATION GROWTH IN NATIONAL ACCOUNTS INDEX OF VOLUME OF GROSS DOMESTIC PRODUCT (1946= 100) 400 4 & 400 YEARLY 300 300 200_ 200 GROSS DOMESTIC PRODUCT 10% PER YEAR CUMULATIVE GROWTH CURVE 100 1__ - I100to 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 (Forecast) INDEX OF VOLUME OF GROSS NATIONAL EXPENDITURE AND DISPOSABLE RESOURCES (1946= 100) 400 A 400 YEARLY GROSS NATIONAL EXPENDITURE (INCLUDES EFFECTS OF TERMS OF TRADE) 300 300 DISPOSABLE RESOURCES .**** (INCLUDES NET IMPORT OF CAPITAL ....****. .........** 200 200 ..** 13% PER YEAR CUMULATIVE GROWTH CURVE 100 100 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 IBRD-ES 1128 - iii - SOUTHERN RHODESIA: CONSUMER PRICES AND BUILDING COSTS (INDEX, 1946 100) 200 YE-Y200 YEARLY BJUILWINYG COSTS 150- 150 ..~"-"-0"" CONSUMER PRICES 100 1_""_ _""_ _ 00 5C 50 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 FEDERATION: EXPORT AND IMPORT PRICES (INDEX, 1946 = 100) 400 Y400 300 300 EXPORT PRICES 200 200 .::: -- - - IMPORT PRICES 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 FEDERATION: TERMS OF TRADE (INDEX, 1946 100) 200 200 YEARLY 150 150 00 --100 50 50 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 IBRD-ES 1129 -iv - COPPER PRICES IN UNITED KINGDOM (L PER LONG TON) 400 , I I I , I I I I I I ; I I - I I I Ion 1 i m ... 40 0 QUARTERLY 300 300 200 200 100 100 MONTHLY 0 1 1... 1.J.L... 1.L... 1.L..L ...L .. .. . ..l~ .llllll'LL J'.uu 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 IBRD- ES 1130 Sumarv and Conclusions 1. The economy of the Federation has been growing at a high rate over the last twenty years. This has been the result of favorable world markets for its exports (mainly copper and tobacco) and a large immigration of capi- tal and trained people. Close ties between the Federation and the United Kingdom and the interest of important British and South African financial groups have been significant in helping the economy grow. 2. While its three constituent territories have been in existence since the early part of the century, the Federation itself is less than three years old. It is not yet fully independent from the United Kingdom and in some respects, particularly in African affairs, the United Kingdom wields strong influence. As British protectorates, Northern Rhodesia and 1yasa- land are still run internally by the British colonial service. 3. The European population, which dominates the government and the economy, is only 3% of the total, the remainder being Africans. The Africans are just emerging from a subsistence existence. The relation- ship between the Europeans and Africans is crucial for the future sta- bility and growth of the country. 4. At present, the Federation is in the middle of a five-year develop- ment program including the Kariba project. When completed, Kariba should greatly help continued rapid growth in the area. When Kariba is built, there will for the first time be abundant reliable power and the railway, partly relieved of carrying coal for power, will have some flexibility. 5. During the construction of the first stage of Kariba, goverment policy will need to keep consumption and private and other public invest- ment from trying to increase too rapidly. 6. To finance the public investment necessary to keep up with the growth in the economy, the external debt has grown rapidly. This has been matched by a growth in export earnings and total debt service is around 3%. of cur- rent e.-ternal earnings. The public investment plans require a continued rapid growth of external debt. As long as the world economy grows and demands more Rhodesian products, this rapid rise in external debt should continue to be roughly matched by the growth in the economy. However, Rhodesia's exports are primary prolucts subject to large swings in price and volume so that in the event of sizeable and prolonged recession, the service of the debt might necessitate considerable sacrifice. 7. The risks in the Bank's lending an amount equivalent to $80 million for the Kariba project are not excessive. However, there are enough ele- ments of uncertainty in the situation and the role of the British Govern- ment in the Federation is sufficiently large that the United Kingdom's guarantee is a welcome additional reassurance. THE ECONOMY OF THE FEPAT1ON OF LH0DEI AND NYASAAN I, General Background A. Natural Setting 1. The Federation has an area of half a million square miles; that is, it is about the size of Colombia or the sum of France, Germany and Italy. 2, Most of the Federation is a plateau 3,000-5,000 feet high (see Topographical Map in back of report). Even though the plateau lies within the tropics its climate is not unpleasant and Europeans easily acclimatize to it. The lower valleys of the rivers and the land surrounding Lake Nyasa fall away from the plateau in a steep escarpment and the climate there is truly tropical. 3. The plateau is mostly savannah. Probably because for centuries the grass and woods were fired by the natives for their shifting cultivation, there is not much useful timber. 4, On the plateau, rainfall is mostly concentrated in a few months between November and March, while the rest of the year is dry. The amount of rain increases as one travels from south-west to north-east and the kind of agriculture that is practicable varies accordingly from extensive pastoral agriculture in western Southern Rhodesia to intensive cultivation in Nyasaland. This helps explain the high density of African population in Nyasaland. 5, About a third of Northern Rhodesia and parts of Nyasaland and Southern Rhodesia are infested with tse-tse fly, preventing the keeping of livestock. Tse-tse fly and poor soils largely account for the sparse population in the high rainfall areas in Northern Rhodesia. Bilharzia is a threat throughout the area and a mild form of malaria is prevalent in the lower river valleys and along the shores of Lake Nyasa. 6. The Federation is land-locked and is dependent, therefore, on its neighbors for access to the sea. The ports chiefly used are Beira and Laurenco Marques in Mozambique ad Port Elizabeth in the Union of South Africa. - B. History and Government 7. Livingstone first explored the area covered by the Federation just * 100 years ago. There are still living members of the first Pioneer Col=n that reached Salisbury in 1890. The two Rhodesias were the property of the British South Africa Company until 1923-24, Nyasaland became a British Protectorate in 1891 but was little more than a missionary outpost of the Church of Scotland for many years thereafter. 8. Southern Rhodesia became a self-governing colony in 1923. Northern Rhodesia and Nyasaland are still protectorates and their governments are subject to the ultimate authority of the Unted Kingdom Government. Their - 2- legislatures still consist of colonial officials and elected or nominated representatives (unofficial members) with the officials predominating in Nyasaland. The unofficial members are in a majority in the Northern Rhodesian legislature. They also hold portfolios in the executive branch and are influential in over-all policy but the Governor and colonial offi- cials head important departments and have a key role in the government. 9. The Federation of the three territories came into existence only three years ago this September. The constitutional status of the Federa- tion, though in some ways similar to that of the members of the Commonwealth of Nations who possess sovereign independent status, is still something less than full independence. While the Federation has responsible government, the Vnited Kingdom Government remains generally responsible for its external relations. The main limitation on the internal powers of the Federation is on its ability to pass discriminatory legislation affecting Africans. (This is further discussed below.) The Federation's constitution specifies that it shall not be reviewed earlier than 7, or later than 9, years after its adoption in 1953. Presumably, the British Government will play an impor- tant role in this review. (A description of the division of powers and responsibilities between the Federation and territories is included in Appendix A.) C. DescriDtion of the Ecomr The Two Economies 10. There are still two economies in the Federationt the European money economy and the African tribal subsistence economy. In the European money economy there are employed at any one time about one million Africans and 100,000 Europeans. Most of the African population resides in the African tribal areas and practices subsistence agriculture (with a small but in- creasing output of cash crops). Most African men in the Federation have a foot in both camps: the men work for wages in the mines, factories, railways, and European farms for part of the time and then return home. During their absence their families mostly remain in the native reserves and farm. In Southern Rhodesia more than half of the African labor force in the money economy comes from outside of Southern Rhodesia; Mozambique and Nyasaland mostly. In cities like Salisbury, even the Southern Rhodesian natives are still mostly without their families. 11. This two-camp system is in most respects an unsatisfactory arrange- ment: the African remains an inefficient worker in both economies. The long periods of separation of the men from family life tend to result in social and moral instability in the cities, and poverty in the native areas. Economic Geoara-hy 12. Of the total output in the money economy in the Federation, Southern Rhodesia produces half, Northern Rhodesia about 44%, and Nyasaland about 6%. Southern Rhodesia produces tobacco and other agricultural products, mines asbestos, gold and chrome, and does some manufacturing in a wide belt along the railway line on the plateau. Northern Rhodesia's output is concentrated on the copperbelt, at the lead and zinc mines at Broken Hill, and in a very -3- narrow farming strip along the line of rail. Iyasaland's tiny agricultural production is similarly influenced by its railway. The bulk of the area of the Federation is used mainly for subsistence native farming which provides at best a very poor livelihood, usually supplemented by the men working away from home on the mines, factories or European farms. ($ee Economic Map in back of report.) Structure of Economy 13. The accompanying chart gives a graphic view of the fundamental structure of the economy in 1954, a more representative year than 1955 when the figures were distorted by an extraordinarily high price for copper. As the chart shows the most striking aspects of the Federation's economy are: a) The very large role played by international trade. Imports are equal to over 50% of the total of goods and services produced domestically and over half of domestic production is exported. b) The net import of capital is a significant factor in the total (and is an important reason why investment can run as high as it does). c) The net income paid abroad, at almost 10% of gross domestic product, is also significant. d) In the production of goods and services, mining is the most important single activity, contributing a third of the total. Copper mining is the most important constituent of this. Manufacturing, European agriculture (largely tobacco), and trade together make up almost another third in about equal parts. e) On tre use of resources, the outstanding feature is the large fraction, almost a third, devoted to investment. Government current expenditure at around 10% is fairly moderate, while government and other public investment is a substantial part of total investment. (A descrip- tion of the fiscal system is given in the Appendix.) -4- FEDERATION SUPPLY AND USE OF RESOURCES - 1954 ...... ... . -SUPPLY' .....:"USE.: . . . . ... .. (PERCENT OF GROSS NATIONAL PRODUCT . ERCENT OF GROSS NATIONAL ...EXPENDiTURE) 4. ECONM E OU7-1- SUppL. EE nIC r 150 5%y PRIVATE CONSUMPTION - 58% CONSTRUCTION 8% TOTAL z TRADE 10/0 --- GROSS DOMESTIC Q -- PRODUCT< w-" EUROPEAN AGRICULTURE 10% .. n 00% .. : AGOVERNMENT CURRENT MANUFACTURING TOTAL EXPENDITURE 10/o (nAVAILABLEm RESOURCES PUBLIC S50% INVEST. 12°/ -T OTAL MNING 33% --····_- GRS PRIVATE INVESTMENT:*,-"' - INVESTNENT 29% 17%/ .... ...- INCOM IMPORTS OF EXPORTS GOODS AND SERVICES OF GOODS AND SERVICES 50/o 530/0 DOTE: Excludes ubsistence economy RD-ES \S\. -5- D. External Accounts 14. The Federation is highly dependent on international trade. The export trade is concentrated on a few commodities. Of the total value of exports in 1954, copper alone represented 60% (with the very high price of copper in 1955, copper was two-thirds of total exports). Tobacco was another 17%, and asbestos and gold were 471 each. Gold, at one time the main export, now has been surpassed by copper, tobacco and asbestos. 15. On the import side, over a third of total imports are machinery and equipment; in part for replacements but mostly for new needs. Another third is consumer goods and the remainder, raw materials and oil products. 16. Geographically, the Federation's trade is also concentrated, The United Kinfdom (43%) and the Union of South Africa (35%) together provide over three-fourths of its total imports. The United Ningdom also takes well over half of the Federation's exports; the U.S., 105; and South Africa, 10%. a 17. The accompanying chart shows the very rapid growth in external current payments and receipts of the area over the last decade. In this period, the volume of exports almost doubled so that the 400 percent in- crease in current receipts shown is more than half due to price rises. 18, The Federation is a net dollar earner. In 1954, her gold and dollar surplus on current account was about 470 million and in 1955, g55 million. The principal sources of these earnings are copper, gold and chrome ore. Dollar imports continue to be restricted in accordance with general sterling area practice. 19. Another important characteristic of the balance of payments is the large volume of the import of capital. From 1946 to 1954, the net amount of capital imported comes to £220 million, or more than what the annual gross national product amounted to as late as 1952. In 1955, as a result of the very high copper prices and profits, internal savings were so high that there was actually a net export of capital. This was, of course, exceptional and for many years to come Rhodesia is likely to remain a net importer of capital. 20. Because of heavy imports of capital, payments abroad for interest, dividends and profits are also heavy. These have been running about £25-30 million a year or about 15% of current payments in 1954. 21. The Federation is in the inne= ring of the sterling area. Its mone- tary and financial system is closely linked to the U.K. and secondarily to South Africa. At present, its currency is backed by 100f% sterling reserve and notes are issued and redeemed automatically against sterling. A central bank, the Bank of Rhodesia and Nyasaland, has just been organised but even after it is fully operating, the currency must continue for some years to be intimately linked with sterling. Commercial banking services are provided by branches of banks with head offices in London and in the Union. The major business interests in the area are likewise either British or South African with the exception of four North American mining interests in copper, chrome and asbestos. 6- FEDERATION BALANCE OF PAYMENTS (MILLIONS OF RHODESIAN POUNDS) 0 50 100 150 200 250 SERVICES 1946 EXPORTS INCOME EARNED ABROAD CURRENT TRANSFERS RECEIPTS | PAYMENTS CURRENT TRANSFERS GOVERNMENT PAYMENTS 1947 IMPORTS INTEREST, DIVIDENDS, ROYALTIES, PROFITS SERVICES RECEIPTS PAYMENTS 1948 NET IMPORT OF CAPITAL RECEIPTS PAYMENTS 1949 RECEIPTS PAYMENTS 1950 RECEIPTS 17 PAYMENTS 195' RECEIPTS PAYMENTS 1952 RECEIPTS PAYMENTS 1953 RECEIPTS PAYMENTS 1954 RECEIPTS PAYMENTS 1955 RECEIPTS PAYMENTS 1956 (f32 RECEIPTS PAYMENTS IBRD -ES (132 'U- II. Economic Growth 22. Aside from the imperial ambitions of Cecil Rhodes and his associates, it was gold which gave the initial impetus to the development of Southern Rhodesia. Gold mines may have been originally exploited as far back as the time of King Solomon and were then abandoned for centuries. 23. Northern Rhodesia showed very little progress until her copper depos- its began to be exploited after 1925. The depression in the early 'thirties slowed the development of both Rhodesias. But recovery came after a few years and the growth of national output reached around 9% per year and this high rate has been generally maintained for the past 20 years. This growth was mainly due to copper in Northern Rhodesia and tobacco and manufacturing in Southern Rhodesia. 24. Reliable national accounts are available only for the past 10 years. As the chart in the front of the report shows, real output has grown at the rate of around 10% a year, perhaps the fastest rate in the world. Favorable terms of trade have made it possible for real national expenditure to grow even more rapidly - at a rate of 13% per year. 25. The main reason for the remarkable growth was an extraordinarily high rate of investment (shown on accompanying chart) made possible by a very high rate of saving, a massive inflow of capital, and immigration. 26. In relation to the size of the economy the import of capital has been almost without precedent. In the record year, 1951, the net inflow of capi- tal of £47 million was equal to almost one-quarter of gross domestic output or well above what most countries would regard as a satisfactory level of gross investment financed from all sources. 27. Of the total net import of capital, 1946-1955, around a half, or £105 million, was net long-terma capital borrowed abroad by the governments and governmental bodies for public investment in the basic services. 28. In many under-developed countries the limitation on growth is the scarcity of managers, technicians and skilled workers. In the Federation this limitation has been avoided by immigration from the United Kingdom and the Union of South Africa. Thanks to this immigration the European * population has more than doubled since the war. The African population, which provides the unskilled and semi-skilled labor, has also grown, but at a slower rate. 29. This remarkable influx of capital and of population and the growth of production has been accomplished without too many difficulties. The main difficulty was to provide basic services (transport, electric power, housing) to keep up with the demands of the rest of the economy. У � � � -. FEDERATIO�. _ RAT10 OF 1NVESTMENT ТО GROSS NATIONAL PRODUCT _ (PERCENT DfSTR1BUT10N) 100°/о 1 1 1 1 1 � 100°/о YEARLY г � � 1 1 г 1 1 1 � г г г � j г ( 1 ; у г � ( 1 г ° � � � г � �� � i г 1 � j 1 I i г � 8О /о � �1 � �1 Г� � I-I I� ( 8О°/о 1 1 1 г 1 ( г 1 г � � г I г 1 1 1 � 1 ` ; г г � i г i i г г г г � г г � г г i г о г I ( I I г г � г � I I i г 1 г г ( I � ° 6О /о i r-1 �-) �I I� � j� �� � �j г 6О /о 1 1 I 1 I 1 г г 1 I � �� � г � г I 1 � � I I 1 I I г � � 1 � � г I о :;;::.: :'::i'�г ;..:::: •:'.•.•:_. ;:�i::: I � 0°/о 4о /о г г-j г .. .... . .. I 1---I (--� г 4 1 1 :: FINANCED ВУ NET 1MPORT OF CAPITAL�:: 1 1 г � 1 1 20 °/о 2О °/о cROSs FtNAWCED ВУ �NТЕRид� SAV�NGS 1NVESTMENT 0 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 0 ( Prelim. est. ) FINANCING OF 1NVESTMENT (M1LL10NS OF RHOOESIAN POUNDS) г оо г оо YEARLY � TOTAL GROSS 1NVESTMENT 80 80 � 1MPORT OF CAPITAL�� :г.=•:�;:'� PERSONAL SAVINGS 6о 60 _ GOVERNMENT 40 suRP�usES" 40 = 2 0: �:�:ciзSiA}sF13�вi}F.�л:�:�?'г'гСiЁ}:[&:�: �:�::�.'•: ' 20 ••:::::•• � �-• • ............ ............. ............ ............. ............. . ...... TOTAL WTERNAL ............. ............. ............. ............. ._.. ... . ............. ........ ............. . SAVINGS """" - DEPREC1AT10N 0 . 0 1946 1 Э47 1948 1949 1950 19 51 1952 1953 1954 1955 1956 = 18R0-ES 1133 �t .. -9 .ean RelatLon_qhi-ps 30. The relationship between Africans and Europepns is crucial for the future of the Federation. The 1-fricans comprise 97% of the total popula- tion, but it is the Lvxopeans who own nearly all the capital and provide the management,, technicians ani skilled labor that has initiated and de- veloped the economy and keeps it going. In addition to running the economy the Europeans also control the goverm.ent and administer it. 31. The _,1fricans are in transition from a static tribal society to an individualistic modern vestern society# The bulk of the Africans are still brought up in a society where a person is not a free individual but a member of a tribe in which his rights,, duties and functions are'laid down for him by immemorial custom. But now for at least a part of his life, and increasingly for a larger part, the African is in a western society where what he does and what his relationships are with other individuals may change from day to dL!4y. His position is not secure and static but insecure and changing. Compared to a tribal society he is free but naked in his lack of security. 32. And.. as if this social and. cultural transition were not problem enough, it is accompanied by the problemse that core from rapid urbaniza- tion and industrialization. While in the long run industrialization may be a stabilizing force, in all countries the period during which a per- nanent urban working force is beinc ' formed is a difficult one* 33. In Southern Rhodesia, the decision was taken four years ago to hasten the transition of the Africans to a money economy and a western- type society. Education is being improved. In the towns, Africans are being helped to buy their own homes. In the reserves., land is being allotted in individually-owned farzs. Assistance and advice are being given and, if necessary, compulsion will be used to secure good farming practice. These measures should help in giving the African a property stake in the new society he is entering and help in other ways in secur- Ing social stability. But even if land settlement, urban housing sqhemes,, and the expanded education program can be carried out on schedule, they will merely provide the foundation on which the Africans themselves must begin to erect their new pattern of life - and this vill take many years. 34. Northern Rhodesia and Nyasaland because of their slower economic development lag behind Southern Rhodesia in meeting this problem. In Northern Rhodesia) the policy in the copperbelt is In a state of flux. Until recently, the companies, while trying to maintain a more stable labor force than do the mines in the Union, encouraged_tbe African..to maintain and to renew constantly his contact with the reserve and his tribe. This policy is now breaking down with the growing up of a gen- eretion in the mine compounds who are loosening t-heir ties of loyalty to the tribe. With the influx of African -families to the towns, the school system has fallen far behind. In the copperbelt three out of five children of school age are not in school; in Lusaka., it is five out of six. These children are escaping from tribal mores and disci- pline and nothing is being put in their place. - 10 - FEDERATION POPULATION GROWTH 600 .600 EUROPEAN (THOUSANDS OF PERSONS) 400 400 TOTAL 200 200 NYASALAND - NORTHERN RHODESIA SOUTHERN RHODESIA 0x0xx xxxxx 1920 1930 1940 1946 1950 1955 1972 (Forecost) 10AFRICAN O#oo 0t 8 - (MILLIONS OF PERSONS) g8 TOTALý 6 - 4 NORíTHERN RHODESIA - 2 2 SOUTHERN RHODESIA 0 1920 1930 1940 1946 1950 1955 1972 (Est.) (Forecast) EUROPEAN AND AFRICAN POPULATION IN 1955 (MILLIONS OF PERSONS) 3 3 AFRICANS 2 2 EUROPEANS 0 SOHA 19RD-ES SOUTHERN RHODESIA NORTHERN RHODESIA NYASALAND 1127 - 11. - 35. In Nyasaland, the African men come in contact with western society mainly when they leave Nyasaland to work in the Rhodesias and the Union. The government has begun to encourage the permanent emigration of men with their families but this can take place only to the Rhodesias. For the rest, Nyasaland has neither the space nor the resources to try to match the approach of Southern Rhodesia. 36. The Federal Legislature has 35 members. Of these, 26 are elected from European or predominantly European constituencies, 6 are Africans, 2 from each territory. In addition, there is a specially elected European member from Southern Rhodesia and a specially appointed European member from each of the two other territories. These three European members and three of the African members constitute the African Affairs Board, which is charged with watching African interests. It has the power to charac- terize a bill as a measure "differentiating against African interests" and to reserve it for approval or disapproval by the British Government. While this Board and the determination of the British Government that the African receive fair play are valuable safeguards, African rights and African ad- vancement depend much more on the attitude of the European Rhodesians. 37. The most influential political, business and financial leaders say that the door must be kept open for African advancement. The government tries to impress on the European population that the future depends on the maintenance of good relations with the Africans. The party in power has an overwhelming majority in the legislature. The small European opposition has so far not succeeded in building a single opposition party. Ominously, however, the European opposition groups have in varying degrees a less liberal position in race relations than the government. 38. The government handling of race problems appears to be based on a willingness to work out pragmatic solutions. There are no dogmas or any fanatic belief in the inherent rightness of a particular line of action. This flexible approach is also carried out with an absence of violence. The police are unarmed and there seems to be an absence of 'ifrican hatred for the police. 39. The most powerful African organizations are the trade unions on the copperbelt and on the railways in Rhodesia and Nyasaland. In the main, te managements of the copper companies and Nyasaland railways have helped the African unions in their organizational problems and have pursued a moderate policy towards them. In return, the companies (and the country) have been rewarded by the unions' moderate and responsible leadership. 40. Noithern Rhodesia and Nyasaland each have a separate political organ- ization called the ffrican National Congress. Both are poorly organized and lack effective leaders. Potentially both are very important. Few even of the educated or semi-educated Africans in Northern Rhodesia and Nyasaland belong actively to the Congress, but they regard it as their organization. Y.ost if not all of the African representatives chosen for the local legis- latures or the Federal legislature belong to the Congress. - 12 - 41. The Congress was opposed to federation and still is. In Nyasaland this opposition resulted in riots that were put down only after 10 to 20 Africans were killed. In Northern Rhodesia Congress leaders have accepted the theory of "partnership" or racial cooperation in the development of the Federation. In Nyasaland the attitude is less favorable. The possi- bility that Nyasaland might detach itself from the Federation is a real one. Its contribution to the total economy is very small and its inclu- sion or exclusion is not a decisive economic factor, though it might be important for the future political development of Central Africa. 42. In European-African relations particular attention has been focused for some years on the copperbelt. Upgrading of African miners (of whom there are some 30,000) was resisted by the European miners union (4,000 members). In two union ballots in 1954 and 1955, the European miners finally agreed that some provision should be made for African advancement. Under strong pressure from the copper companies, one group of which was willing to run the risk of a strike for the purpose, an industry-wide agreement was reached with the European union in September 1955. Under this agreement, 24 new categories of jobs were opened to the African miners, creating a "ladder of opportunity" for about 1,000 of them as they improve in ability. While this is only a beginning it is a most important one. But the great difficulty in reaching even the limited advancement conferred by this agreement indicates that African advancement may be contested bit- terly step by step by the European unions and that progress will at best be slow and painful. 43. In the rest of the Federation, African advancement is slow but per- ceptible in practically all industries but the Rhodesia Railways and some of the building trades in Southern Rhodesia. In general, the African lead- ers criticize governmental policy for moving too slowly, but they do not disagree with the direction in which it is going. 44. In the postwar economic development the Africane have benefitted and total income secured by African labor has more than doubled. But even now three-fifths of the total wages goes to the European one-tenth of the labor force. 45. If the productivity of the Africans continues to increase, and if development continues, then there should continue to be a margin for grant- ing improvements to the Aricans without cutting the European standard of living. In the still longer run, as the .fricans begin to compete with Europeans for skilled jobs, and in the professions and technical positions, progress will be more difficult. Any significant deterioration in economic conditions would bring unskilled European labor into competition with African labor and might evoke strife which would seriously set back African advancement. 46. There is as yet no example of a country with a very small European settler minority and a large African majority working out a "free" multi- racial society. Whether it can be done and if so how long it will take are questions for the future, and events in other parts of Africa are not encour- aging. All that can be said is that if the Africans can be persuaded to accept a slow evolution rather than a rapid change it may be possible to preserve a stable political and economic structure for the present generation. - 13 - IV. Public InvestmentProams 47. The Federation and the territories have investment programs cover- ing the five years, July 1, 1954-June 30, 1959. These programs include the bulk of the investment to be carried out by public authorities during this period. The programs are to be reviewed at the end of 1956, when the results of the first two years are available, and they are then to be extended for an additional two years to June 30, 1961. 48. The 1954-59 progras, including the Kariba project, total £223 mil- lion or just over 50% more than total public investment in the preceding five years. But the gross national profuct has increased correspondingly and it is expected that public investment in 1954-59 will still be the same proportion - some 13 or 14 - as in the five years 1949-54. Because investment in the Kariba hydro-electric project was so large, maintenance of the same total rate of investment was po3sible only by holding down other investment. 49. The programs should not be beyond the capacity of the economy. However, if there should be pressure to increase private investment, private consumption, and government consumption more rapidly than in the past, there will be inflation and the public investment program is likely to run into trouble. A governmental policy of imposing restraint in these other sectors is therefore of great importance during the building of the Kariba project. 50. The following table gives an outline of the public investment pro- grams by economic sector. Outline of Public Investment Plans in the Federation J 1. 1954J- June 30.. 19 9 (In £ millions) Prooed Investment Federal Southern Northern Sector Govn Rhodesia Rhodesia Nasaland Total Transport 72 4 2 2 80 Power 59 - - - 59 P.T. & T. 4 - - - 4 African Housing - 4 4 3 11 European Housing 1 1 2 - 4 Education, Health & Administrative 14 5 4 - 23 Local Government - 14 7 1 23 Agriculture & Rural Development 3 1 4 1 9 Industry - I - - 1 Miscellaneous 1 - 4 1 6 Yunicipalities Loan Funds - - - -1 154 29 29 8 233 -14- Notes: Because of rounding, details may not exactly add to totals. Included in transport is £58 million for Rhodesia Railways, i.e. £20 million over the published plans plus £5 million of rolling stock under a lease-loan arrangement. Included in power is £50 million of estimated expenditure for Kariba during this period. 51. Investment other than in transport and power may be disposed of briefly. It represents in the main a continuation of existing' programs of ex%pansion or extensions of existing facilities to keep up with the growth in the economy. The programs do provide for some intensified effort in African housing as a part of the attempt to meet the urbani- zation problems. For the rest (P.T. & T., water supplies, health, edu- cation, etc.), the programs run slightly above the levels of 1949-54. Since the economy itself has expanded, this represents a lag in meeting the growing needs of the economy. 52. With the completion of the railway link tQ Laurence Marques in 1955 individual items of expenditure, except for Kariba, are small enough so that where an economic return is expected it begins to come in almost immediately. This also provides some flexibility: if necessary invest- ments could be out without creating unfinished "white elephants". Transrort 53. Of the £80 million allocated for transport, three-quarters is for the Rhodesia Railways that serve both Rhodesias. Of the remainder, £5 million is for the Federation's airlines and other miscellaneous trans- port activities, and £17 million for roads and bridges. Essentially all of the investment in transport is "passive" investment, that is, invest- ment needed to keep up with the demands of the growing economy. 54. The difficulties of the railways have been particularly manifest. Although a widening gap between the growth of real output and railway traffic is to be expected, since there is increasing use of truck and air transport, the gap has widened too rapidly. As a result, the rail- ways have been unable to carry all of the chrome ore that has been offered and over long periods have not been able to transport all the coal required by the power plants. The copper companies have accordingly had to supple- ment their Rhodesian coal supplies by burning wood and by importing American coal through Angola and the Belgian Congo - both expensive expedients. 55. The current railway program is designed only to keep pace with the growth of traffic durinu the construction of Kariba. No provision is being made to secure any reserve of capacity because once Kariba comes into pro- duction, the need to transport coal to power stations will be drastically cut and the railway should then get some flexibility. - 15 - FEDERATION RHODESIA RAILWAYS (MILLIONS OF TONS) 10 10 TONNAGE CARRIED TOTAL e . ..- GENERAL GOODS OTHER MINERALS 4 .·... 4 2 -2 TOTAL <COAL 01 ~~ MINERALS ý_1 0 O 1946 1955 NET TON-MILES AND REAL GROSS DOMESTIC PRODUCT (INDEX, 1946=100) 250 250 YEARLY REAL GROSS DOMESTIG PRODUCT»^,. 200 200 150 NET TON-MILES 150 150 100 ' 00 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 IBRD-ES 1134 16 - 56. A new link to the coast to Laurenco Marques was completed in 1955. Beira, the principal port used by the Federation, was being used to capacity and traffic had had to be restricted. Since Laurenco Marques is capable of practically unlimited expansion, this bottleneck to the growth of the Feder- ation has been broken. 57. Nyasaland is served by a privately-owned railway. After many years of operating losses, it is now running at a profit and intends to finance its expansion by raising loans in the market. Its traffic is only a small fraction of that of the Rhodesia Railways, but has been growing at a rate of 16k, compound in the last 10 years (or twice the Rhodesia Railways rate). Electrici&y 58. Investment in electric power in the current programs is almost triple that in the preceding period, because of the Kariba hydro-electric project. The definitive study of this project is being presented in the Technical Report, but some of its economic aspects require mention here. 59. The accompanying chart shows how power consumption since the war has grown somewhat faster than total real national output and somewhat slower than total real national expenditure - that is, at a rate between 10% and 13% a year cumulative. If the economy is to continue to grow rapidly, more power capacity must be provided. Whereas the rest of the public investment is in the main designed just to keep up with the growth in the economy, Kariba should be large enough to take care of the power needs of the economy to some time around 1970. The decision to undertake Kariba is, therefore, one that requires considerably more courage and more faith in the continued rapid growth of the Federation than does any other public investment. 60. The decision to do Kariba also represents a major change in the grand strategy of development. Up to the present, the whole economy has been based on a single fuel and power source, coal, coming from one mine, Wankie, and transported hundreds of miles over a single track railway to consumers in both Rhodesias. With practically no coal stocks away from the mine, the whole economy is vulnerable to any interruption in this pre- carious supply line. It will remain vulnerable until Kariba is producing electricity. Kariba should thus provide an alternative power base for the economy and provide a greater assurance and stability for its existence and growth. 61. As mentioned in the discussion on transport, one of the important results of the successful completion of hariba should be the provision of - a breathing space for the railways when the need to carry over a million tons of coal a year to the power stations is reduced. Coal forms over one-third of the total tonnage carried and, more importantly, it deter- mines the loaded direction of the traffic and, therefore, has been the marginal element determining the need for investment. Throughout the postwar period there has been a constant struggle to increase the capa- city of the railway. Almost *90 million in new investment has been expended or programmed for this purpose in the 10 years, 1949-1959. - 17 - ELECTRICITY OUTPUT IN RHODESIA (INDEX, 1946=100) 400 400 YEARLY 300 . 0 REAL GROSS NATIONAL EXPENDITURE . 0* ELECTRICITY OUTPUT: ..* . 20 0 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 (Prelim. est.) IBRO-ES 1135 If the requirements for coal for thermal stations should continue to go up rapidly, continuous large investment would be neqessary. While the power station demand may be replaced by the export of coal, exports can be re- duced if necessary, while now the coal must move if the economy is to function. 62. Of the total output of Wankie coal of 3.6 million tons, one-third is used to produce electric power in the area that would be served by Kariba, not counting the coal burned by the railway locomotives in carry- ing it to the thermal stations. The Wankie coal deposits are first class coking coal and are the only known major deposits of such coal in Southern Africa. One advantage of switching to hydro-power, therefore, is the preservation of the Federation's coal for other purposes. 63. The decision before the Federation was between investment in a major hydro-power plant or additional investment in thermal plants plus water supplies plus coal mines plus railways. The simple economic test as to which of these is preferable is the comparison of the cost of the product resulting from one or the other investment. Since one of the choices is investment in Kariba, the crucial element in this calculation is the size of the demand and, therefore, the number of units over which the fixed costs of Kariba can be spread. 64. As is shown in the Technical Report, power demand should grow at a rapid enough rate to justify investing in Kariba rather than in thermal power. Financin the Investment Proarams 65. Over the five-year period ending June 30, 1959, the Federal and territorial governments have to find £233 million to finance their present development plans, including Kariba, and another £10 million for refinancing, or a total of £243 million. While it is not possible to plan exactly in this field, the present rough outlook for the financing is as follows (detailed table given in the Appendix): Source of Furds1 £illion of Total Taxation and other revenue 90 37 Internal loans 52 21 Kariba - Internal loans 15 6 External loans Total 243 100 66. On this basis, at least 58% of the total capital investment will come from internal sources. Adding the £15 million in Rhodesian pounds lent for Kariba by the copper companies and the two London commercial banks, the proportion is 64%, compared with less than one-half in the previous five-year period. The percentages financed from revenues have - 19 - also improved greatly. In the previous five-year period revenues covered only a quarter of the total public investment as compared to well over a third in the present plans. 67. This improvement is practically entirely due to the windfall reve- nues resulting from high copper prices. At the time of the Bank's econonic mission in May 1955 the government decided to earmark for development all revenue coming to it directly as a result of copper prices above a "normal" price of £240 a ton. To date this arrangement has yielded about £12 million for the Federal Government and at least 29 million for the territorial governments. Because of high copper prices, the copper companies and the British South Africa Company have been willing to lend £27 million to the Federal and territorial governments for Kariba and other development during the five years 1956-61. 68. Well over two-thirds of the total public investment is in activities such as electric power, railways, P.T. & T., housing, that provide a direct return to the government sufficient to meet the service on any debt that is incurred to finance them. 69. As a means to increase the proportion of development financed out of revenue in the future, the government is now requiring the statutory bodies to meet part of their future expansion out of earnings. The railways, for example, are to secure -6 million in this way for their investment during 1956-59. 70. The new central bank is just coming into operation. It has taken over the Currency Board's reserves and should gradually take over the external assets of the governments and governmental agencies. All of these totaled P62 million at the end of 1955. The commercial banks opera- ting in Rhodesia now have around £28 million of their reserves held abroad and will have to shift some of them to the central bank. Obviously, all of these amounts cannot be mobilized and used for development but in an emer- gency an appreciable amount of foreign exchange might be available. 71. The estimate of the amounts to be raised in the internal market may be low. If necessary, the government could borrow an appreciable additional amount on short term. Several of the large companies in the territory have large sums that must be kept in fairly liquid form and they would probably be willing to invest some of it in short-term government paper. 72. Consequently, barring a major catastrophe, one can have considerable assurance that the finance will be available to carry out the development programs, -20- V. Creditworthiness and Conclusions 73. The Federation is in many respects unique among the under-developed countries of today. First of all, there is no "under-development" of its key people. Its public officials, its businessmen, its technicians, its skilled labor, have been largely recruited from advanced economies. They come from a capital-minded milieu and are prepared to use advanced equip- ment and techniques. As a result, the limitations that exist in most countries from the lack of suitable personnel has not been so tight in the Federation. 74. Also important is the closeness of the Federation's ties to the United Kin7dom and to the English-speaking community in the Union of South Africa. In this respect, the process of development of the Fed- eration is somewhat akin to the way in which economically under-developed parts of the U.S., e.g. the Southwest, have been developed in recent years. As with the American Southwest, there is government money and administrative machinery at hand. There are also important economic and financial groups, such as the Anglo-Imerican-deBeers group, the related British South Africa Company, and the Rhodesia Selection Trust group which have a special interest in the success of the Federation. Currently, these groups have agreed to lend -,24 million on favorable terms to the Federation to help finance Kariba and general development. In addition, the inglp-American group is leasing £5 million of rolling stock to the Rhodesia Railways, while the Rhodesian Selection group is lending £3 million to Northern Rhodesia and Nyasaland on a long-term basis with no interest charged for the first four years. The two groups have also agreed to give the Federation Government Z10 mil- lion for development over the seven years, 1961-67, through a special sur- charge on the Kariba power the copperbelt will consume during this period. 75. Both of these factors have contributed to another rare feature in under-developed areas - availability of capital and a high level of inter- nal savings. 76. Two drags on growth have existed in the limited capacity of Beira, the Federation's main port, and the shortage of coal. The first limitation has disappeared with the access to a new port, Laurenco Marques, the second has already disappeared, at least temporarily. The limited, though growing, capacity of the railway has been a drag on development and will probably remain so for at least the next five years when Kariba should provide a measure of relief. The prospect of abundant supplies of power from Kariba after 1961 may also stimulate growth. A continued rise in African produc- tivity and African incomes should provide a growing market in the Federation. Further fairly rapid growth of the Federation is, therefore, highly likely. 77. The Federation is greatly dependent on two export products, copper and tobacco. The copper industry plans to lift copper output from the 424,000 tons of 1954 to 550,000 tons in 1961. The Federationts output has constantly increased (see accompanying chart) and prices have gone up. - 21 - FEDERATION REFINED COPPER OUTPUT (THOUSANDS OF SHORT TONS) 600 YERLY 500 -500 400 1 - 400 300 300 200 200 100 100 1930 1935 1940 1945 1950 1955 1960 PROGRAN EXPORTS OF TOBACCO IMILLIONS OF LBS) 250 ,ir-r-i rr-- ,rrr , vr -~n 250 YEARLY (Forecost) 200 ,. 200 150 i150 TOTALk 100 .100 NYASALAND ::: NORTHERN RHODESIA 50 .-------- 50 SOUTHERN RHODESIA 1930 1935 1940 1945 1950 1955 1960 1965 IBRO-ES (Prelim. est.) 1136 - 22 - Copper is second only to iron and steel in importance as an industrial metal. Over the long term, consumption of copper should increase with the growth of world population and world income. But in modern condi- tions, no commodity is absolutely essential, as it is usually possible to find or develop a substitute. Aluminum is probably the main threat to copper with substitution supposed to begin to occur at a copper price of around 30 cents a pound or £240 a ton. The £300-400 copper price of recent months may not, therefore, last. 78. From time to time increases in copper output may outrun the growth in demand. The Rhodesian mines are fairly low-cost producers and could operate at a profit even if copper were £160 a ton. In some important producing countries, however, price guarantees or other devices might ensure continued production even in the face of a fall in demand. This situation could result in a disproportionate fall in the price of copper in the free market and tte economy of the Federation could suffer a sharp setback. A crisis could also result from a prolonged strike on the mines or on the railway that carries the copper to the sea. 79. Such a situation would not only hit directly the copper companies and those who work for them: it would also hit the goverment's.revenues and the balance of payments. Since the companies pay their income tax with a lag of ) to 2 years after their accounts are closed, the govern- ment would have almost two years warning of a drop in its receipts and, therefore, time to make some adjustments. The Federation also has appre- clable sterling reserves. At the end of 1955, official holdings amounted to some £60 million and banks and companies held another £88 million. With the formation of a central bank these can be more easily mobilized to cushion part of the impact of a copper crisis. But even so, it would represent a time of great difficulties for the Federation. 80. The other major export, tobacco, runs risks of a different kind. The great growth of the tobacco industry (see accompanying chart) came in large part as a result of the scarcity of dollars available to the British to buy American and Canadian tobacco. About a third of the total tobacco exports should have no trouble holding their markets even if con- vertibility came. The remaining two-thirds might well have some difficulty. 81. If import licensing were abandoned the U.K. market would not dis- appear. The British tobacco companies have stated they would continue to buy Rhodesian tobacco even if they had plenty dollars as they would not wish to eliminate an alternative source to dollar tobacco. In time, how- ever, this attitude would become less and less influential and Rhodesian tobacco to hold its own would need to be more and more competitive. The Rhodesian producers are fully aware of this and in cooperation with the govern=ent have under way an intensive research program to improve quality. 82. The other exports have their particular problems, but aside from gold, should be able to hold their own or grow. Wattle plantations in Southern Rhodesia are expected to provide a new export worth around £1 million per annm in another couple of years. Lithium has just recently become an important item, worth almost £1 million a year. Exploration for other minerals is going on very actively all over the Federation. Coal nay become an export once hydro-power comes in. - 23 - 83. Industries reducing the import needs of the Federation are also being started. For example, a sulphuric acid plant is being built and plans for the expansion of the iron and steel plant are well advanced. 84. This section started out by mentioning some of the positive non- economic factors affecting the future of the Federation. There are also non-economic factors that are not so favorable. 85. African-European relationships are an important problem here as in the rest of Africa. This subject has been discussed at length in Section III of this paper. In brief, no conclusion can be confidently advanced except the unsatisfactory one that this is the big question mark for the future of the Federation. There are sufficient elements of good-will and statesmanship in the present situation to give one some hope for the future but satisfactory evolution in these relationships is far from assured and the risks on this account continue to be great. 86. In the past the growth of the Federation has been closely geared to the growth of the European population. Rapid growth in the future, too, depends in large measure on an inflow of suitable immigrants. Recently with the improvement in living conditions in the United Kingdom it has become necessary for the Federation to encourage some immigration from the continent of Europe. But as time goes on, life in the Federation becomes easier and more attractive and, in fact, even now it is "pioneering with all modern conveniences". The net result of all this is hard to evalu- ate. Probably it means that the Federation will still be able to get the people it needs on an individual recruitment basis but it will have to de- vote more attention to upgrading Africans to do jobs which formerly European artisans did. 87. With the growth in output the external debt has grown too. Over the past ten years the public external debt has kept roughly in step with the growth in gross national output and external earnings. The present esti- mates are that by the time Kariba is finished in 1961 the debt will have grown further to over £200 million, or £230 million if the loans to be made by the copper companies and the commercial banks for Kariba, which are denominated in Rhodesian pounds, are also considered as external. 88. If the real gross national product and external earnings grow at the same rate as they have over the past 10 years and prices are no lower than in 1954, the relationship of the total debt in 1961 to GNP and exter- nal earnings will be roughly the same as over the past. The ratio of total debt service to external earnings will deteriorate, however, because the new debt will be amortized quicker than under the usual 1% per annum sink- ing fund arrangements on the existing debt. With external earnings at the 1954 level, total debt service in 1961 would be around 8% of total external earnings. This is a high proportion but not an intolerable one. Given reasonable world prosperity, the proportion should be lower. But it should be recognized that should there be a major world recession, Rhodesia might well have severe difficulties in maintaining debt service. -24 - 89. To conclude, the risks in the Bank's lending an amount equivalent to about $80 million to the Federation for the Kariba project are not excessive and the Federation can be regarded as creditworthy for this amount. However, there are sufficient elements of uncertainty in the picture and the role of the British Government is sufficiently large in the Federation that the United Kingdom's guarantee is a welcome additional reassurance. - 25 - LIST OF CHARTS. TABLES ANID MAPS Charts Growth in National Accounts ii Southern Rhodesia: Consumer Prices and Building Costs) Federation: Export and Import Prices ) iii Federation; Terms of Trade ) Copper Prices in United Kingdom iv Supply and Use of Resources 4 Balance of Payments 6 Ratio of Investment to Gross National Product) Financing of Investment ) Population Growth 10 Rhodesia Railways 15 Electricity Output in Rhodesia 17 Refined Copper Output; Exports of Tobacco 21 Governent Revenue and Expenditure 28 Total Public External Debt 41 Tables 1. External Debt of Federation of Rhodesia and Nyasaland 2. Growth of External Debt of Federation and Territories Comprising the Federation 3. The National Income of the Federation 4. Percentage Distribution of Gross National Expenditure 5. Import Content of Consumption, Investment and Exports 6. Gross Investment in Rhodesia and Nyasaland 7. Rhoresia Railways 8. 1954-59 Public Investment Programs Topographical Yap Economic Map Transport and Proposed Power 'Network - 26 - APPEIDIX A The Federal Government's first full fiscal year was July 1, 1954 to June 30, 1955. The second fiscal year 1955/56 has not yet been com- pleted. The allocation of the various services among the four govern- ments, while largely decided, has not yet been made fully effective, The territorial governments are, therefore, still performing some fune- tions, which they will lose, on a reimbursable basis for the Federal Government. The Federal Government is responsible for defense; external rela- tions; immigration; international and inter-territorial trade and transport (this includes the Rhodesia Railways and Central African Airways); money and banking; foreign exchange control; postoffice, including--,rtlphone 6A telegraph; European and Colored education; European agriculture; and several development activities such as the Federal Power Authority, the Cotton Board, and major water and irrigation works. The main functions left to the territorial governments are local government; native affairs, including African education and African agri- culture; intra-territorial road9; housing; minor water and irrigation works; police. Both the Federal and territorial governments may help set up and regulate industries, land banks and cooperatives and carry out health measures. The Federal Government has the main tax sources: income taxes, customs and excises (except on motor fuel). Of the total Federal income taxes collected the Federation keeps 64% of the total;Northern Rhodesia, 17%; Southern Rhodesia, 13%; and Nyasaland, 6%. (These percentages are to be reviewed at a financial conference of all four governments at the end of 1956.) In addition, the territorial governments were given the right to authorise the Federal Government to collect for them a terri- torial surcharge on the Federal income taxes. This can be levied on individuals up to 20% of the total Federal tax payable by the individual including income tax.and surtax, and on companies up to one-fifth of the rate of basic tax payable by the company. The basic Federal rate on com- panies is 6/3d in the 8, and all three territories have imposed the full surcharge of 1/3d over this. Southern Rhodesia and Nyasaland are also levying the full surcharge on individuals. Northern Rhodesia does not. The territorial governments also levy death duties (present maximum rate 5/- in the £), duties on motor fuel, stamp duties, entertainment taxes, betting taxes and license fees and receive mineral royalties. In Northern Rhodesia, the collection of mineral royalties is the territoryts second biggest source of revenues. Borrowing by all four governments is coordinated and controlled by a Loans Council on which all governments are represented at the minis- terial level. The Loans Council coordinates and agrees upon an external and internal program of borrowing for the Federation as a whole. In the absence of agreement each government is entitled to take the same percentage - 27 - APPENDIX A of the total amount borrowed as its percentage of the Federal income tax. At the time of Federation, the total public debt of the territorial govern- ments was £161 million. Of this amount, the Federation assumed £114 million of which £100 million was external debt. The Federal Government, Southern Rhodesia, and Northern Rhodesia divide their budget statements into two parts: Revenue Account, covering current expenditures and receipts, and Loan Account, covering investment items. It is hoped that Nyasaland will also soon apply this system. The annual Loan Account in general covers a year's capital expenditures and receipts on the investment projects included in the development programs. The Federal, Southern Rhodesian and Northern Rhodesian Revenue budgets usually include on the expenditure side an appropriation to the Loan Account. Also, in the Federal and Southern Rhodesian budgets, a small amount of investment items, public works and equipment purchases under a certain figure, are charged to the Revenue Account. The Feder- ation and Southern Rhodesian Governments have adopted a technique which over the years should automatically increase the amount of investment financed out of revenue. Under this procedure, the current budget pro- vides for interest and amortization on all loans, including those that have been passed on to the statutory boards and commissions. These bodies, however, as mentioned, have to provide service on their loans to the government. The government uses the interest received to offset the interest it pays but uses the amortization payments to finance the development program. Under the current plans, this amounts to £12 million. The revenue budget ordinarily shows a small surplus but the actual opera- ting surplus achieved is much greater because of the reasons just mentioned. While it is not possible as yet to give the results of the current fiscal year, 1955/56, it is already clear that all four governments will have relatively large surpluses on revenue account perhaps totaling some £6 million altogether instead of the net deficit that was budgeted. The accompanying chart summarizes all of the current government accounts in the Federation and presents the economic analysis of the sources of government receipts and the uses made of the funds. The following tables give the details of the major elements of the budgets of the four governments. - 28 - FEDERATION GOVERNMENT REVENUE (PERCENT DISTRIBUTION) 100% 00/% 17 C:INCOME FROSM PROPERTY ABROAD : ...*... . . :;. *.... ... DIRECT TRANSFERS 80% ......... FROM ABROAD 80% .:::.: INDIRECT TAXES INOEFM .. PROPERTY AT HOME 60% 60% DIRECT RECEIPTS FROM INDIVIDUAILS 40% 40% DIRECT RECEIPTS 20% ~~FROM COMPANIES AND STATUTORY BODIES FRMCPE-0 209'. 200/. COMPANIES YERLY 0i 0 1950 1951 1952 1953 1954 GOVERNMENT EXPENDITURE (PERCENT DISTRIBUTION) 100% 00%~ YEARLY CURRENT SURPLUS 80%-: 80% ASUBSIDIES INTEREST ON DEBT 60% C60%. OTHER TRANSFERS TRANSFERS ABROAD 40% 40% DEBT INTEREST PAID ABROAD NET CURRENT EXPENDITURES 20% 20% 0 0 1950 1951 1952 1953 1954 1955 IBRD-ES 1138 - 29 - FEDERAL GOVERNM.ENT A. Revenue Account (millions of pounds) Estimate 1954/55 1955/5 RECEIPTS Income tax 18.9 19.2 Customs anO excise 9.3 9.4 Recoveries of charges on loans and advances 3.6 4.3 Posts and telegraphs 3.0 3.3 Other revenue 1.2 1.8 Total Receints 36.6 31.9 EXPENDITURES Public debt 5.8 6.9 Defense 2.5 3.0 Social Services (education, health, pensions) 7.7 9.3 Posts and telegraphs 3.0 3.4 Food subsidies 2.2 2.2 Establishments 2.4 3.5 Development appropriation 3.0 4.1 Other o6.8 7.1 Total Expenditures - 30 - FEDERAL GOVERNMENT B. Loan Account (millions of pounds) Estimated Expenditure 195&/55 1955/56 Recoverable & Interest Bearing Advances Advances to Statutory Boards: Rhodesia Railways 8.0 8.6 Electricity Supply Comission 3.0 1.6 Other 2.2 09 Sub-Total 13.2 11.3 Other Advances 0.3 -L Total Recoverable & Interest Bearing 13.5 11.4 Other Expenditure Buildings for government departments 3.3 4.5 Roads and bridges 2.3 2.2 Telephones, telegraphs and radio 0.9 1.0 Other .0. Total Other Expenditure .2 .1 Grand Total 20.9 Add Repayments and amortization 4-O 24.9 24.5 Less Revenue provision for development 3.0 3.8 Loan recoveries 0.8 1.8 Estimated amount borrowed or to be borrowed 1.19 - 31 - SOUTHERN RHODESIA A. Revenue Account (millions of pounds) Approximate Budget Expenditure Estimate 1954/55 1955/56 RECEIPTS Basic tax on income or profits 3.8 4.0 Income tax surcharge 1.8 2.1 Native tax: indigenous 0.4 0.5 non-indigenous 0.2 0.2 Customs duty on motor spirit 1.1 1.1 Vehicle tax 0.5 0.5 Stamp duties and fees 0.5 0.5 Business licenses 0.4 0.4 Transfer duty 0.4 0.5 Death duty 0.4 0.3 Mines: royalties and fees 0.4 0.5 Interest on loans, deposits, etc. 1.3 1.4 Rents 0.5 0.5 Other . ..9 Total Receints 12.7 13.3 EXPENDITURES Service of loans 2.4 2.4 Police 1.8 2.0 Native education 1.4 1.6 Native land husbandry -- 1.0 Native affairs: general, engineering, marketing and area administration 1.5 1.1 Roads 1.5 1.5 Irrigation 1.1 0.6 Justice, Internal Affairs, Courts 0.7 0.6 Pensions 0.6 0.6 Public works 0.5 0.5 Labour Department 0.4 0.5 Treasury 0.3 0.4 Local Government and housing 0.2 0.3 All other .. Total F=penditures 11 4.0 Note: These are net of reimbursed expenditures on services performed for Federal Government. -32 - SOUTHEN RTODESIA B. Loan Account (millions of pounds) Approximate E;penditure Estimate 1954/55 1955/56 Local Government 3.0 2.6 Housing 0.3 1.8 Roads 0.6 0.8 Public works 0.2 0.3 Irrigation 0.2 0.3 Mines, lands and srrveys 0.3 0.2 Native engineering 0.3 0.2 Iron and steel --.6 -- Total _ cenditures 5.6 6.1 Reduction in floating debt 8.8 REBCEIPTS Net new funded debt 5.3 Loan recoveries 1.9 Liquidation Pension Fund 0.1 Carry-over from 1953/54 0.9 Debit balance, 30 June 1955 wQ& Total Rceitss. -33- NORTHERN R_HCD ESTA A. Revenue Account (millions of pounds) Approved Estimate Estimate 1954/55 1955/56 RECEIPTS Income tax 8.8 8.5 Native tax .2 .2 Motor Vehicle Licenses .2 .2 Other licenses, taxes and fines .2 .3 Mineral royalties 1.8 1.9 Reimbursements by Federal Government 1.2 1.4 Interest and loan repayments 1.0 .8 Specific services (rents, fees, etc.) .8 .7 Other .2 .1A- Total Revenue 14-1 0 EXPENDITURES African education 1.1 1.4 Public works 1.6 2.0 Police 1.0 1.3 Pensions and gratuities .3 .4 Provincial administration .5 .6 Agriculture .4 *4 Forestry .2 .3 Water development & irrigation . .5 Grants to local authorities *3 .4 Appropriations to capital and development funds 3.2 2.8 Other .2.2 ._.7 Total Zxpenditures _4_2 13.9 -34 - NORTERN RHODESIA B. Caoital Account (in millions of pounds) Estimate 1955/56 RECEIPTS Credit balance brought forward 1.2 Appropriations from revenue 2.6 Capital repayments received (local authorities, etc.) .3 Appropriations from General Revenue Balance 1.6 Colonial Development & Welfare Grants .6 Loan flotationa 4s0 Total 10.2 EXPENDITURES Under Development Plan Loan advances to public utilities .8 Public works and public utilities 2.9 Loans to local authorities and coopso 1.3 Rural development .3 African education .4 Roads and bridges .5 Agriculture & forestry .3 Miscellaneous .8 Total 7.3 Other i Faenditure Additional capital - local authori- ties, Loans Board 1.5 Oter loans - ,frican housing, Fisheries Development Board, etc. .2 1.7 Public Works 1.0 Miscellaneous Capital Items .2 Grand Total 10.2 - 5 - YASALAD BUDGET (in millions of pounds) REVElUE Estimate 1954/55 Ordin=r Income tax 2,0 Reimbursements from Federal Government 0.7 Native tax 0.5 Interest (on investments held) 0.2 Other 0.8 4.2 Extraordinar U.K. grants under Colonial Development and Welfare Act 0.8 Trans-Zambezi Railway Debenture Interest 04 0.8 Total Receipts 5-0 - 36 - NYASALAND BUDGET (in millions of pounds) EXPEIDITURES Estimate 1954/55 Ordinr Public works 0.7 Agriculture 0.3 Education 0.3 Forestry 0.2 Local government contributions 0.3 Pensions and gratuities 0.1 Police 0.3 Provincial,and District Adfitnitration 0.2 Public debt charges 0.2 Other 1.2 Total Crdinary 3.9 Extraordinary Public works 1.0 Trans-Zam-bezi Railway Debenture Interest 0-05 Total Extraordinary 1. Grand Total Exeitures --0 - 37 - ALPE!DIX B The Customs Tariff 1. The Federation came into being on September 3, 1953 and is successor to a number of trade agreements (e.g. Congo Basin Treaty of 1885, Ottawa, GATT) to which Southern Rhodesia or the United Kingdom, on behalf of North- ern Rhodesia and Nyasaland, had been party. The constitution reserves to the Federal Government powers to control imports and exports and to impose customs and excise duties and, under the provisions of the Customs and Ex- cise Act, 1955, a unified federal tariff superseded the previous territorial tariff. 2. The customs tariff is a four-column tariff which provides for a maxi- mum rate and three progressively larger rebates. The maximum rate of duty (A) applies only to imports from countries with whom no trade agreement is in force. Duty (B) applies to imports from most-favored nations, duty (C) to the independent members of the Commonwealth and duty (D), the most favor- able, to tYe United Kingdom and her overseas territories. 3. Imports from non-Commonwealth members of GATT, other than Japan, receive the first stage of preference (duty B). Japan pays the highest rate. South Africa, under the terms of a separate trade agreement, is accorded a position somewhere between (C) and (D), to put her generally on the same basis as the United Kingdom while providing some protection to local manufacturers. The northeastern part of the Federation falls within the Congo basin as defined in the Treaty of Berlin. Imports into this area, called the "conventional area", are uniformly subject to duty (B) regardless of origin. 4. Duties are normally ad valorem and, except for certain revenue items, rarely exceed 20%. Duties on machinery and equipment (except automobiles) and raw materials are generally limited to 10% from (B) countries and come in free from (0) and (D) countries. Some sample rates are shown below. 5. The customs tariff schedule is enacted by the Federal legislature, pursuant to Section 73 of the Customs and Excise Act, 1955. The schedule includes lists of countries to which the various rates of duty apply and the lists may be amended by the Governor-General by notice in the Federal GazettA. Section 102(i) of the Act provides that "the Governor-General may under such conditions, restrictions and regulations as he may prescribe by notice in the Federal Gazette (a) suspend wholly or in part any of the duties appearing in the customs tariff ... Source: Government of the Federation of Rhodesia and Nyasaland. - 38 - Extraets from Custom Tariff* 1955 Item Duty Duty Duty Duty A& B C D 83. (1) Barrages: structural steelwork therefor, and the equipment directly connected with and essential to the construction thereof: for irrigation and other water supply pur- poses (ad val.) 10% 5% Free Free 97. (1) Cranes, mechanical excavators and loaders, winches, hoisting crabs, chain blocks, spiral chutes, gravity conveyore and shears; and mechanical storage lifting apparatus (ad val.) 10% 5% Free Free 119. (1) Machinery, apparatus, appliances, implements and material used in connection therewith, for the generation, storage, transmission, distribution of, and lighting by gas or electric power, and machinery for the con- version or transformation of electric power, n.e.e., but not including lamps, lampware and electric lamp bulbs elsewhere provided for, and parts or accessories of motor vehicles or cycles (ad val.) 20% 10% Free Free 129. (iv) Lorries and trailers, equipped with tipping bodies or bottom dump bodies, of a level body loading capacity of not less than six and one- half cubic yards (ad val.) 10% 5% Free Free 138. Railway construction and operational requi- sites n.e.e., being materials, equipment and permanent way, and locomotive & rolling stock, including finished and semi-finished parts and accessories: of a type specially designed and suitable only for use in the construction or operation of goods or pas- senger carrying railways (ad val.) 10% 5% Free Free ' The scurce is the draft motion imposing the customs tariff: Rates finally in force may consequently differ from those shown above. - 39 - APPENDIX TABLE 1 External Debt of Federation of Rhodesia and N and Amount of I ssue Amount of Issue Description of Issue Outstanding on 31 Dec. 1955 Net of Sinking Fund A. Sterling eSertion 10,000,000 4% Federal Stock 1972/74 10,000,000 10,000,000 5% Federal Stock 1975/80 7,200,000 2,750,000 3 $ Southern Rhodesia Stock 1955/65 1,749,156 1,250,000 3% It it U 1959/64 869,132 2,250,000 3- " it it 1961/66 1,732,271 32,000,000 2 It it 1965/70 28,679,882 5,000,000 3% " " t 1971/73 4,622,213 6,000,000 3i% " " 1967/69 5,620,668 5,000,000 31% i" 1980/85 4,816,990 7,500,000 4 " It " 1977/82 7,264,195 10,000,000 44% n60 1987/92 9,818,136 1,097,000 3g% Northern Rhodesia Stock 1955/65 585$176 3,540,000 3% " " 1963/65 3,301,941 7,730,000 3% " " " 1970/72 7,382,072 2,540,000 41% " It I 1965/70 2,524,600 1,570,000 3% Nyasaland Guaranteed Stock 1954/74 1,007,363 2,060,000 4- 1 Wasaland Development Loan 1971/78 2,028,246 773,000 3 'Ryasaland Loan from H.M.G. 703,775 1,340,000 Interest free Yyasaland Loan from EG 1979 1,190,000 3,571,429 4-3/4% F,0.A. Railway Loan 3,571,429 Southern Rhodesia 2,000,000 4 Southern Rhodesia Stock 1958/68 1,057,944 2,250,000 3 $ " U 1953/63 1,462,017 Sub-Total 107,187,206 B. 21ars Federation 5,000,000 2% Rhodesia Railways (ECA) Loan 1964 3,632,783 Southern a.odesia 10,000,000 4-3/4% IBRD Electricity Loan 1956/77 10,000,000 Northern Rhodesia 5,000,000 4-3/4% IBRD Railway Loan 1956/72 5,0003000 Sub-Total 125,819,989 Federation 1,750,000 4,% C.D.C. Loan to Central African Air- 500,000 ways Corporation (interest adjusted with U.K. bank rate) Sub-Total 126,319,989 ess Northern Rhodesia Supplementary Sinking Fund (Federal Share) 766,372 TOTAL 125.553617 1/ Actual cost value of Northern Rhodesia Sinking Fund as at 31st December, 1955 not available: estimated values have been used for this statement. APPENDIX TABLE 2 Growth of External Debt of Federation And Territories Comprising the Federation (i millions) 31 Dec. 31 Dec. 31 Dec. 31 Dec. 1946 1950 1954 1955 Southern Rhodesia 9 49 11 12 Northern Rhodesia 2 4 5 5 Nyasaland 4 3 - Federation - - 101 109 Total 15 56 117 126 Service on Total Debt Annual Interest Payments 0.6 1.9 4.3 4.9 Annual Sinking Fund and Amortization Payments 0.2 0.7 1,l 1.2 Total Annual Service 0.8 2.6 5.4 6.1 Note: Debt figures are net of amounts held in sinking funds. Source: Federal Ministry of Finance. TOTAL PUBLIC EXTERNAL DEBT OF FEDERATION AND TERRITORIES (MILLIONS OF RHODESIAN POUNDS) 600 000 500 500 POST-WAR RATE OF GROWTH 4 400 -400 PROJECTIONS 000v AT 1954 PRICES 300 . 300 TOTAL EXTERNAL CURRENT RECEIPTS 200 - .NP .200 (AT FACTOR COST) ST) HALF POST-WAR RATE OF GROWTH 100 1OO 100 TOTAL DEBTI0 0 10 '46 '47 '48 '49 '50 '51 '52 '53 '54 '55 '56 '57 '58 '59 '60 '61 IBRD-ES SERVICE ON TOTAL PUBLIC EXTERNAL DEBT OF FEDERATION AND TERRITORIES DEBT SERVICE BURDEN SERVICE CHARGES AS % OF EXTERNAL CURRENT RECEIPTS (MILLIONS OF RHODESIAN POUNDS) (PERCENT) 15 10% USiNG HALF POST-WAR USING RATE OF GROWTH AI9D POST-WAR AMORTIZATION 1954 PRICES RATE OF AND SINKING FUND 8% GROWTH- ON 1954 RECEIPTS? AND 1954 :PRICES .0 6%RIZTO INTERESTANONKAOD 4%* - INTEREST O 01 1946 1950 1954 1961* 1946 1954 (Forecast) 1961 PROJECTIONS* IBRD-ES *Including contingent external debt 1137 APPENDIX TABLE I The National Income of the Federation (£ millions) INCOME: 1. Wages and Salaries: a) European, Asiatic & Coloured 49.1 60.6 73.4 84.1 92.0 b) African 28.1 34.5 40.7 50.8 59.0 2. Incomes fror Unincororated Enterarise: a) European, Asiatic & Coloured 21.0 17.0 23.9 23.5 26.5 b) African 5.6 4.7 5.9 7.0 8.0 3. Incomes of Companies & Statutory Bodies 48.9 70.2 71.0 76.8 84.2 4. Government Incomes from Property 2.3 2.7 3.3 4.2 5.0 5. Miscellaneous Income from Property 1.4 1.7 2.2 2.5 2.8 6. Net Domestic Output in Xoney Economy 156.4 191.4 220.4 248.9 277.5 7. Add Income Received from Abroad +2.6 +2.9 +5.7 +6.2 +7.0 8. Less Income Paid Abroad -28.6 -35 9. Net National Income in Mloney Economy 130.4 158.9 189.9 218.7 248.1 10. Subsistence Output (Nominal) 17.0 17,0. 0 17.0 17.0 11. Net National Income 147.4 175.9 206.9 235.7 25i PRODUCT: 12. Net Domestic Product 156.4 191.4 220.4 248.9 277.5 13. Sums set aside for Depreciation 11.8 13.6 16.3 15.3 16.3 14. Gross Domestic Product at Factor Cost 168.2 205.0 236.7 264.2 293.8 15. Add Indirect Taxes +8.2 49.5 +10.9 +11.6 +13.4 16. Less Subsidies -1.5 -3.5 -3.9 -3.0 -2,5 17. Gross Domestic Product at Market Prices 174.9 211.0 243.7 272.8 .304.7 18. Add Incoze from Abroad +2.6 +2.9 +5.7 +6.2 +7.0 19. Less Income Paid Abroad -28.6 -35.4 -36.2 -36.4 -36.4 20. Gross National Product at Market Prices 148.9 178.5 213.2 242.6 275.3 -43- APPENDIX TABLE 4 Percentage Distribution of Gross National Expenditure (At factor cost) 1950 1951 1952 1953 1954 Savings 1/ 26.60 28.00 27.80 26.20 27.70 Constption: a) Inport contentV 30.72 33.17 32.34 31.00 29.27 b) Domestic produce content/ .6 38.83 . g2.. 42.0 430 Total 100.00 100.00 100.00 100.00 100.00 1/ As given on page 63 of "Statistical Review of the Federation in 1954", Supplement to Monthly Digest of Statistics, Vol., II, No. 4, July 1955, Central African Statistical Office, Salisbury. 2/ Calculated by applying the percentage import content to the percentage of income consumed. }/ Obtained by difference. Source: Central African Statistical Office. - 44- APPENDIX TABLE 5 Import Content of Cons tion. Investment and Exorts' (Percent) 1950 1. 19e2 1. 1954 Private Consumption 45.00 50.00 48.00 45.00 43.00 Government Current Expenditure 10.00 10.00 10.00 10.00 10.00 Private & Government Consumptiong/ 41.85 46.07 44.79 42.00 40.48 Gross Investment 60.00 70.00 66.00 60.00 60.00 ExportsV 43.20 42.00 36.80 35,30 34.90 1/ "Import content" includes goods, services and income payments abroad. ,/ Weighted average of private consumption and government current expendi- ture, the weights being the actual values of these two items in each year. 3/ Includes goods, services and income receipts from abroad. Calculated by subtracting income derived from exports of goods and services and income receipts from abroad from the total value of these items and expressing the differences so obtained as percentages of these totals. Source: Central African Statistical Office. - 45 - APPENDIX TABLE 6 Gross Investment in Rhodesia and Nasaland (£ millions) 1949 1950 95 2L52 15 . 1. Governments 12.0 14.3 19.5 22.1 21.9 20.0 2. Statutory Bodies: a) Rhodesia Railways 4.3 3.9 4.4 8.4 9.2 8.4 b) Electricity Supply Commission 1.5 1.8 2.4 3.1 3.0 2.3 c) Rhodesian Iron and Steel Commission 0.5 0.2 0.3 1.0 0.9 0.1 a) Other 1.0 1.0 1.4 0.7 0.5 0.7 3. Companies (Recorded): a) Nyasaland Railways 0.6 0.4 0.3 0.4 0.2 0.2 b) Northern Rhodesia mining, refining and electrical distributing companies 6.5 8.4 11.1 14.8 15.0 14.9 c) Wankie Colliery 0.3 0.3 0.9 2.0 1.5 1.8 d) Other 0ining 0.21 0.3-1 0.3/ 51/ 1.12 0.82 e) Manufacturing2/ n.a. n.a. n.a. n.a. 3.3 1.8 f) Other/ n.a. n.a. n.a. n.a. 1.6 2.3 4. Other Investment, n.e.i. 29.6 34.4 56.7 44.7 27.7 34.0 Total 56.5 65.0 97.3 97.7 85.9 87.3 8 companies only. 2 18 companies. Incomplete. n.a. = not available. Sor: Central African Statistical Office. - 46 - APPEDIX TABLE 7 Rhodesia Rilgg Total Total Million Million Total Coal Mineral General Gross Net Tonnage Tonnage Tonnage Goods Ton-Miles Ton-Miles Hauled Hauled Haule Hauled 1246: Total 4,174 1,891 4,237 1,585 2,455 1,782 Index 100.0 100.0 100.0 100.0 100.0 100.0 127: Total 4,307 1,936 4,339 1,478 2,379 1,960 Index 103.2 102.4 102.4 93.2 96.9 110.0 14_8: Total 4,307 1,964 4,673 1,661 2,714 1,959 Index 103.2 103.9 110.3 104.8 110.6 109.9 129: Total 4,831 2,218 5,163 1,844 3,004 2,159 Index 115.8 117.3 121.9 116.4 122.4 121.2 5O: Total 5,504 2,524 6,001 2,102 3,393 2,608 Index 131.9 133.5 141.7 132.6 138.2 146.4 1951: Total 6,187 2,805 6,786 2,310 3,797 2,989 Index 148.2 148.4 160.2 145.7 154.7 167.7 125: Total 6,653 2,999 7,334 2,518 4,036 3,298 Index 159.4 158.6 173.1 158.9 164.4 185.1 j=2: Total 7,323 3,286 7,955 2,597 4,598 3,357 Index 175.5 173.8 187.8 163.8 187.3 188.4 1954: Total 7,829 3,471 8,401 2,764 4,914 3,487 Index 187.6 183.6 198.3 174.4 200.2 195.7 : Total 8,481 3,785 9,312 3,308 5,522 3,790 Index 203.2 200.2 219.8 208.7 225.0 212.7 Source: Central African Statistical Office. - 47 - APPENDIX TABLE 8 1954-59 Public Investment Programs Dutline of Financina (£ millions) Southern Northern Federatign Rhodesia Rhodesia Nvasaland Lo Investment Plans 154 42 29 8 233 Refinancing & Repayments - - 10 Total Financing Required 161 _Q9 Fincing Available A. Internal Revenue contributions & surpluses 25 2 13 1 41 Revenue contribution - Kariba 3 - - - 3 Copper "fat" 12 3 5 1 21 Loan Recoveries 4 7 1 12 Railways Pension Fund & revenues & other intenal resources 11 - 2 13 Internal loans 29 18 2 Total Internal 84 30 24 4 142 B. Internal-Contingent External 15 - - - 15 Kariba-copper co.'s & Barclay's & Standard Bank loans C. External C.D. & W. grants - - 1 2 3 London market 22 13 4 1 40 U.S. Government 4 - - - 4 Existing IBRD loans 2 1 - - 3 C.D.C. 2 1 - 1 4 Kariba: C.D.0. & C.D.F.C. 12 - - - 12 IBRD 18 - - - 18 %.B.S.A. 2 - -2 DGad Totenal6 D. Grand Total 16-1 _Q _29 8__ -48 - Notes to Apendix Table 8 The amounts shown for Kariba financing during the 1954-59 plan period are taken as 5/8 of the probable loans which are: £20 million from the copper companies, £4 million from Barclay's and Standard Bank, £15 million from Colonial Development Corporation, £3 million from Commonwealth Development Finance Compar, £28 million from IBRD, £4 million from British South Africa Company. The Kariba loans from the copper companies and from Barclay's and the Stan- dard Bank are denominated in Rhodesian pounds but the holders have the right after consultation with the Rhodesian government to sell the bonds abroad. £13 million of the internal loans listed under Southern Rhodesia are for municipal loans raised directly by them on the market. A part of this will actually be for 'Northern Rhodesian municipalities. Copper "fat" is the income tax collected on the extraordinarily high profits of the copper companies resulting from the very high price of copper in 1955 and 1956 to date. It is computed by taking the tax pay- ments due from these companies and subtracting what the payments would have been if a "normal" price of £240 per ton had actually prevailed. FDRTION OF RHODESIA FEDERATO OF41 RHDSI1 T A N G A N Y l K A AND NYASALAND ECONOMIC LO TH E R N - - --BELGIAN GONGO E-USABETHV4 - 5,N I~ ANGOLA - *,. LMA4 RH 0 D- E S A< - 1~ S?BLANTYR ETETE S0 O TH E R5 -VINGSTONE VER 0 S. 'E*WA A --- NKE R ELLAS \R. H O D Ef S A B/ 6 A8RD-260 FEDERATION OF HCE.IA. -P-H- %ND JYAS4L4ND il TOPOGRAPHY O T E R N <> - 1 - r. 0 R H 0 D E S DEA) N3 S 0 U T H E R N ELEVAIIONS IN I-EE - 0 00003 V 0000005u -- 0 -il -FRII APR'L.E S I 956 R H 0D JA, L,-