Announcement of Loan Granted to Northern Rhodesia on March 11, 1953

• • ·!' .. • INTERNATIONAL BANK FOR RB10NSTRUCTION AND DEVELOPMENT rre THE PRES.S FOR IMMEDIATE RELEASE Press Release No. 322'.· March n, 1953 The International Bank for Reconstruction and Development today made a loan of $14,000,000 to Northern Rhodesia to aid in carrying out a three-year development program being und'ertaken by the Rhodesia Railways. The funds will be used to buy new equipment to relieve the strain on the heavily overburdened railways, and to help build a new rail connection to the sea to accommodate tt, growing inter~'" national trade or the Rhodesias. The loan is £or a term of 19 years arxl bears interest of 4-3/L% including the 1% • commission for the Bank's special reserve. Northern Rhodesia is eligi_ble to borrow from the Bank as an overseas dependency of a member ,~;ountry ( the United Kingdom), and the loan is guaranteed by the United Kingdom. The Rhodesia Railways serve not only Northern Rhcdesia but Southern Rhodesia am. Bechuanaland as well. Since the war t.he economic growth of the Rhodesias has been exceptionally rapid; natiqnal income has mo1·e J:,han doubled., largely as I) a result of an increase in the ,.output and price or minerals and tobacco. The development taking place in the Rho4esias has placed a great burden on the Railways. The tonnage carried in 1952 was 7<:J/, more than in 1946. Although the Railways have made good usi, or avci.ilable facilities in their efforts to han~le the traffic., they have been un~.ble to move all the freight offered or that would be offered if the I\ capacity were adequate.· For example, in recent years the production of chrome ore- has consistently been greater than rail capacity for moving it to seaports for • shipment overseas. As a result., stockpiles of ore aggregating over half a million tons have been built up at railway sidings awa.iting transportation. The three teITitori es served by the Rhodesia Railways Osystem are landlocked 0 and depend on ·cormecting 1·ailways for· their a.ccess to the ~ea. From Bulawayo in \\  « ·,,.,, . .,,.,.,,.......,,,,,,..,.""-'l"' . """~~:--~-__,._..._,..,,.~...,,....,,._.,..,......,.,..,~~..,.,_,~~-............,,...,..,.,_..,..,,....._,...,,._,,,..,..,....,.,,., .. _ _.,.,.....,,...,...,.,~_---,,.,__,__ ,,.,....,.,,...,,.,,...,,..,..,.~--.,...,.,....,.,,_.,..,,_..,.,...,.,..,....,..,_9,.-,,"""'f9S:,.... ,.f29...,.,..f."'" ,:rze •.i3t!."""',UI"'""-, ; •• Southern Rhodesia., the Railways system reaches out in three directions: -2- northward . 800 m,iles through Northern Rhodesia to the Belgian Congo1 where it connects with lines golng to the Atlantic Ocean; eastward 463 miles to Mozambique (Portuguese East Africa).,;-where \\ it connects with a railway to the port or Beira on the Indian \\ Ocean; and sou-tlhward 580 miles through Bechuanaland to connect with railways to Johannesburg and the Cape. Beira., in Mozambique., is the chief port used by the Rhodesias for their international trade. To relieve the pressure on this port and on the railway line lir.l{ing it to the Rhodesia.s., the Rhodesia Railways are building an alternative route. The new rail line, to be 200 miles long, will reach from Bannockburn in \ Southern Rhodesia to the Moz.ambique border. There it will connect\ with a line being built to the port of Lourenco Marques by the Portuguese Government with the aid of a loan :made recently by the Export-Imi;>ort Bank of Washington. Tae Export-Import Bank and the International Bank have been in close consultation to ensure coordination in theL1' respective participations it1 this project. The measures being undertaken to improve the Railways system include the purchase or steam and diesel locomotive~, freight cars and coaches; the improvement or the pennan~nt 1i way by reducing grades':;;.a1n curves; the enlargem~t and remodeling 1 •,i, 'I of yards and sidings; the modernization I al)d expansion of 1?epair shops; the installa- tion of nEM .signaling equipme:rit and improvement or water supplies; and the construction of housing for the Railways' staff. In 1949' the Railways w~re purchased by. Southern Rhodesia and thereafter _controlled, through a statutory body car(¢ the H:tgher Authority, by the three • countries in which they operate. Since 1949 Cf!,pitaf:, ror t1'~ Rhodesia Railways has (' \ customarily been provided by loans raised by one or thi other of the Rhodesias and ~ ) re-lent to the Railways. The t(?tal cost of the presen.t development program is ........ ~ estimated at the equivalent or $79 million. The Bank's loan will pay for. the import ot equipment and materials costing $14 · million; a ~9Sl ,.,.,..,,, .... , •.. ,c•,~4-,. ,\1 •••~, . .--~ .. ,,..,!'»»;•-~•~•"'-"•><>%• loan from ECA is ~,.,.,,.;,._.,,,·.•.·<\",-J.,,·•.•1,••.'-•"')'.r.-~cs~• . ,.. .-._~ ,,• ,.,,,,.,,,,,,._,,_. •.,1-'<•,··"'' • ·• :~••••"·Wtt~·•·'".";{..,.'•'.~·,·;,;' O"'-' >» ,.,-~ -;~« •  .... ' \ • ,, . . . .- -.. " ¥ - ... - .... • .. .. ·; • ~~---..,._·..r-~.~-...---,--~···--·~· . .,-...........~---"'""-·-·.._,,.,.,.....,...,~- .. _.....' ,0 ..... ,~..,...,., j ... •• providing another $14 million; and the remainder has been or will be raised by the two Rhodesias either in the United Kingdom or in the Rhodesias themselves. The pro gram. which the Bank's loan will help to finance will be completed in 1955. · It is expected that most of the material and equipment ·to be purchased with the loan will be bought in the United Ki."lgdom. These goods..will be purchased with pounds sterling. This sterling will be bought from the United Kingdom with . dollars provided by the Bank under the loan. These dollars will help offset the drain on the foreign exchange resources of the United Kingdom occasioned by her large-scale provision of capital for the development or overseas tetti tories. t r: Since improvements in the Rhodesia Railways will benefit both Rhodesias, -~; responsibility for the program ·will be shared by the two. The loan has been . d e to Northern Rhodesia., but both Rhodesia.s have undertaken to see that the. prog1•am_ is carried out and finance9,; each has entered into the customary obliga- tions to supply the Bank ,d th information related to the project and to permit <3nllk inspections, from time to ti.me., of progress being ma.de. :. After approval by the Bank•s Executive Directors., the loan documents were ' signed on March 11, 1953. The documents consisted or a loan agreement between the Bank an.d Northern Rhodesia., a subsidiary agreement between the Bank and both Rhodesia.s, fu~d a guarantee agreement between the Bank and the United Kingdom. Mr. R. M. Taylor., Financial Secretary to the Government of Northern Rhodesia, who had negotiated the loan for !forthe.rn Rhodesia,· h?d returned· to Northe1:i1 Rhodesia before the loan was finally approved, and the loan docwnents were signed for both Northern atd Southern Rhodesia by Mr. J. B. Ross., Deputy High Commissioner tor Southern Rhodesia in the Uni.ted Kingdom. His E~cellency., The Right Honorable & Roger Makins, Br~tish Ambass~dor in Washington, signed on behalf or the· United Kingdom, and Mr. Robert L~ Garner, Vice President, sigr.ed on behalf" or the International Bank.  ... ~ • ' ' •• -la.- Supplemental Statement on Loan to Northern Rhodesia'. The Economy of British Central Africa British Cen~ral Africa is the term commonly applied to the three British dependencies of Southern Rhodesia, Northern Rhodesia and lJyasaland. Together they form a continuous bloc of territory in the heart or Southern Africa, extend- ing from the Tropic of Capricorn in the south to within 10° of the equator in the north, a11:l covering a land area of 476,000 square miles. The combined territories are thus larger than France, Spain and Portugal together. The population in 1951 was between 6 ~n:i ~ million people, of 'tohom 1801 000 were of European origin. The three territories are at present separate political and financial entities. Southern Rhodesia, in fact, has a different political status, being a self- governing colony while the two northern territories are protectorates. But they are in a number of ·i-1ays interdependent. For example, the two Rhodesias are served by a common railway and they are both dependent on Nyasaland for an important part of their labor supply. Moreover, the three governments and the government or the United Kingdom have under serious consideration a form of federation for the three territories. Most of British C.entral Africa is a plateau ranging between 3 1 000 and 5,000 eet. Though it lies within the tropics its climate is modified by the altitude. • uch of it lies within the watershed of one of the greatest rive~s in Africa, . .the Zampezi. F - I The economic development or Central Africa dates from the establishment of ¥ British administration at the end of the 19th century. Mining has been the mainstay of the economy. Gold in Southern Rhodesia was the first mineral to be exploited and it re~ained the most important until the 1930 1 s when rich copper deposits were bro·ught into production in Northern Rhodesia. Other minerals of importance are coal, chrome, asbestos, lead·and zinc. Except for coal, which is mainly used locally, all these minerals are exported. Minerals have regularly accounted .f.or the greater part or exports. Before the war, few agricultural products could stand the cost of tbe long haul to the coast, particularly during the depression of the 1930'sc Tobacco and tea were the two principal agricultural products exported, but in 1938 they accounted for only a.bout a tenth of all exports. Otherwise farming has been principally concerned with supplying the limited local market with the food it required. Before the war, too, there was little manufactur,i,ng industry in Southern Rhodesia and hardly any in the other two territories. Apart from mining and fanning, the principal occupations of the people were trade and administration. The war years a.nd the years following it have wrought a profound change in Central Africa. The products of Central Africa have been in strong demar.d and both the output and tne price have increased. In 1951 the value of all exports s over five times what it was in 1936. Copper-mining and tobacco-growing have • en particularly prosperous. Manufacturing in Southern Rhodesia was stimulated by shortages during the war and its growth hP.s continued ever since in response to boom conditions throughout the area. Now manufacturing has overtaken mining as a source of income in Southern  • ~~~a....--. . , . .. , . . . . . __ ,_,..._,,. _.. . . . . . . . _ . ---.. . -,..~,~--·:·'"'- -s- Rhodesia and many manufactured goods are exported to neighboring countries. The prosperity of Central Africa has been accompanied by an influx of inunigrants. The European population increased from 76,ooo to 180,000 between 1938 and 1951 and in the same period the employment of Africans rose from about 400,000 to over 800,000. ' The rapid development of mining, industry and farming combined ·with the influx of European immigrants and of Africans from the rural areas has made tremendous demands on the basic services necessary to support the,economy. There have been chronic shortages of coal, power, transportation and housing. In years of drought, the area is a heavy importer of maize, the staple food of the African population" · Measures have been ta.."{en to ease the strain. The colliery company has opened ne.w pits and has partly mechanized its operations. The present program of the Rhodesia Ra.ilwa.ys should enable it to catch up with the demands of traffic. New thermal electricity plants are being built in Southern Rhodeeia with the aid of a loan made by the Bank a year a go and there are plans to develop the almost unused hydroelectric resources of the Zambezi and its tributaries. Energetic and encouraging steps hci.ve been taken to realize the potentialities of African agriculture which for long remained primitive. Much of the capital needed to develop Central Africa so rapidly has necessarily had to come from abroad, either by direct private investment or by gcverri-"Tle.-rit bc:rro".:."i.ng. But the rc,ienue of NorthE!r-n Rhodesia, 'the borrower of the present loan, has increased so rapidly that most of the investment in that territory apart from the mining industry has been financed out of current revenue; the latter has increased from about 1,3} million in 1946 to an r stimated ;30 million 0 in 1953. More than half' the 1953 budget is devoted to investments of one kind or another; they include a ~2 million loan to the railways. Most of this revenue is derived from income taxes on the mining indust.ry, in which copper plays the outstanding role. · Northern Rhodesia produces ~bout an eighth of the free world's output of copper. Production in 1952 was.well over 300,000 long tons. According to the announced plans to develop existing mines and open new ones, output may rise to more than 400.,000 tons a year within the next five years, and fw:·ther increases can be expected thereafter. The copper ore in a number of ~~e mines also contains cobalt; Northern Rhodesia produces a fifth of the world•s output of this mineral. Since the copper mines in Northern Rhodesia have relatively high-grade ores ard their output is likely to be readily saleable in the starling area, the irrlustry is on a sound footing. But profits, on which the rei.renue of the goverrunent so much depends, are bound to vary with the prica of copper, lmich is now unusually high. As the territory is little developed, especially in the -large areas distant from the railway line, the calls on the government for current and capital expenditure are bound to grow. The government,• s present policy of .,. .• • using its om financial resources as far as possible should ~tar.d it in good stead in times of recession • It federatiol'l should come about, the vulnerabi:!..ity of Northern Rhodesia to fluctuations in the price of one commodity will be lessened. Lconomic advantages should, in fact, be felt by all three territories. The broader and ~ ...-.-,;.c.-.... • ...- - . • - - - . - : , , , , - - • - · ~ . - ~ . , , - ~.. ·--"'·-1'~~---·'--.. .,. . ,. .,. .-,. ___, ' C f • .., •• more balanced economy would be in a better position to pursue the stable development of still untouched resources. -6- The Rhodesia Railways To provide capacity for anticipated la.rge increases in traffic, the Rhodesia Railways has adopted a development program for the triennium 1953-55, estimated to cost approximately ~28 million. Other financing will be available for all but about =5 million of the cost, arxi the Bank loan will cover this deficiency. The Rhodesia Railways is a statutory corporation controlled jointly by Southern Rhodesia, Northern Rhodesia an:l the Bechuanaland. Protectorate. A body called the Hi ;tier Authority determines the policies of the Railways, which are cattied out by the Rhodesia Railways Board. The governments of the three owning territories are entitled to receive dividends from the Railways where net revenues pe?'IT'.it and are ultimately responsible for any deficits. The system of the Rhodesia Railways comprises 2500 route miles of single- track, 31611 gauge railway line. From Bulawayo, Southern Rhodesia, as a center, the main line extends northward 800 miles to·the Belgian Congo border, eastward 463 miles "t,0 the Hozambique border, and southward 580 miles to Vryburg in the Union of South Africa. The Bulawayo- Vryburg line is operated for the Rhodesia Railways by the South African Rail"Ways. The system connects to various seaports through other railways, as follows: through the Beira Railway to Beira, • Mozambique, the principal port for the Rhodesias; through the South African J · ''\ Railwavs to oorts in the Union and also to Lourenco Maroues in Mozambioue; and · ' throui1. the Belgian Congo Railways and the Benguela Railway to the port of · Lobito in Angola. Freight traffic on the Rhodesia Railways has increased 70fo since 1947, and estimates of future traffic indicate that this rapid growth will continue for several years at least. The existing equipment and facilities of the Railways f l are not a.dequa.te· for handling all freight now offered, without considering future r l increases. Traffic est:unates for the line to Beira indicate that its capacity will ;. be reached or exceeded by about 1955. There is therefore urgent need for expanding .. , the capacity of the present system an:i for providing additional capacity for f' traffic to and from the sea, and the development program of the Rhodesia Railways l. is designed to meet that need. I In respect of the present system, the program includes (a) large purchases or locomotives and rolling stock; {b) enlarged and better equipped repair shops; (c) comprehensive measures for expanding main-line cap~cities by reducing grades and curvature., enlarging and remodelling yards and sidings, installing new signalling equipment, improving water supplies., etc .. ; and· (d) the .construction of housing for the Railway staff• I I To meet the need for more capacity to and from the sea the program provides tor a new.connection, called the Southeast Connection, from Bannockburn on the • Shabani Branch to Lourenco Narques. It will require the coustruction of e.pproxi- mately 400 miles of new line, half in Southern Rhodesia and half in Mozambique. The Portuguese Government will do the construction work j_r" !~ozambique and has been granted a credit for the purpose by the Export-Import Bank. The 204 mile section to be built by the Rhodesia Railways presents no difficult construction  :a •- • ) .. .,.._, ~,_.._,.. ............ ~f-''"""'· .. · · - ..' ·~--·- .~ . - -...,.__.t.-,.,.~~~ ,, • v., •• - 7- ' problems, arxi the completed line will have favorable operating characteristics. The program. as a whole is considered to be sound, well-balanced and realistic. It could not be materially reduced without endangering the accomplishment of its purposes. Its completion by the end of 1955 is considered reasonably possible. Many of the improvements included in the program., such as the Southeast Connection, will serve the needs of traffic for many yea.rs. Other parts of the program, such as the item for new locomotives and rolling stock., are designed only to meet predicted demands to 1955, and the housing projects will probably serve for an even shorter time. He~e further capital e:xpenditures will probably be necessary in the future., but the present program is complete in itself. The mana.gement and the technical staff of the Railways appear to be very competent. There has been difficulty during recent years in maintaining staff at full strength, ~ut the management is satisfied that enough employees of all categories can be obtained to carry out the development program and to staff the expanded facilities that the program will provide. i t~- ) • r l l· I f i I • /,I '