Rhodesia and Nyasaland - Economic position and prospects

RESTRICTED RE 1ILE COPY REP EA-83 ON This report was prepared for use within 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 ECONOMIC POSITION AND PROSPECTS OF THE FEDERATION OF RHODESIA AND NYASALAND May 23, 1958 Department of Operations Europe, Africa and Australasia CURRENCY EQUIVALENTS " 1 Rhodesian L & I Sterling L 1 U.S. $2.80 L 1 million z U.S. $ 2.8 million CONTENTS Page Naps Charts Basic data Sumnary and Conclusion Introduction ........................................................ 1 Economic Developments in 1956 and 1957 ................. . 1 Northern Rhodesia .............................................. 2 Southern 2 ,ode.ia .................. ................ 3 Nyasz lana .................................................... 5 External Payments and Government Policy............................ 6 The Outlook .......................,.............................. 10 The 17mediate Future ............. ...... .. ........... ..... .. 10 Non-economic Factors ............. ............................. 11 Long-run Growth Prospects .... ......... ...................... 13 Statistical Appendix То Port Fтапгqиг То Albertville --� (ве[сiай��'� ` j � , LГong,nyiko cR kwa , 1 глг со ьо,1�•^гУ•.,\еиrд l / п'i ( F п и }"�' ,\ / /LOA�B � �`. i J��eë _ /� BELG/AN�/ е,а а''�Г �' Аавгсогп ТА N G А N У/ К i� [а,�го� ^� %// �// дNGOLA ..� � � �� 5 W г fг � н Beiro � � aFпica) '� • „ � �о.,еп� о � �CONGO ® G� й а С� � �1 �'•. „1и л о�е: ,^, JIл4 Durcon о � � КрSо о g�� �• � о' �у ЕР� С � с ��. ` т 4 �С: � // Саомоw ai EiizaNe�м / Q А� i-� � i�>' � гс4ч LakP"' 't�� ", � � п пgнВиlи � '� / � Е✓ � �-' у� �о i 9 э��� ,; _ � FOri ь=`� 11 � ii S'i �/ �� U �i ЭС<��, 1f -- -� мw�п�гоп а _ Rosebery � � 9 �/i �� - / ElisabethvJle�' ^ � � r% .4 Nti�G OL А � � / ���..��__�. � � � � , , � � могка � '�'�% F �/ jjj Solwen ' � �° � � � 1 Вап t ��ji �% �� �СЬи9оi0 М juliго Пn , � ' l%U САКЕ � � NYASA/ Ki1we доlа Luanshyo G�,7 1 Bplovole R' Vг �а � ;�' ,�, 9 Fort •.• � - � �'а рГ Jameson �� � W � � c�J � (r51� �п� �'J 'и li/о / �� , ngwp 5alima (� �1 е R � '..'�. �_ Petauke '� i �- �, Каfи ; Р �) � = � �_ , ,��-- " _ �-� Broken нi11 •г.а'�i: мопкоуо ,_ ..'в' � о '-ь1s. r ���: �о''��s � �---' �,Э,�MOngu Mumbwa � � °0 wo�o LUSAKA -'� о`" К°lие,-, � Х 1 � ` {" F,ots '-- iqe 1amбezi Rrveг �.У-�� .г•г_, е смгипди гОмв � � � �У'� у-о� В1опг е Limbea �� � уг п / го �об / мiо � � � 6Р� MuIO6¢zi СМотр г'� И� � Коlртр ge � ОО М й а G� а � / � 'ti, gмртvоц ' AFR%j S �iип st� Sinoio 5P��50VR $. W >4--,�- ;�, • �` --- Wonkie Наг11еУ /���/ Ф Garooma Iпyanqp � Uц 1Г 1l � ® LS сЭ1 о��дв�\�ур ` Q-Oуо� �j � Оие Оие � �j �� � , � �а�/ Enke доот ��j /���/< Umvuma Umtali �� � о 4о еа i2o iea гоомееs �'у Gwe1o � � ����������/�j � Selukwe Viëiorio `� ' Bulawoyo �i � Beiro о Sbabam ChiPm9o FEDERATION OF RHODESIA Zj �wonda n9we Q AND NYASALAND � West Nictюlaon � И Q � � +н-и+нч-г+-r RAILWAYS % О У � р о MAIN ROADS � ������ �6iiR ���LlLL�Д.TERNATIONAL BOUNDARIES Beitbridqe � --•--•-•••••• TERRITOftц1L BOUNDARIES � .О -'� � . Cim О О А � � ...� ,� �_ � � � swaмPS • �±N� �F�j �с 5. AFR/СА APR1L 1958 То Capetown То Рогг E1izaбeth То Lourenco Marques 1BRD-466 ＿二 APRJL 1958馴BRD一467 T. P-t F-~ i T. Åkb.~14 ýLQrkO Atercorn* m (0 R T m [E R m L9gngweuju RN. t5 LÄKE M Y41 SA Luanshy' JgD Fart -o 0 D E 5 0 so CIRC IVUTS 8,0W Hdi LUSAKA Rivel 90 fr, z -BAd 0 -bntyre Mulobev chorna c (0 u MA Z EShovo siroic Copper Belt LMngstore BURY G-t D~ A-b-t- Gotoorna V Ch-. Railway. m 0 D ji 22 G.1d internatiomý\ e p GO Bmndmies m- T- ltor1.1 u.tali, CEU Coaj ............. B-od-iý. Cýttl. kvre'. Ä i7E Fort habani Victoria FEDERATION OF RHODESIA 0«.d. AND NYASALAND 41 West Nicholsm RESOURCES 0 40 80 120 160 20OMiles Beifbridg im APRIL 1958 T. Cýp.t- T. P-t Eii-b.th T. L-e- M-, - IbRD-468R FEDERATION OF RHODESIA AND NYASALAND GROSS NATIONAL PRODUCT AND EXPENDITURE (MILLIONS OF i) 400 400 YEARLY 350 350 V-GROSS NATION4AL PRODUCT 300 300 250 250 PRIVATE CONSUMPTION 200 -- "- - 200 ....** EXPORTS OF GOODS AND SERVICES 150 .150 MPORTS OF GOODS ....** AND SERVICES .*GROSS INVESTMENT 100 PUBLIC AUTHORITIES CURRENT EXPENDITURE 50 J - - 50 0 0 1954 1955 1956 1957 VOLUME AND DISPOSAL OF GROSS DOMESTIC PRODUCT (INDEX, 1953 100) 225 225 YEARLY 200 200 GROSS INVESTMENT -.2 175 175 GROSS DOMESTIC PRODUCT PUBLIC AUTHORITIES CURRENT 150 EXPENDITURE - I 50 PRIVATE CONSUMPTION I25 EXPORTS OF GOODS AND SERVICES to0o 100 IMPOTS F GODS AND SERVICES 17 751 75 1954 1955 1956 1957 4/23/58 1376 IBRD- Economic Staff FEDERATION OF RHODESIA AND NYASALAND COPPER PRICES IN UNITED KINGDOM (£ PER LONG TON) 500I I I I I I I I I I I I I 1 1 50 0 MONTHLY 400 400 300 300 200 200 100 100 D J D J D J D J D 1955 1956 1957 1958 TERMS OF TRADE* (INDEX, 1954= 100) 150 YEARLY 150 UNIT VALUE OF EXPORTS 125 OUNIT VALUE OF IMPORTS 125 100 ._______.__ 100 .... *..... ......... TERMS OF TRADE 75 75 1954 1955 1956 1957 1958 * Unit value of imports over unit value of exports BALANCE OF PAYMENTS (MILLIONS OF £) 300 ~k~PAYMENTS 300 EXPORTS OF 250 RECEPTS -CAPITAL 250 IMPORTS OF--- CURRENT CAPITAL TRANSFERS 200 200 CURRENT I:::...ICM TRANSFERS Tk\. : PAYMENTS I 5ABROAD I 50 FROM ABROAD :.:.:.:. SERVICES 100 SERVICES 100 EXPORTSIMOT 50 50 0 0 1954 1955 1956 1957 4/23/58 1377 IBRD- Economic Staff FEDERATION OF RHODESIA AND NYASALAND GROSS INVESTMENT AND SOURCES OF FINANCE (MILLIONS OF S) 200 200 YEARLY IMPORTS OF CAPITAL USE OF RESERVES 150 150 100 GOVERNMENT SURPLUSES 100 ... PERSONAL SAVINGS 50 ..--... ...........150 UNDISTRIBUTED PROFITS OF COMPANIES AND STATUTORY BODIES 0 DEPRECIATION ALLOWANCES 0 1954 1955 1956 1957 FEDERAL AND TERRITORIAL DEVELOPMENT PLANS, 1957-1961 (MILLIONS OF i ) 0 10 20 30 40 50 60 POWER HOUSING AND MUNICIPAL SERVICES RAILWAYS AGRICULTURE AND WATER DEVELOPMENT ROADS EDUCATION AND PUBLIC HEALTH ADMINISTRATION OTHER TRANSPORT AND COMMUNICATIONS OTHER SERVICE PAYMENTS ON THE EXTERNAL PUBLIC DEBT AS OF MARCH 31,1958 (MILLIONS OF £) 40 ----- 40 30 30 20 U.S. DOLLARS JI 20 AND OTHER CURREN II I 0 " 10 POUNDS STERLING 0 11 1 O 1954 1960 1965 1970 1975 1980 4/23/58 1578 IBRD- Economic Staff BASIC DATA Area 483,000 square miles Population (1957) African 7,230,000 ross Domestic Product (1957) £00 million European 282,000 ($1,120 million) Other 33,000 Federal Budget Results (1956/57) Territorial Budgets' Results (1956/57) (£ million) (£ million) Revenue 53 Revenue 42 Recurrent expenditure 45 Recurrent expenditure 36 Development expenditure 32 Development expenditure 21 xports (1957) £156 million imports (1957) £178 million of which: of whioh: Copper 53% Producers' goods 62% Tobacco 18% Fuel and electricity 5% Asbestos 5% Consumers' goods 33% Chrome ore 4% Tea 2% 3alance of Payments (1957) Sterling Assets (Feb. 1958) (Z million) (W million) Exports 159 Governments and Imports 176 Central Bank 77 Net invisibles -54 Other 23 100 Current deficit 71 Net capital inflow 25 External Debt (Dec. 1957) £171 million Decrease in reserves 46 ($479 million) Summary and Conclusion 1. This report describes economic developments in the Federation of Rhodesia and Nyasaland since June 1956, when the Bank made its $80 million loan for the Kariba project to the Federal Power Board, and reviews the outlook for the econo- my. It reaches the conclusion that the assessment of the Federationts long-term economic prospects on which the Kariba loan was based still holds good. 2. The most significant development of the past two years was the steady fall in the price of copper. This commodity, which normally represents about 60% of the Federationts exports and 25% of its gross national product, saw its price halved between the summer of 1956 and the spring of 1958. Lately, London quo- tations have been fairly stable around £175 per long ton, or nearly 10% above the level of early March. 3. The price fall, and the consequent deterioration in the terms of trade, marked the end of a period of extremely rapid economic growth. Nevertheless, buoyant conditions persisted well into 1957 and in certain sectors until the end of that year, Output increased and so did consumption. Private and public in- vestment rose rapidly, financed by internal savings and by imports of capital, primarily from the United Kingdom. The copper companies continued their expan- sion programs, new manufacturing capacity came into being and building activity reached record levels. Government revenue reflected high profits of the copper boom years and Goverunent development expenditure was larger than ever before. 4. High levels of economic activity resulted in high imports. With terms of trade rapidly moving against the Federation, foreign trado showed a deficit in the second half of 1957 for the first time since 1949. In consequence, the cur- rent external deficit grew larger and, despite the large capital inflow, the Federation lost £42 million of its very high external reserves between the middle and the end of 1957. However, at £100 million on December 31, they were still substantial. 5. When the Bank of England raised its rate in September 1957, the new Bank of Rhodesia and Nyasaland did not follow suit, in spite of very close financial links between the Federation and the United Kingdom. But in January 1958 the Government took steps to restrict credit and thus reduce imports and arrest the drain on sterling balances. Simultaneously, Federal and Territorial development programs were revised in the light of lower Government revenue estimates for 1958/59. 6. These measures coincided with the decision of the Northern Rhodesian copper companies to curtail output in order to check over-supply. The building boom in and around Salisbury showed signs of tapering off. Some unemployment appeared in the mining and urban centers, European imigration declined sharply and the country entered a phase of adjustment. Automatic correctives are at play already and, in a country like the Federation, should go a long way towards re- storing the balance in external accounts; the measures taken by the Government will reinforce and accelerate their effectiveness. 7. Unless another boom in non-ferrous metals occurs, the economy of the Federation is unlikely to grow as rapidly in the foreseeable future as it did in - ii - the past ten years. Nonetheless, prospects for continued economic progress are good. The close links of the Federation with the United Kingdom and the Union of South Africa should ensure the availability of capital for investment over and above internal savings. Reserves of copper are large, the productive capacity of the copper mines is being expanded and the copper industry is thoroughly competi- tive, with costs rather below £L150 per long ton. Chrome and asbestos are now being exported in increasing quantities; their reserves are also large and pro- duction costs low. Moreover, the mineral resources of the country are far from being fully explored. In agriculture, tobacco should be able to maintain its position in the export market and gradually expand its outlets, whereas culti- vation and sales of tea increase steadily. The productivity of African farmers is rising due to the land improvement schemes carried out by the Territorial Governments, Finally, further industrialization will save imports, make it possible to export some of the products in a more highly processed form and, in the long run, lessen the country's dependence on copper. Introduction 1. When the Bank made the loan for the Kariba project in the middle of 1956, the price of copper in London and New York was already falling. The fall con- tinued throughout the period covered by this report. Copper prices averaged, respectively, £329 per long ton (42 cents per lb.) in 1956 and £219 per long ton (30 cents per lb.) in 1957. In March 1958, with quotations down to £160 (23 cents), copper earned roughly one-half of what it did in mid-1956. 2. Although, through federation, British central African territories acquired a more diversified and better balanced economy, the importance of Northern Rho- desia's copper to the federated country remains very great. Copper normally represents about 60% of total exports and about 25% of gross national product. The population of the Copperbelt, 400,000 Africans and 40,000 Europeans, depends on the copper industry for its livelihood, while the copper companies contribute 25%-30% of the Federal and Territorial budget revenue. The United Kingdom is by far the largest buyer of Northern Rhodesian copper. 3. Past Bank reports (EA-2b and EA-60a) have described the rapid growth of the British central African economies since World War II. The first two sections of this report will discuss the impact of falling copper prices on the Federation and the steps the Government has taken to deal with the situation. The conclud- ing section will review the outlook, Economic Developments in 1956 and 1957 4. Boom conditions continued in the Federation throughout 1956. European immigration and capital inflow were at record levels. National income increased by 11%, compared with 15% in 1955, because of the smaller increase in corporate profits, but African wage and salary payments rose by 14% and European by 161. Consumption and investment expanded spectacularly. Production, railway traffic and use of electric power reached record levels. The money supply expanded by 7% to meet the needs of the economy and consumer prices rose by h%, mainly re- flecting higher import prices. 5. With the continuing fall in the price of copper, however, and a consequent heavy drop in corporate profits, the national income declined by 2% in 1957. Ex- pansion in European wages slowed down and European immigration, though still very high at 24,000, was less than in the previous year. African wages, however, con- tinued to rise rapidly and so did consumption. Though domestic savings fell and capital imports were somewhat smaller, investment rose further, absorbing 4O% of the gross national product. Production, transport activity and use of power, all surpassed 1956 performance. The money supply was stable but consumer prices again rose a little in line with import prices. 6. These developments in the economy of the Federation were the outcome of a multitude of events in the three Territories. While the fall in the price of copper affected Northern Rhodesia directly, it had a delayed and rather indirect effect on the other two partners in the Federation. High incomes of European tobacco farmers, the expansion of secondary industries and buoyant building ac- tivity had a more immediate effect on Southern Rhodesia, and rising public invest- ment, tea estate earnings and African tobacco crops on Nyasaland. It was only -2- when the Government had to take measures to check imports and public expenditure, because of loss of external earnings and budget revenue from copper, that people in Southern Rhodesia and Nyasaland really began to feel the impact of the break in the copper market. Northern Rhodesia 7. No one in a responsible position in Northern Rhodesia's Copperbelt ex- pected the £400 per long ton copper price of the first quarter of 1956 to last. The volume of output and the investment decisions of the copper companies were not related to this exorbitantly high price. The Northern Rhodesian copper mines have very large ore reserves and are relatively low cost producers. Their break-even point probably lies a little below £150 per long ton. 8. Consequently, the two copper groups, the Rhodesian Anglo-American Ltd., controlled by the South African parent company, and the United States controlled Rhodesian Selection Trust Ltd., restored their output - reduced through a long strike in 1955 - to 430,000 tons in 1956 and raised it further to 472,000 tons in 1957, when power imported from the Belgian Congo eased the strain on the domestic coal supply. 9. Gross investment in the mines rose to about £25 million in each of the two years. Rhodesian Selection Trust expanded capacity at its two existing mines, opened up a new copper and cobalt mine and began work on the construction of a £.5 million copper refincry at Ndola. Anglo-American spent about £12 millic- on its new minie at Bancroft, which came into production in January 1957, anria ccn- siderable sums on mining, processing and appurtenant facilities at its two exist- ing mines. Simultaneously, both groups took steps to increase productivity aid reduce costs. 10. While expansion programs were still being carried forward and output in- creased, the incomes of the European mine workers were already falling heavily. The copper bonus, a wage supplement based on the margin between production cost and selling price, fell from about 107% of the basic wage in May 1956 to 26% in December 1957. This put an end to the heavy spending on cars, household durable and travel but did not imply real hardship, since the average European take-home pay was still over £100 per month. 11. African miners were not severely affected. Their earnings, including bonuses, had been consolidated and wage rates increased subsequently. By the "African advancement agreement" of September 1955, about 700 Africans were admit- ted to some of the better paid jobs relinquished by the European trade union. At present, African wages average £200 per annum and the best paid employees can draw up to £50 per month. 12. The continued high level of spending stimulated trade, manufacturing and building activity in the Copperbelt. Contractors, merchants and craftsmen estab- lished themselves in the urban centers, particularly in Ndola and Kitwe, and the number of people linking their fate to that of the copper industry increased in spite of the fall in the price of copper. 13. The Northern Rhodesia Government derives the main part of its revenue - 3 - from its share in the Federal income tax, from the Territorial surcharge on corporate income tax and from mining royalties. Due to high copper earnings in the middle 'fifties, receipts from these sources enabled the Government to make a substantial contribution to the capital account. In consequence, expenditure on the Northern Rhodesian development plan increased from £8.3 million in 1955/56 to an estimated £9.5 million in 1957/58. Capital expenditure by the Federal Government in the north also increased considerably. This spurt in public invest. ment was reflected throughout the Territory in a higher level of building activ- ity, employment and incomes in 1956 and 1957. 14. A rather sober mood now prevails in Lusaka and Broken Hill, the two largest towns outside the Copperbelt. Lusaka, the capital, has a larger European population than two years ago and displays several new administrative buildings, apartments, warehouses and workshops. But its hopes for future development linked to the Kafue project were somewhat dimmed by the decision to carry out Kariba. Broken Hill, the zinc and lead mining center, was affected in 1957 by the rapid price decline of both metals. Sales proceeds fell by 20% and output may have to be restricted. 15. Agriculture is less important to Northern Rhodesia than to the other two Territories. European settlement on land is limited and vast areas under Afri,:an cultivation are devoted to primitive subsistence farming. Nevertheless, develop- ments of the past two years deserve mention. The favorable price, guaranteed to growers by the Federal Grain Marketing Board in order to ensure a supply adequate for local needs, stimulated the cultivation of maine to the extent of creating an export surplus. On European farms, along the railway between Livingstone arn Broken Hill, yields and quality of flue-cured tobacco improved with better meflods of cultivation and the application of fertilizer, Around Petauke, African farmner, expanded production of groundnuts which, because of their high quality, comand a good price in the export market. 16. Much progress has been made in African farming methods and rural living standards along the railway line and in the Petauke area. Farm improvement schemes were expanded further and tribal authorities recognized more and more the importance of individual rights to land. An increased number of farmers accepted the guidance of extension and demonstration services in matters of acreage limi- tation, soil conservation and crop rotation, and began to use fertilizer and agri- cultural implements and machinery acquired with the help of Government subsidies and loans. Southern Rhodesia 17. Judged by its economic performance in the past two years, Southern Rho- desia seemed farther away from the Copperbelt than the map indicates. Its most important product, flue-cured tobacco grown on European farms, saw an exceptional ly bountiful crop in 1956, due to favorable weather and much improved yields (840 lbs.) per acre. Because of bad weather,the 1957 crop was much smaller but texture and quality were very good and the price averaged 39d per lb., compared with 33d in the previous year. Consequently, the earnings of the 2,500 Southern Rhodesian tobacco growers were, at about £23 million per annum, higher than ever before. This was the first factor which cushioned Southern Rhodesia from -4 unfavorable extraneous influences and kept commercial activity in Salisbury brisk. 18. Substantial progress has been made in the past two years with the accel- erated implementation of the Native Land Husbandry Act of 1951 in the native reserves and special areas, and with the sale of farms to trained African farmers. in the native purchase areas. At the end of 1957, 3.5 million acres had been allocated under the Act to individual farmers who obtain a fair degree of se- curity of tenure but are required to use the land in accordance with good farm- ing practice and to ensure proper soil conservation. On the same date, 5,500 Africans in the purchase areas had full title to their farms with the right to sell them and borrow against mortgage. These measures have already helped to raise African maize and groundnut production to the highest level on record, 19. European production of maize increased by 50% between 1955 and 1957,owing to the incentive of a guaranteed price and the spreading use of hybrid seed and fertilizer. Storage and disposal of the crop began to cause difficulties. Cattle raising on big European ranches and meat supplies from tribal areas expanded steadily. Cattle are still imported for African consumption while better quality meat is being exported; the Federation is now self-sufficient in milk and cheese but demand fur butter continue3 to be met by impo:ots. 20, The value of mining output in Southern Rhodesia is only about 25% of that of Northern Rhodesia but in the past two years it increased from £20.5 million tc £25.8 million. The main export minerals are asbestos, chrome and gold, all of them mined ia the Great Dyke area. Investment in mines and processing plants made porsible an increase in exports of asbestos which ccmmands a good markE.t, in the United Kingdom, India, the United States and Continental Europe because cfitc low iron content and long, good quality fiber. With the improved capacity of the railways to tarry the ore to ocean ports, the output of chrome, mined main2 r by United States controlled companies and a major dollar earner for the Federation, expanded by nearly 50% in 1957. New mines, located near the new Lourenco Marques railway extension, were brought into production. Gold producers maintained their position, in the face of rising costs, only by milling higher grade ore. Of the other export minerals, lithium and copper were produced in larger quantities in 1956 and 1957. On the other hand, proposed exploitation of a nickel deposit has for the time being been given up. 21. Southern Rhodesia also has large reserves of coal, iron ore and limestone The best coking coal deposit in all Southern Africa is located at Wankie, where a sizeable investment has been made in recent years to expand the capacity of thq colliery to 5 million tons per annum. Until 1957, however, the growth of output was limited by the inability of the railways to carry to consumers all the coal they needed. In that year railway capacity expanded but demand by thermal power plants in the Copperbelt declined, owing to the delivery of hydroelectric energy from the Congo. Production of iron ore and limestone at Que-Que increased con- siderably between 1955 and 1957. 22. Rapid development of secondary industry in the area between Salisbury anc Bulawayo was another factor which, in the past two years, helped to compensate for the fall in the copper market. The value of manufacturing production in- creased from £91 million in 1955 to £106 million in 1956 and a further substanti& increase took place in 1957. Many of the new industrial ventures came into being on the initiative of European residents or immigrants and, at the same time, a number of existing small enterprises attracted the interest of powerful British and South African concerns and were reorganized and expanded. Much of the capi- tal imported into the Federation was invested in manufacturing. Relatively low taxation, duty-free entry for most materials for industry, ample labor supply and the prospect of ample power from Kariba influenced the decisions of foreign in- vestors. In a few instances (e.g. enamel ware), the Government helped to launch an industry by extending tariff protection. 23. In early 1957, the Southern Rhodesia Iron and Steel Commission sold its plant at Que-Que for £ million to the Rhodesian Iron and Steel Company Ltd., formed by the'Lancashire Steel Company in partnership with other British, South African and Rhodesian interests. The new company immediately embarked on a £8 million 4-year expansion program designed to raise the capacity of the plant to 160,000 short tons of pig iron and 150,000 short tons of steel ingots per annum. Other recent investment in industry is exemplified by the construction of a £1.5 million tire and tube factory and of a Z3.5 million sulphuric acid and super- phosphate plant which will use locally mined iron pyrites and import phosphate rock, pending the development of a deposit in the vicinity. Smaller companies were created for the manufacture of vehicle bodies, metal containers and wattle bark extract. 24. The construction industry also contributed substantially to the high level of activity and employment in Southern Rhodesia in 1956 and 1957. Salis- bury, in particular, experienced an unprecedented building boom which changed the features of the city. Having become the capital of the Federation, and conse- quently the seat of two governments, Salisbury needed more office space and also more residential accommodation. The headquarters of the copper companies moved down from Northern Rhodesia, and new stores and hotels were opened. Southern Rhodesian building societies expanded their operations greatly and in 1)56 regis- tration of mortgage bonds in Southern Rhodesia reached its peak of £32 millions the 1957 figure was somewhat less but still higher than two years before. 25. Finally, public capital expenditure sustained economic activity in Southern Rhodesia after the copper slump had set in. The revenue of the Southern Rhodesia Government, derived from more sources than in Northern Rhodesia,incressed very substantially between 1955/56 and 1957/58. Revenue contributions to develop- ment were raised and investment in municipal services, housing, roads and agri- culture under the Southern Rhodesian development plan reached £10.9 million in 1956/57. Federal development expenditure in Southern Rhodesia was even larger; a growing share of Federal funds financed Rhodesia Railways and Kariba, but sub- stantial amounts were also spent on roads, hospitals, schools and administrative buildings. Nyasaland 26. While in Southern Rhodesia public capital expenditure was only one of several factors neutralizing the impact of the fall in copper prices, it was by far the most significant factor in Nyasaland. The economy of this Territory is still, to a large extent, based on subsistence agriculture, with cash incomes accruing mainly from remittances of some 150,000 Nyasa men working in the South - 6 - African and Rhodesian mines and industries, from wages earned on tea estates and from sales of tobacco and cotton grown by African farmers. 27. Since Federation, the revenue of the Nyasaland Government increased con- siderably by virtue of its 6% share in the Federal borrowing and income tax proceeds. This made it possible for the Government to finance more public works and housing. From £800,000 in 1954/55, its capital expenditure rose to £2 million in 1956/57. In addition, Federal development expenditure on roads, rail- ways, lake transport, power and public health services in the Territory averaged about £1.5 million per annum. 28. These are sizeable sums for Nyasaland. Moreover, the increased level of spending began to attract contractors and traders. Workshops and small indus- tries were set up and demand for labor increased. Minima wage rates were raised by 25% to 50% on July 1, 1957, in turn stimulating business activity. 29. Production of the main export crops, African grown tobacco and European grown tea, expanded substantially in 1956 and 1957. Due to a determined effort by the agricultural services of the Government, acreage under fire-cured tobacco increased from 85,000 acres to 115,000 acres and the numTber of growers from about 50,000 to 70,000. Sales exceeded 25 million lbs. per annum in 1956 and 1957, compared with the very poor crop of 15 million lbs. in 1955. Favorable weather, better seed and more fertilizer resulted in larger tea crops and export tonnages reached record levels. An exception to the progress in agriculture was heavy damage done to cotton production by pests and diseases during the 1955-56 season, External Payments and Government Policy 30. High levels of production, investment and consumption brought a steady rise in imports, partly financed by expansion in bank credit to business. Between 1955 and 1957, the volume of imports rose by 20% and their value by 28% from £138 million to £177 million. Investment goods and materials for industry showed a higher rate of increase than consumers' goods. Imports from the Union of South Africa rose most and at £61 million ranked in 1957 a close second to imports from the United Kingdom. 31. Export tonnages also rose by 20%. Their rise in 1956 more than offset the price decline in copper and the value of exports increased from £173 million to £182 million. In 1957, however, the fall in the price of copper and some other minerals wiped out the gains in volume, and the value of exports shrank by nearly £26 million to £156 million. The greatest loss was in earnings from the United Kingdom, the major market for Northern Rhodesian copper, whereas in sales to the United States, with which the Federation has a consistent surplus, larger deliveries of chrome made up for smaller exports of copper. 32. The deterioration in the terms of trade was so drastic in 1957 that the usual trade surplus turned into a trade deficit of £17 million. This in turn raised the deficit on current account from £33 million in 1956 to £71 million. 33. A substantial share of imports continued to be financed by the inflow of - 7 - capital into the Federation. Net receipts on capital account amounted to £31 million in 1956 and £25 million in 1957. Most of the long-term funds for invest- ment in the Northern Rhodesian mines and Southern Rhodesian industry came from the United Kingdom and the Union of South Africa. 34. The decline in net capital receipts in 1957 may have been caused in part by the large difference in interest rates in the Federation and the United King- dom in the latter part of the year. In the past, interest rates in the Federa- tion have moved in sympathy with those in the United Kingdom. In September 1957, however, when the Bank of England raised its discount rate, the newly established Federal central bank, the Bank of Rhodesia and Nyasaland, did not follow suit. Its rate remained at 4f%, 21% below the London rate. In these circumstances, some of the United Kingdom parent companies refrained from transferring to the Federation funds which could be more profitably invested at home and advised their subsidiaries to turn to local banks for their credit needs. This led to additional pressure on banks; credit to business expanded further and private deposits declined. 35. The gap in overall external payments caused a drain on the country's monetary reserves in the second half of the year. Total sterling balances of the Federation, which stood at £149 million on December 31, 1956 and at £142 million on June 30, 1957, were down to £100 million by December 31, 1957. 36. When the level of sterling reserves at the end of the year became known in the second half of January, the Government immediately ordered a "credit squeeze". The Bank of Rhodesia and Nyasaland called in the bankers and requested that steps be taken to reduce, by April 30, the total value of bills and advances by 10%. The reduction of the individual overdrafts was left to the discretion of the local bank managers familiar with the circumstances of their customers. At the same time, instalment purchase terms were radically tightened, with 50% of the price down and the rest payable over a maximum of twentyfour months. The Govern- ment expected that a 10% reduction in credit would eventually result in a 20% reduction in imports and the re-establishment of a balance in foreign trade. 37. It is not yet possible to assess the results of the credit squeeze. B-11-k balance sheets for the end of April will not be available before late May. The Federation's sterling balances at the end of March were practically the same as on December 31, 1957; however, proceeds of a £10 million Federal issue in London were credited to the Federation during the intervening period. A substantial reduction in credit within three months is not an easy task, particularly at a time when tobacco growers need accommodation to tide them over until the harvest is sold. Furthermore, the effect of credit restrictions on imports may be somewhat weakened by the fact that United Kingdom shippers and bankers, who finance part of the Federation's foreign trade, are not affected by the internal credit squeeze. Never- theless, it appeared at the end of March that the credit squeeze was working, even if it might take more time to achieve its full effect. 38. The Federal and Territorial Governments have also taken steps to reduce public expenditure below the levels originally planned. Federal budget revenue for 1958/59 was estimated in March at £51 million on the conservative assumption that the price of copper would stabilize at £160 during the first half of 1958. The reduction by £ million from the latest estimate for the current fiscal year - 8 - is more than accounted fo' by the anticipated decline from £20 million to £10 million in income tax payable by the Northern Rhodesian copper companies. The incidence of copper price fluctuations on income tax receipts is delayed but very significant. Every change of £10 per ton means a £625,000 difference in revenue with a lag of twelve to eighteen months. The decline in income tax receipts from the copper companies should be partly offset by higher income tax collections from corporations and individuals in Southern Rhodesia and, in a small measure, by increases in other revenue. 39. To keep its revenue account in balance and at the same time provide for increases in public debt service and recurrent expenditure on public health, European education and public works (to repair flood damage), the Federal Govern- ment had to reduce further the revenue contribution to development from an esti- mated £6.6 million in 1957/58 to £1.1 million in 1958/59, and to cut subsidies by 4O%. The latter measure is expected to be achieved largely by lowering the Grain Marketing Board's average purchase price for maize so as to maintain a stable price for quantities consumed internally but eliminate the subsidy for the export- able surplus. No increases in taxation are considered necessary at this time. The Federal Treasury believes that lower tax rates than in the United Kingdom, and not much higher than in South Africa, are a necessary ingredient of the Federation's growth, 4O. Having had to reduce the revenue contribution to development, the Federal Government decided early in 1958 to curtail its four-year development plan for 1957/61 from £138 million to £123 million, first of all reducing development expenditure in the current fiscal year by £5 million below the original estimate. By far the largest reduction was made in the investment program of Rhodesia Rail- ways. The other significant cuts affected inter-territorial roads, certain power projects in Southern Rhodesia, the construction of educational establishments for Europeans and the replacement of some existing hospitals. 41. After a relatively substantial increase in revenue in the current fiscal year, Southern Rhodesia anticipates a further slight increase in 1958/59, based on the assumption that the Territorial surcharge should bring in more money than the expected drop in Southern Rhodesia's share in the Federal income tax. The Government has nevertheless decided to reduce its revenue contribution to develop- ment in order to provide for increases in recurrent expenditure on agricultural services and public debt payments. In consequence, the Southern Rhodesian de- velopment plan for 1957/61 was recently scaled down from £37 million to £35 million by reducing expenditure on housing and loans to local authorities for municipal installations. 42. In Northern Rhodesia where mining royalties, which are payable monthly and follow price changes without delay, represent an important component of the total budget, estimates provide for less revenue in the current fiscal year than was collected in 1956/57. Estimates for 1958/59 take into account the full impac' of lower receipts from the Territorial surcharge, the Federal income tax and min- ing royalties. In order to maintain a balanced budget, the Northern Rhodesia Government decided to compress recurrent expenditure wherever possible. At the same time, however, it determined to apply the substantial Treasury reserves, accumulated during the years of the copper boom and largely held in London, to its ?35 million development plan for 1957/61 to counteract the copper recession. 43. Budget estimates for 1958/59 are not yet available for Nyasaland. Never- theless, the GoVokhmeht has d1ready decided to curtail its planned development expenditure by deferribg £700O0 w6rth of eon8truction work originally scheduled for 1957/58 and 1958/59. This measure will affect primatily administrative build- ings and roads. 44. Overall government spendingi including Federal and Territorial recurrent and development expenditure, should still be about £10 million higher in the cur- bent fiscal year thain in 1956/57, when it totalled £134 million. However,because of the reductions decided by the four governments, overall expenditure should not increase further in 1958/9 and might even be less, The excess of development expenditure 6ver government revenue will continue to be financed by internal s&ings and exterhal borrowing. Estimates of financial resources available for public investment were reviewed and revised recently and are realistic, 45. The credit and fiscal measures of the Government coincided with the deci- sion by the copper companies to restrict copper output in order to check over- supply. Rhodesian Selection Trust cut production a its two big mines by about 10% of the 1956 level, Anglo-American, on the other hand, suspended altogether mining operations at Lancroft, where underground water con(:itions had impeded the work from the beginning, and aimed to achieve a 10% reduction in the rate of out- put originally planned for 1958. 46. The closing of Bancroft had a pronounced psychological effect in the Federation. Although the development of the mine is going ahead and consequently part of the local labor force continues at work, about 600 Europeans and 3,000 Africans engaged in mining operations have lost their jobs, Most of the European staff were offered other assignments. Some Africans returned to their villages but most of them remained in the Copperbelt looking around for other employme"' Although the ties with the village are said to be still very strong, the pull of the city is certainly increasing and the risk of urban unemployment in a depras- sion looms greater than ever before. 47. Another significant development in the industrial sphere is the tapering off of the building boom in Salisbury. Building activity is still high but is expected to decline later in the year. Some signs of slackening can also be de- tected in commerce. As a result, a number of Europeans and Africans are seeking employment. 48. Curtailed demand for skilled labor in the Copperbelt and in Salisbury immediately affected European immigration. In the early months of 1958, the number of immigrants fell to 1,600 per month, compared with a monthly average of 2,200 in 1957. 49. The decline in job openings for Africans was accentuated by rationaliza- tion measures spreading throughout the economy in the wake of the African wage award of January 1, 1958. For the first time since 1953, the legal minimum wage for Africans (with the exception of agricultural laborers and domestic servants) was raised from £4. 15. 6 to £6. 10/- per month. While during the boom one more African on the payroll at 6d per hour did not seem to make much difference, in the present circumstances, with wages at 71d or 8id per hour, employers are watching costs closely. - 10 - 50. One more event which might somewhat dampen economic activity in the Federation in the months to come is the damage to crops caused by short but un- usually heavy rains and the unprecedented Zambezi flood of February and March 1958. The estimate of the tobacco crop was revised downward from 200 million lbs. to 168 million lbs. and maize also suffered. The flooding of works at Kariba temporarily reduced the demand for cement and will slow down progress of construction in 1958, even though the project is still expected to be completed in 1961. The Outlook The Immediate Future 51. The national income will probably decline further this year, mainly because of the fall in corporate profits and European wages and salaries.African incomes may hold their own, the reduction in employment being offset by a rise in wage rates and better farm earnings. The rapid growth in private consumption will probably level off and gross investment slow down, due primarily to less residential and cormercial construction. However, provided that the recession does not become more serious in the United States or spread to Western Europe, production, incomes and employment in the Federation should be maintained at a level which, although lower than during the boom years, would nevertheless be reasonably high. 52. The external financial position of the country will be determined lar5el by the price of copper and the success of the Governmentts measures to check imports. Copper output has been cut by leading producers and the price, after falling to £160 per long ton last March, has recovered slightly and has recently hovered between £170 and £180. Copper prices may recover somewhat in the months to come; nevertheless, export earnings from copper in 1958 will presumably be lower than in 1957 since the price could hardly return to the average level of last year and the reduction in output will be reflected in somewhat smaller expor tonnages. 53. Imports should soon begin to feel the effect of the credit squeeze. If this is insufficient to check the drain, the Government intends to take addition- al steps to redress the foreign trade balance probably by selective import controls which, however, it would only reluctantly apply. 54. The situation will also tend to correct itself. The fall in profits of the copper companies will further reduce dividend transfers to foreign share- holders. The building trades will import less equipment and materials, and Euro- pean population in the Copperbelt will spend less on imports and foreign travel. Merchants will place less orders abroad and hold smaller inventories. This proc- ess of automatic adjustment will be reinforced and accelerated by the measures taken by the Government. 55. The inflow of capital should be larger this year than last. The Federal Government continues to draw on its Kariba loans. It floated an issue of £10 million in London in January and proposes to borrow the equivalent of about £9 - 11 - million in the New York market and from the Bank. Expansion programs at present under way in mining and manufacturing will probably call for substantial trans- fers of capital from the United Kingdom and South Africa. Although funds brought in by immigrants will almost certainly be less than in the past two years, many Europeans who recently established themselves in the country may be transferring assets to the Federation. Nevertheless, the Federation's sterling balances may decline further in 1958, At the moment, at £99 million or nearly seven months' merchandise imports, they are still substantial, Non-economic Factors 56. The Federation is the home of two races. Unlike Nigeria or Uganda, where Europeans are few and occupy only high positions in administration and business until they retire in Europe, the Federation - due mainly to its favorable climate- has a fairly large European settler element which is there to stay. Furthermore, because of its mineral wealth, the Federation shows heavy investment in mines and industrial plant, and, as a concomitant, a concentration of urban working popu- lation, particularly around Salisbury and Bulawayo, and in the Copperbelt. In contrast with the Belgian Congo but similar to the Union of South Africa, this working population consists of two races which are already competing for certain jobs and are bound to do so increasingly in future. 57, The demographic and political structure of the three constituent Terri- tories of the Federation is far from uniform. In Southern Rhodesia, Europeans make up 8% of the population, own half of the land and, except for matters affecting native reserves, have full control of go-ernment. In Northern Rhodesia and Nyasaland, which are still under British protection, Europeans number,resp?c- tively, 3% and 0.3% of the population and own only V-510 of the land. 58. Africans in the northern Territories had opposed Federation for fear of European settler influence spreading from Southern Rhodesia to the north. In the past few years, these fears were allayed somewhat by the rapid pace of eco- nomic development, enhanced by the association of the three Territories. Land improvement measures in rural areas have been accelerated and urban housing con- ditions have grown better. In the Copperbelt some jobs, formerly reserved to Europeans, have been opened to Africans. Rapid progress has been made in edu- cation. About 80% of children of school age attend primary school in the Rhodesias and even though the ratio is much lower in Nyasaland, the recent in- crease there in numbers at school has been spectacular. 59. There were other developments which were not encouraging. Labor disputes caused a state of emergency to be declared in the Copperbelt in fall 1956. Euro- bean trade unions, in particular the Railway Workers' Union, are still reluctant to relinquish even simple jobs to Africans and among Africans there is much re- sentment towards unskilled and semi-skilled Europeans holding jobs which Africans feel they could adequately perform. African leaders are also critical of the limited scope of technical and professional training and of the difference be- tween European and African educational standards in the Federation. 60. Recently, the provisions of the Federal Electoral Act of 1958 have re- vived African suspicion of the Federation. The Act enfranchises an estimated - 12 - 55,000 Africans by establishing a special voterst roll with lower financial and educational qualifications than those required for the general roll, for which 82,000 Europeans but only about 1,500 Africans are expected to qualify. However, the majority of the members of the Federal Assembly will be elected by general voters only, whereas both the general and special voters will vote for the remain- ing elected members, who, together with some designated members, are to represent African interests. The Act was considered discriminatory by the African Affairs Board, a standing committee of the Federal Assembly, and consequently referred to London, where it was approved by the United Kingdom Government after a discussion in Parliament. It is likely that the African National Congress, which advocates African self-government, will seize upon the electoral issue. The influence of the Congress does not seem to have increased in the past few years but it tries consistently to infiltrate into the trade unions and intimidate African leaders who favor cooperation. The new Electoral Act could easily help its chances. 61. The Federal Party, which, since federation, has been in control of govern- ment in the Federation and in Southern Rhodesia, groups in its fold persons of many views and interests, The franchise controversy has weakened the Party and the deteriorating economic situation might further help the opposition. Southern Rhodesian politics, as distinguished from Federal politics, have recently been stormy. In April, the Prime Minister of Southern Rhodesia lost a by-election to the Southern Rhodesian legislature to a member of the Dominion Party and subse- quently several members of that legislature seceded from the Federal Party. This friction betwreen Federal Party members in Southern Rhodesia may spread into Federal polities and affect the outcome of the Federal election to be held with- in a year. In this election, the opposition Dominion Party, which advocates Dominion status and independence from London in regulating native affairs, might gain strength at the expense of the Federal Party. In addition, the Constitutior Party, recently formed in Northern Rhodesia, will presumably enter its candidates in the election. This Party appeals to Europeans and Africans alike and criti- cizes the Federal Party for neglecting the principles of inter-racial partner- ship and cooperation to which the country is committed by the Constitution. 62. Race relations rather than other issues are at the root of party divi- sions in the Federation. They will dominate the political future. The course of race relations in a multi-racial society is never smooth and does not lend itself easily to prediction. However, the federated Territories have a long tradition of peaceful and friendly relations between Europeans and Africans. Europeans have, on the whole, been pragmatic in their approach, while Africans have so far been moderate in their demands. Today, all responsible African leaders emphasize the importance of education as a pre-requisite of political advancement. The wish to learn is universal and the respect for European intel- lectual achievement widespread. Progress in education and improvement in living conditions are generally recognized by the Africans. On the other hand, Euro- peans, though naturally sensitive to any threat to their own standard of life, accept the principle of African advancement and have shown willingness to put it into effect. Given further rapid advancement in African educational and material standards, and the will on the part of the Europeans to accept gradual political progress of the Africans, race relations in the Federation need not deteriorate to the point where they would threaten the growth of the economy. - 13 - Long-run Growth Prospects 63. Aside from non-economic factors, the economic growth of the Federation depends, first of all, on the demand for its exports, in particular copper and tobacco which together make up over 70% of the total. Ore reserves in the Copperbelt are estimated at about 600 million short tons, containing 18 million tons of copper, equal to 35 yearst supply at the 1957 production rate. Their metal content is relatively high, varying from about 2 % to over 5%. The Northern Rhodesian copper industry is thoroughly competitive and the mines were still operating profitably at £160 per long ton. Though African labor is no longer cheap, power from the Congo now and from Kariba after 1960 give good possibili- ties for further mechanization. The high Rhodesia Railways freight rates on copper have just been lowered. 64. Investment in mines, plant and welfare services is going ahead. Capital expenditure by Rhodesian Selection Trust will reach a peak in 1958 and 1959, mainly in connection with capacity expansion at the Mufulira mine, from 90,000 to 150,000 tons by 1962, Expansion programs of Anglo-American under way at the Nkana and Nchanga mines and the development of the Bancroft mine call for high capital expenditure in the next four years. If demand warrants, this investment will enable the Northern Rhodesian mines to raise output to 600,000 tons in 1962, compared with 472,000 tons in 1957; other major producing countries are unlikely to expand productive capacity in the same proportion. 65. Copper prices will, of course, be heavily dependent on the level of business activity in the United States and Western Europe, The present copper price of about £175 per long ton in London is relatively low. In view of the sizeable additions to capacity which will result from expansion already under way in Northern Rhodesia, Latin America and Australia and of the substantial stocks now in the hands of producers, the price of copper is unlikely in the next few years to reach the boom levels of 1955-56. In the long run the price is likely to move upwards if only because at present prices producers have no incentive to undertake new expansion, Even at £200 per long ton, however, the Rhodesian mines can operate profitably. 66. Good prospects also exist for the production of other minerals. Asbestos reserves are very large and production costs competitive. Reserves of chrome are practically unlimited, production costs low, and 80% of the output consists of high-grade metallurgical chromite which is in good demand. Though stock piling in the United States is to be discontinued at the end of 1958, Rhodesian chrome producers can be expected to raise their exports to 900,000 tons by 1962. Pro- duction of gold, zinc and lead, on the other hand, is unlikely to change appre- ciably. However, the mineral resources of the Federation are far from being fully explored. Prospecting continues and various promising properties are being examined. 67. Physical conditions for expanding production of flue-cured Virginia tobacco are favorable. Present yields are still 30% below the United States and could be raised substantially. Cost of production averages less than £100 per acre, placing the break-even point slightly below 30d per lb. at a yield of 800 lbs. Much is being done to promote experimental work and disseminate its results; many growers are currently reducing acreage and obtaining higher yields and better quality from the application of more fertilizer and a better organi- zation of labor. If demand for Rhodesian tobacco were to grow rapidly, pro- duction could nearly double within fifteen years. 68. After World War II the dollar shortage in the United Kingdom enabled Rhodesian tobacco to displace United States tobacco in the British market which now takes over 50% of the exported crop. United Kingdom requirements for 1958-60 are estimated at 75 million lbs. per annum. At this level, British cigarette manufacturers would be buying the maximum quantity of non-dollar leaf which they can use without changing the characteristics of the English blend cigarette. Al- though an end of import licensing would expose Rhodesian tobacco to full compe- tition of United States and Canadian tobacco, of which the latter also benefits from Commonwealth preference, Rhodesian growers should be able to maintain their position in the United Kingdom market by virtue of existing arrangements, pro- vided there is a steady improvement in quality. Because of the slow growth of British cigarette consumption, however, large expansion in output could not be based on outlets in the United Kingdom. 69. About 20% of the 1956/57 tobacco crop was sold in Continental Europe, where price rather than quality is important. Rhodesian growers have increased their small share in this market in the past few years and could expect to ex- pand their sales in the long run, due to rapid growth of cigarette consumption. The 30% ad valorem duty, provided for in the Treaty of the European Eccnromic Community. would mean a lowering of the present German dul.y on Rhodesian tobacc but would more than double the existing Benelux duty on tobaccos from outside the Community. However, since producers in the overseas territories of the Community do not produce flue-cured tobacco, the pattern of trade should not change dras- tically. Furthermore, in a price conscious market an ad valorem tariff may en- hance the competitive advantage of Rhodesian leaf, as compared with the more expensive United States leaf. Nyasaland fire-cured tobacco, on the other hand, which has recently increased its exports to African countries, might suffer if production in the Belgian and French territories were stimulated by the common tariff. 70. The outlook for other crops is quite promising. Tea production in Nyas- aland should continue to grow. The tea estates re-invest their profits and acreage is expected to increase by 30% to 35,000 acres in the middle 'sixties. At a yield of about 1,000 lbs. per acre, this would mean adding 1 million lbs. per annum to exports. Production cost is still fairly low because better yields and slowly rising labor productivity have in part offset the increase in wages. Production of groundnuts by African farmers for export should also increase; out- put of maize, on the other hand, will presumably be curtailed to avoid subsidiz- ing exports. There is also room in agriculture for replacing certain food importE by domestic production. For instance, prospects for expanding cultivation of sugar cane are good and several projects are now being examined, 71. Manufacturing industry should continue to develop in the Federation. This would make the economy less dependent on the vicissitudes of the copper market and give it a higher measure of stability. Industrialization would mean saving on imports and selling export products in a more highly processed form. Although the Belgian Congo and British East Africa may some day offer outlets for the Federation's industries, fundamentally manufacturing will depend on domestic demand. Consequently, progress of industrialization is closely linked to future growth of African incomes, which in turn depends largely on increased produc- tivity of African workers and farmers. 72. Expansion in the private sector of the economy will call for adequate public services. These the Federal and Territorial Governments intend to pro- vide by carrying out their 1957/61 development plans partly financed from over- seas. The Federal Government borrowed £10 million in London last January and besides the equivalent of about £9 million expected from the present New York market-IDRD operation, it proposes to float two more issues of £10 million each in London before the end of 1960. 73. The external public debt of the Federation and its constituent Territories amounted to £183 million at the end of March 1958. Estimated service payments on this debt fluctuate between £9 million and £16 million per annum in the next six- teen years, except for 1970 when a substantial Southern Rhodesian issue falls due, and decline rapidly thereafter. Including the service on the expected borrowing in the next two years, the average annual debt burden in the late 'fifties and throughout the 'sixties represents about 7% of gross current external earnings of the Federation in 1957. 74. The Federation is now going through a period of readjustment and con- solidation. Though times will be harder in the near future and the rapid rate of growth achieved in the past decade will hardly be matched in the next few years, the long-run economic outlook remains good. There has bocn no major developp.ent in the past two years that would make it necessary to revise adversely the a&sesa ment of the long-term prospects of the Federation on which the Kariba loan was based. Table 1 Population (in thousands) June 1954 June 1955 December 1956 December 1957 African European African European African European African European Southern Rhodesia 2,150 158 2,220 165 2,330 185 2,380 200 Northern Rhodesia 2,010 53 2,060 58 2,130 70 2,190 74 Nyasaland 2,470 5 2,530 6 2,610 7 2,660 8 Federation 1 6,630 216 6,810 229 7,070 262 7,230 282 Population in the Main Centers 1951 1957 Africans in Europeans Africans in Europeans employment and employment and dependents dependents Salisbury 75,488 40,433 125,000 76,000 Bulawayo 57,492 32,294 77,000 47,000 Kitwe-Nkana 17,220 5,225 27,000 11s000 Lusaka 14,756 4,656 26,000 11,000 Ndola 12,766 2,907 26,000 8,800 Umtali 10,856 5,734 15,000 7,700 Luanshya-Roan Antelope 16,257 4,676 20,000 6,100 Gwelo 10,319 5,o96 12,000 6, 00 Mufulira 13,383 3,703 16,000 6,100 Blantyre-Limbe - - 30,000 3,000 Industrial Distribution of the Economically Active Population2/ 1951 1956 aAfriaan wa ne Europeans a can wag ers Europeans and salr e ers and salary anr Agriculture and forestry 325,000 8,700 357,537 9,500 Mining and quarry 102,000 7,600 98,770 9,300 Manufacturing and refining 88,000 11,700 117,912 13,00 Construction work 116,000 9,000 147,268 13,900 Electricity and water 6,000 900 9,678 1,400 Commerce and finance 38,000 13,800 55,639 23,600 Transport and communications 20,000 7,000 25,687 10,400 Administration 30,000 8,700 39,976 10,500 Health and education 29,000 5,300 35,347 8,000 Other services 3 105,000 6,000 149,215 9,4oo Not classified - 800 31-4 1,100 Total 859,000 79,500 1,037,33 110,5oo 1/ In addition, there are about 30,000 people of other races. In addition to Africans and Europeans, 7,100 Asians and coloreds in 1951 and 9,300 in 1956 were economically active, primarily in commerce, finance and manufacturing. / Liberal professions, domestic servants, hotel employees, etc. Source: Federal Government Economic Reports for 1957 and 1958; Central African Statistical Office. Table 2 Land Distribution Southern Rhodesia Northern Rhodesia Nyasaland Native reserves 23% Native reserves 19% African trust land 87% Special native areas 13% Native trust land 60% Public land 9% Native purchase areas 8% Barotseland 16% European land 4% Forests 3% European land 5% Game reserves and National Parks 4% European areas 49% Production of Principal Crops 1954 1955 1956 1957 Flue cured Virginia tobacco '000 lb. 132,542 131,859 177,773 148,610 Fire cured Virginia tobacco nf 24,197 15,059 25,768 25,510 Sun and air cured Virginia tobacco a n 3,310 2,330 2,694 3,037 Burley tobacco n 2,050 2,174 2,465 2,374 Turkish tobacco n n 180 409 563 1,185 Tea l n 17,808 17,929 21,073 21,362 Maize '000 bags at 200 lb. 5,311 5,176 6,642 n.a, Groundnuts 1000 n n 180 " 311 381 467 n.a. Seed cotton '000 " 18,159 19,731 7,167 8,,2 Numbers of Cattle (in thousands) 1954 1955 1956 African European African European African European Southern Rhodesia 1,850 1,227 1,901 1,246 1,937 1314 Northern Rhodesia 855 130 871 126 892 139 Nyasaland 283 10 297 10 308 10 Federation 2,988 1,367 3,069 1,382 3,137 1,493 Final assignment now proposed under the Land Apportionment Act. Nyasaland only; Southern Rhodesian production can be estimated at between 1 and 2 million lbs. Source: Department of Native Agriculture, Southern Rhodesia; Department of Agri- culture, Northern Rhodesia, Annual Report for 1956; Secretary for Lands and Mines, Nyasaland; Monthly Digest of Statistics, March 1958; Federal Govern- ment Economic Report for 1958. Table 3 Total Value of Nineral Production ( thousand) Southern Northern Nyasaland Federation Rhodesia Rhodesia 19KA 18,776 97,675 15 116,466 1955 20,510 122,988 1 143,503 1956 23,261 129,336 - 152,597 1957 25,764 96,737 - 122,501 Output of Principal Metals and Minerals 1954 1955 1956 1957 Copper: blister '000 tons 229.6 184.9 176.4 189.9 electrolytic '000 tons 194.5 198.1 253.1 276.3 other '000 tons 1.4 2.3 2.6 6.1 Gold '000 fine oz. 538 525 540 541 Asbestos '000 tons 80.0 105.3 119.0 132.1 Chrome Ore '000 tons 442.5 449.2 h9.0 654.1 Zinc 29.7 31.2 32.4 33.0 Lead 16.8 18.0 17.0 16.0 Cobalt: alloy owt. 23.8 8.4 2.7 1.1 metal " 13.2 9.2 18.4 24.0 Tungsten concentrates '000 tons 0.3 0.2 0.3 0.2 Beryllium Ore it 1.1 1.0 0.6 0.6 Coal it 3,029.3 3,653.8 3,917.5 4,246.8 Volume of Output (1949=100) 135 127 143 156 Manufacturing industries ( thousand) Number of Salaries and Value of Production Establishments Wages paid 1955 1955 1955 1956 Southern Rhodesia 721 15,373 75,882 88,233 Northern Rhodesia 207 2,388 11,031 13,867 Nyasaland 76 652 4,122 4,309 Federation 1,004 18,413 91,035 106,409 Source: Federal Government 7conomic Reports for 1957 and 1958. Table 4 Power Consumption (in million kwh.) Farms Mines Industry Domestic Otbrs Total Southern Rhodesia 1954 24.9 281. 239.8 232.6 91.0 869.5 1955 30.5 297.3 285.3 253.3 106.3 972.7 1956 36.0 317.2 314.1 287.4 129.7 1084.4 1957 39.7 345.1 364.1 330.6 150.2 1229.7 Northern Rhodesia 1954 0.1 1026.5 13,8 41.4 24.1 1105.9 1955 0.1 1064.8 19.1 57.7 19.6 1161.3 1956 0.1 1227.5 26.5 83.9 27.2 1365.2 1957 0.1 1386.9 37.1 118.6 27.6 1570.3 Nyasaland 1954 0.2 - 1.4 1.4 1.1 4.1 1955 0.1 - 2.3 2.0 1.3 5.7 1956 0.1 - 3.2 2.6 1.8 7.7 1957 0.3 - 6.0 4,6 2.3 13.2 Railway Traffic Rhodesia Railways 1954 1955 1956 1957 Passengers i,i38,000 3,240,000 3,371,000 3,667,000 Tonnage hauled 8,401,000 9,319,000 10,405,000 11,591,000 of which: coal and coke 2,764,000 3,322,000 3,643,000 3,821,000 chrome ore 431,000 512,000 614,000 817,000 copper 504,000 466,000 558,000 614,000 Nyasaland Railways 1954 1955 1956 1957-1/ Passengers 345,000 381,000 344,000 402,000 Tonnage hauled 577,000 636,000 724,000 697,000 of which: tobacco 29,893 21,258 30,939 29,110 tea 9,204 9,753 11,340 10,170 cotton 7,539 6,743 4,649 5,100 L,/ January - November only. Motor Vehicles 1955 1956 1.957 Commercial 41,200 468,300 54,200 Other 85,800 94,600 109,800 Total 127,000 142,900 164,000 Source: Federal Government Economic Reports for 1957 and 1958 Table 5 National Income (Z million) 1954 1955 1956 1957 African wages and salaries 54.5 61.6 70.2 80.0 African income from unincorporated enterprise 8.0 9.2 10.4 11.7 Subsistence output 17.0 17.0 17.0 17.0 African income 79.5 87.8 97.6 108.7 Europeanl/ wages and salaries 91.5 104.0 120.6 128.2 European%"' income from unincorporated enterprise 25.7 25.7 28.8 28.3 Income of companies and statutory bodies 86.9 109.2 117.0 85.0 Government income from property 3.6 4.3 5.0 5.5 European2/ income 207.7 243.2 271.4 247.0 Miscellaneous income from property 2.8 3.3 3.9 5.0 Net Domestic Output 290.0 334.3 372.9 360.7 Income received from abroad 6.1 8.9 12.9 9.4 Income paid abroad - 35.9 - 42.2 - 50.7 - 41.4 Net National Income 260.2 301.0 335.1 328.7 1/ European, Asian and Coloured. Source: Federal Government Economic Report for 1958. Table 6 Gross National Product (f million) 1954 1955 1956 1957 Net National Income 260.2 301.0 334.8 326.7 Depreciation allowances 16.3 19.2 22.3 24.0 Indirect taxes 13.4 16.1 20.9 24.a Subsidies -2.5 -3.2 -2.3 -.0 Gross National Product 287.4 333.1 375.7 370.7 National Expenditure (Z million) 1954 1955 1956 1957 Private consumption 171.1 189.8 218.3 238.0 Public authorities current expenditure: By governments 26.9 28.7 33.2) 40.0 By local authorities 2.5 2.7 2.9) Gross investment: By public authorities 20.0 27.5 30.2 33.0 By railways and statutory bodies 14.5 13.6 18.2 23.0 By business and individuals 49.9 68.4 92.6 96.3 Exports of goods and services 167.6 191.3 196.2 176.6 Imports of goods and services -151.9 -172.2 -195.1 -216.? Errors and omissions - 0.4 - 0.4 + 0.3 - 2.3 Disposal of gross Domestic Product 300.2 349.4 396.8 387.7 Income from abroad + 6.1 + 8.9 +12.6 + 9.8 Income paid abroad -35.9 -42.2 -50.7 -43.8 African subsistence output 17.0 17.0 17.0 17.0 Disposal of Gross National Product 287.4 333.1 375.7 370.7 1/ Revised figures. Source: Central African Statistical Office. Table 7 Savings and Investment (Z million) 1954 1955 1956 1957 Savings:- --- Personal savings 14.1 18.8 23.1 23.4 Government surpluses: Central Government 19.7 25.1 25.7) 30.0 Local government 1.9 2.3 2.7) Undistributed profits of companies and statutory bodies 21.1 32.9 32.8 3.0 Depreciation allowances 16.3 19.2 22.3 24.0 Total Gross Savings 73.1 98.3 106.6 80.4 Capital imports and change in reserves 11.3 11.2 34.4 71.9 Available finance 84.4 109.5 141.0 152.3 Gross Investment: By Governments: Central ) 17.8 20.2 22.5 Local ) 20.0 9.7 10.0 10.5 By railways and statutory bodies: Railways 9.2 6.8 5.5 8.5 Electricity boards and corporations) 8.2 12.5 Other ) 5.3 6.8 4.5 2.0 By mining companies: Northern Rhodesia mines 14.9 21.4 25.4 25.0 Southern Rhodesia mines 3.8 2.9 2.3 2.0 Other private investment: Imported agricultural machinery 3.3 4.5 4.8 5.4 Other imported machinery 5.2 6.3 9.3 11.3 Residential buildings ) 18.5 ) Commercial buildings ) 7.0 ) 32.0 Industrial buildings ) 22.7 33.3 2.5 ) Other ) 22.8 20.6 Total Gross Investment 84.4 109.5 141.0 152.3 See Table on external payments. Source: Central African Statistical Office. Table 8 Federal Development Expenditure - Actual 1955/57 and Proposed 1957/61 ( thousand) 1955/56 1956/57 1957/58 1958/59 1959/60 1960/61 Roads and bridges 2,222 3,004 2,463 1,237 620 453 Civil aviation 1,955 533 1,000 572 39 30 Rhodesia Railways 6,760 11,131 7,870 10,040 6,660 5,310 Nyasaland Railways 225 298 - - - - Lake transport 70 51 65 20 25 37 Posts and communica- tions 913 1,220 1,780 1,798 1,693 1,772 Kariba project!/ 3,200 10,104 17,950 19,989 12,272 4,870 Other power projects 2,272 1,750 1,283 1,237 1,246 1,608 Shire River project 59 174 48 - - - Sabi Valley scheme 12 3 5 50 100 68 Agriculture- 789 398 305 292 88 78 European education 1,303 1,027 1,424 1,307 960 1,140 African Agri. CollegeE/ - - - 73 26 1 Public health 1,119 1,538 1,438 1,054 862 949 Administrative build- ings.-' 335 275 358 501 355 296 Eederal Government housing 337 142 358 362 300 300 Contingencies and time-lag in payments - - -700 700 700 1,000 Development expenditure on revenue votes 617 683 1,050 1,000 1,000 1,000 Total 22,188 32,331 36,697 40,232 26,946 18,912 Note: Proposed 1957/61 development expenditure as revised in early 1958. 1/ Includes £1 million for bush clearing over the four years 1957/61. 2/ Execution dependent on special finance. 3/ Mostly facilities for the Marketing Boards. / Customs houses,archives, prisons, etc. Source: Federal Treasury. Table 9 Territorial Development Plans, 1957/61 (£ thousand) Southern Northern Rhodesia Rhodesia Nyasaland Loans to local authorities 15,500 11,500 1,205 Loans to land banks, cooperatives, ete. - 1,021 - Housing 2,100 7,263 1,766 Municipal services - 120 1,444 Power development - 1,000 - Roads and bridges 7,126 2,025 1,195 Agriculture and land husbandry 3,298 257 126 Rural development 1,297 2,800 1,202 Water development and irrigation 1,073 344 - Forestry 150 197 776 Veterinary services - 283 145 Game and tsetse control 101 69 Shire River project - - 584 Kariba bush clearing 1,000 1,000 - African education 683 1,600 980 Social welfare - 83 218 Administrative buildings 1,829 4,297 1,803 Equipment for Public Works Department 279 400 1,025 Minor public works 501 696 - Miscellaneous 138 491 274, 34,974 35,478 12,812 Note: Development plans of Southern Rhodesia and Nyasaland are shown as revised in early 1958. 1/ About £700,000 of this amount is expected to be paid only after June 30, 1961. Source- Southern Rhodesia Treasury; Northern Rhodesia Government; Nyasaland Government. Table 10 Estimated Financial Resources for Development (£ million) Federation 1957/58 1958/59 1959/60 1960/61 Total Revenue contribution to development 2.6 1.0 1.0 1.0 5.6 Income tax on copper profits over £240 per ton 3.9 0.2 - - 4.1 Loan recoveries 1.2 1.1 1.2 1.3 4.8 Sale of capital assets - 0.3 - - 0.3 Special project finance - - 0.3 - 0.3 Federal Government pension fund 1.5 1.2 1.2 1.2 5.1 Federal Power Board (Kariba) resources 17.7 19.6 12.1 4.7 54.1 Rhodesia Railways own resources 4.1 3.4 1.6 1.6 10.7 Development expenditure on revenue votes 1.1 1.0 1.0 1.0 4.1 Borrowing 5.4 13.5 8.7 8.2 35.8 Loan repayment to Territorial Govts. -0.8 -1.1 -0.1 -0.1 -2.1 Total 36.7 40.2 27.0 L8.9 122.8 Territories, 1957/61 Southern Northern Rhodesia Rhodesia Nyasaland Revenue contribution to development 4.5 2.4 0.8 Loan recoveries 7.2 4.7 - Colonial Development & Welfare grants - 1.0 1.3 African Development & Welfare grants - - 1.5 Colonial Development Corporation loans - - 1.1 Rhodesian Selection Trust loans - 2.0 0.9 Reserves and surplus balances - 7.2 - Development expenditure on revenue votes 7.2 - - Borrowing, including share of Federal borrowing 15.7 16.0 5.1 Other sources - 0.6 Total 34.6 33.3 11.3 Source: Federal Treasury; Southern Rhodesia Treasury; Northern Rhodesia Government; Nyasaland Government. Table 11 Government Revenue (? million) 1954/55 1955/56 1956/57 1957/58 1958/59 Actual Actual Actual Estimate Estimate Federation Income tax (Federal share) 19.1 19.6 26.3 25.3 20.5 Customs 7.6 10.1 11.0 12.0 12.t Excise 1.6 2.5 3.0 3.5 3.5 Posts and Telegraphs 3.1 3.6 4.o 4.7 5.2 School and hospital fees 0.7 0.8 0.9 1.0 1.0 Recovery of loan charges 3.7 4.5 5.5 6.8 7.8 Miscellaneous receipts 1.2 1.2 2.3 1.9 1.4 Contribution from Income Tax Reserve Account - - 0.8 0.8 Total 37.0 42.3 53.0 56.0 52.2 Southern Rhodesia Share of Federal income tax 3.8 3.9 5.3 5.2 5.0 Income tax surcharge 1.8 2.4 2.3 2.8 3.3 Native tax 0.7 0.7 1.2 1.3 1.3 Customs duty on gasoline 1.1 1.1 1.3 2.0 2.2 Transfer and death duties 0.9 0,9 1"0 1.0 0.8 Stamp duties 0.5 0.6 0.7 0.8 0.8 Vehicle tax 0.5 0.7 0.9 0.9 1.0 Mining royalties and fees 0.4 0.5 0.6 0.6 0.7 Interest on loans 1.3 1.3 1.7 1.9 2.0 Miscellaneous receipts 1.9 2.6 2.3 2.7 2,5 Total 12.9 14.3 17.3 19.2 19.6 Northern Rhodesia Share of Federal income tax and income tax surcharge 8.6 9.5 12.0 11.6 8.8 Mining royalties 1.8 3.2 2.5 1.8 1.4 Other revenue 4.1 4.5 4.8 4.7 4.4 Total 14.5 17.2 19.3 18.1 14.6 Nyasaland Share of Federal income tax and income tax surcharge 1.8 2.0 2.6 2.3 n.a. Native tax 0.5 0.6 0.6 0.7 n.a. Payments for services and reimburse- ments by Federal Government 0.5 0.7 0.9 0.8 n.a. Other revenue 1.0 1.1 1.6 1.3 n.a. Total 3.8 4.4 5.7 5.1 n.a. Source: Federal Treasury; Southern Rhodesia Treasury; Northern Rhodesia Government Nyasaland Government. Table 12 Government Expenditure from Revenue Funds (9 million) 1954/55 1955/56 1956/57 1957/58 1958/59 Actual Actual Actual Estimate Estimate Federation Public debt 5.7 6.6 7.4 9.0 10.7 Pensions 0.4 0.8 2.0 1.8 2.1 Defence 2.8 3.6 4.3 4.7 4.3 General Administration 3.2 3.8 4.5 4.5 4.5 Agriculture 1.4 1.4 1.8 1.9 1.9 European education 13.5 4.1 .8 5.6 6.5 Public health 4.0 4.5 5.3 6.0 6.7 Transport and Public Works 4.6 6.1 6.7 6.7 7.2 Posts and Telegraphs 2.8 3.3 4.1 4.2 4.5 Subsidies and bonuses 2.7 2.4 3.7 4.5 2.7 Contribution to development 3.0 4.1 10.0 6.6 1.1 Income Tax Reserve Account - - 1.6 - - Total 371 4 Southern Rhodesia Public debt 3.4 2.3 2.6 2.8 3.0 Pensions 0.7 0.6 0.7 1.4 1.4 Police 2.2 2.0 2.4 2.5 2,6 African Administration 1.3 1.8 2,1 1.9 23 African education 1.6 1.5 18 2.3 2.4 Roads, Public Works, Irrigation 3.8 2.8 3.4 3.7 3.8 Other expenditure 2.9 2.7 2.5 2.8 2,9 Contribution to development - 0.4 1.1 1.9 0,8 Total 15.9- W7 19,3 19.2 Northern Rhodesia Public debt 0.1 0.1 0.3 0.4 n.a. Pensions 1.3 1.6 1.1 0.8 n.a. Law and order 1.1 1.3 1.6 1.8 n.a. African Administration 0.8 0.9 1.2 1.5 n.a. Agriculture 1.7 1.6 1.9 2.1 n.a. Public Works 2.0 1.9 .0 3.7 n.a. Social services 1.3 2.0 2.0 2.3 n.a. Other expenditure 2.3 3.1 3.3 3.2 n.a. Contribution to development and various investments 3.0 3.9 2.0 2.4 n.a. Special Tax Reserve - 0.9 1.1 - n.a. Total n.a. Nyasaland Public debt 0.2 0.3 0.3 0.4 n.a. Pensions 0.2 0.2 0.2 0.2 n.a. Law and order 0.3 0.3 0.4 #.5 n.a. African Administration 0.2 0.2 0.3 0.3 n.a, Agriculture 0.5 0.7 0.9 0.8 n.a. Public Works 0.6 0.6 0.7 0.8 n.a. African education 0.3 0.3 o.4 0.6 n.a. Local government subsidies and loans 0.3 0.4 0.4 0.2 n.a. Other expenditure 1.0 1.1 1.3 0.9 n,a, Total 17= n.a. / Includes grant to the multi-racial Rhodesia University College. 2/ First post-federation fiscal period covered 15 months. Source: Federal Treasury, Southern Rhodesia Treasury; Northern Rhodesia Government; Nyasaland Government. Table 13 Assets and Liabilities of the Bank of Rhodesia and Nyasaland (Z thousand) April 6 June 30 Dec. 31 June 30 Dec. 31 March 31 1956 1956 1956 1957 1957 1958 Foreign assets 20,646 22,975 23,537 26,334 40,363 37,671 Federal Government bills discounted - - - - 985 530 Federal Government stock - - 243 203 202 202 Other internal securities - 105 105 105 105 105 Other assets 816 807 1 121 1,082 2,170 1,300 Total assets 21,462 239887 27,724 k3,8,2 39,06 Notes in circulation 15,205 17,253 17,841 19,816 19,204 18,353 Coins in circulation 4,986 5,o94 5,235 5,420 5,190 5,016 Government deposits - - - - 8,156 5,924 Bankers deposits 17 175 132 563 8,798 7,627 Other deposits - - - 2 1 1 Capital and reserves 1,100 1,100 1,100 1,200 1,200 1,200 Other liabilities 154 265 698 723 1,276 1,687 Total liabilities 21,62 23,887 25,oo6 27,724 43,825 39,808 Assets and Liabilities of Commercial Banks (£ thousand) Dec. 31 Dec. 31 June 30 Dec. 31 June 30 Dec. 31 1954 1955 1956 1956 1957 1957 Cash and local banks 5,743 7,657 8,582 8,860 10,625 20,413 Banks abroad 45,698 35,596 24,725 47,002 43,138 30,938 Government securities 12,108 12,161 11,058 10,517 11,530 11,226 Treasury bills - - - - 850 830 Other investments 1,428 1,416 786 1,448 1,444 1,438 Commercial bills 5,289 8,325 9,237 8,859 10,301 11,090 Loans and advances 20,o65 30,358 36,208 34,019 36,656 39,417 Advances to Government 8,381 7,146 10,127 2,913 7,326 4,170 Other assets 2,045 2,801 2,815 3,783 3,666 5,128 Total assets 100,757 105,460 103,538 117,401 125,536 12,5 Local banks 478 542 1,379 1,331 1,760 2,378 Banks abroad 8,005 8,953 9,891 12,812 11,125 23,975 Bills payable 155 228 97 110 118 207 Demand deposits:private 66,172 62,883 59,188 72,143 76,446 65,710 Government 17,314 22,681 19,980 17,830 19,786 14,178 Savings bank deposits 5,308 6,388 6,541 7,o69 7,74o 8,506 Fixed deposits 3,048 3,363 5,937 5,546 7,945 8,952 Other liabilities 277 422 525 560 616 744 Total liabilities 100,757 105,460 103,538 117,401 125,536 124,650 Source: Federal Government Economic Reports for 1956, 1957 and 1958; Balance Sheet of the Bank of Rhodesia and Nyasaland. Table 14 Prices of Electrolytic Copper London (Z per long ton) 1954 1955 1956 1957 1958 Annual average 248.16 352.28 328.88 219.28 1st quarter 230.52 331.88 405.09 250.08 167.93 2nd quarter 240.98 329.33 33.72 235.44 3rd quarter 243.53 367.86 297.49 206.59 hth quarter 277.89 381.70 278.43 185.13 New York (U.S. cents per lb.) Annual average 29.8 37.4 41.9 30.0 1st quarter 29.7 32.0 44.2 33.5 25.0 2nd cuarter 29.9 35.9 45.9 31.4 3rd quarter 29.9 38.9 4o.5 28.1 hth quarter 29.9 42.9 37.0 26.8 Internal Price Index Numbers (1949=100) Consumer Prices in Southern and Building Materials Northern Rhodesia in Southern Rhodesia 1954 127 119 1955 129 124 1956 134 126 1957 138 126 Source: IBRD Statistics Division; Central African Statistical Office. Table 15 Foreign Trade (k million) 1954 1955 1956 1957 Imports (f.o.b.) 125.3 138.6 159.3 177.5 Merchandise exports (f.o.r.) 146.8 172.8 181.7 156.1 Gold exports (f.o.r.) 6.5 6.5 6.5 6.9 Trade Balance +28.0 +40.7 +28.9 -14.5 Terms of Trade 1954 1955 1956 1957 Volume of imports 100 106.7 117.6 127.4 Unit value of imoorts 100 103.7 105.0 108.0 Volume of exports 100 90.6 101.9 109.6 Unit value of exports 100 127.6 119.1 94.3 Terms of trade 100 81.3 88.2 114.5 Merchandise Imports and Exports by Gurrency Areas (Z million) 1954 1955 1956 1957 Origin of Imports United Kingdom 53.4 59.6 65.2 67.1 Union of South Africa 43.4 45.5 53.4 61.0 Other sterling area 10." 10.7 10.4 10.6 Dollar area 7.3 8.9 11.9 13.1 OEC ) 11.2 11.8 14.9 20.5 Other ) 2.1 3.5 5.2 Total 125.3 138.6 159.3 177.5 Destination of Exnorts United Kingdom 81.8 92.1 106.2 7365 Union of South Africa 15.6 16.8 18.2 15,) Other sterling area 8.6 7.9 7.8 11.6 Dollar area 15.8 22.6 13.5 16,6 OFC ) 25.0 31.2 34.2 32.5 Other ) 2.3 1.8 6,0 Total 146.8 172.8 181.7 156.1 Source: Federal Government Economic Reports for 1957 and 1958. Table 16 Composition of Imports (I million) Producers' goods 1954 1955 1956 1957 Materials for food production, agriculture and industry 28.3 28.3 30.7 36.0 Durable materials for industry and building 13.0 14.9 20.1 20.2 Industrial machinery 18.3 18.7 22.4 23.1 Other equipment 16.3 20.4 27.1 30.8 Total 75.9 82.3 100.3 110.1 Fuel and electric energy 5.8 6.2 7.3 9.2 Consumers' goods Food, beverages and tobacco 7.5 8.6 8.9 10.0 Other non-durable goods 21.3 21.8 22.5 25.7 Motor cars 4.7 7.5 7.3 7.9 Other durable goods 10.1 12.2 13.0 14.6 Total 43.6 50.1 51.7 58.2 Grand total 125.3 138.6 159.3 177.5 Principal Exports (t million) 1954 1955 1956 1957 Copper: electrolytic 4l.5 56.6 69.4 49.6 blister 44.9 54.0 44.9 32.9 ore and concentrates - 0.3 0.5 0.8 Tobacco 24.9 25.4 27.9 27.5 Cigarettes 0.3 0.7 o.4 0.4 Asbestos 6.5 7.4 8.6 8.4 Chrome Ore 2.6 2.8 3.7 5.9 Ferro-chrome 0.3 0.8 1.1 1.3 Tea 2.8 3.1 3.0 3.5 Maize 0.L 0.8 0.6 3.5 Zinc: bar and ingot 2.1 2.1 2.6 2.2 Cobalt: metal 1.0 0.9 1.3 1.6 Apparel 2.5 2.2 1.5 1.4 Lead: bar and ingot 1.2 1.2 1.6 1.2 Ground nuts 0.4 0.5 1.4 1.1 Cattle hides 1.1 0.8 0.9 0.8 Coal and coke - 0.1 0.2 0.5 All other 14.3 13.1 12.1 13,5 Total 146.8 172.8 181.7 156.1 Source: Federal Government Economic Reports for 1957 and 1958. Table 1 External Payments (Z million) 1954 955 1956 15 Receipts on Current Account Merchandise and gold 158.2 181.6 184.8 159.2 Services 9.L 9.7 11.3 17.4 Income receipts 6.2 8.9 12.9 10.4 Current transfers 9.5 9.2 9.8 9.6 Total 183.3 209.4 218.8 196.6 Payments on Current Account Merchandise and gold 123.8 137.8 157.8 176.1 Services 28.2 34.4 37.3 40.6 Income payments 35.9 42.2 50.7 44.2 Current transfers 6.7 6.2 6.2 7.1 Total 194.6 220.6 252.0 268.0 Balance on Current Account - 11.3 - 11.2 - 33.2 - 71.4 Receipts on Capital Account Long-term: official 17.3 11.7 7.1 10.6 private 9.7 25.0 20.1 25.4 Short-term:official 0.3 o.4 0.3 0.3 private 2.h 0.5 2.2 0.6 Total (after errors & omissions) 31.4 37,6 35.2 36.9 Payments on Capital Account Long-term: official 1.6 1.7 1.8 2.7 private 2.6 7.0 1.8 4.6 Short-term:official 0.2 0.3 0.3 0,3 private 2.8 1.9 0.6 0.7 Total (after errors & omissions) 7.2 18.1 4.5 11.6 Balance on Capital Account +24.2 +19.5 +30.7 +25.3 Change in External Reserves 412,9 4- 8.3 - 2.5 -46.1 Source: Federal Government Economic Reports for 1957 and 1958; Central African Statistical Office. Table 18 Growth of External Debt (Z million) Dec.31, Dec.31, Dec.31, Dec.31, 1954 1955 1956 1957 Southern Rhodesia 11 12 12.9 12.3 Northern Rhodesia 5 5 4.2 4.5 Nyasaland - - 1.o 1.0 Federation 101 109 155.9 153.1 Total 117 126 174.0 170.9 Debt Service Payments (Z thousand) Total Service Pounds Sterling U.S. Dollars Other Currencies Year Payments Amortization Interest Amortization Interest Amortization Interest 1954 5202 940 3290 1437 400 13q 1955 5865 1043 3748 - 534 403 137 1956 6767 1114 4123 227 5b9 627 1.27 1957 8563 2027 4772 645 549 461 10) 1958 9586 1765 6020 670 599 436 96 1959 9776 1812 6120 710 642 406 36 1960 10100 2231 6063 658 625 448 75 1961 11236 2386 6676 481 654 538 50i 1962 11220 2445 6593 487 655 545 95 1963 13179 3591 6501 1421 632 551 480 1964 12590 3653 6352 806 573 746 460 1965 15713 7328 6204 907 536 307 431 1966 12470 407 5883 958 493 313 416 1967 10945 2953 5734 1144 445 268 hol 1968 10897 3092 5613 1098 392 315 387 1969 14871 7334 5409 1054 341 363 370 1970 33365 26130 5149 10h4 291 399 352 1971 9128 2675 4409 1034 243 435 332 1972 13999 8073 4122 839 194 461 310 1973 11554 6183 3805 629 163 487 287 1974 14999 9987 3468 635 133 515 261 1975 7483 2772 3187 641 103 545 235 1976 7451 2903 3045 647 73 575 208 1977 7003 2902 2895 311 44 673 178 1978 7083 3317 2745 2142 29 707 1L3 1979 12946 9428 2497 149 22 742 108 1980 5884 2909 1954 157 14 780 70 1981 5881 3060 1800 164 6 820 31 Source: Central African Statistical Office; IBERD Statistics Division. Table 19 Public External Debt Amount outstanding on Dec. 31, 1957 Amount of Issue Description of Issue net of sinking fund Federation 10,0000000 4% Federal Stock 1972/74 9,711,314 10,000,000 5% Federal Stock 1975/80 9,774,196 2,750,000 3$% Southern Rhodesia Stock 1955/65 1,562,816 1,250,000 3% i I " 1959/64 801,035 2,250,000 3Kps a 11 1961/66 1,633,015 32,000,000 2L% i n n 1965/70 27,069,087 5,000,000 3% n n 1971/73 4,361,195 6,000,000 3% i " 1967/69 5,371,900 5,000,000 3N I I 1980/85 4,689,900 7,500,000 4f% If I It 1977/82 7,094,400 10,000,000 % i It 1987/92 9,539,990 1,097,000 3.% Northern Rhodesia Stock 1955/65 522,273 3,540,000 3% 1963/65 3,200,610 7,730,000 3 0 1970/72 7,157,610 2,540,000 i i I? I 1965/70 2,458,o10 1,570,000 3% Kyasaland Guaranteed Stock 1954/74 790,935 2,060,000 4 Nyasaland Development Loan 1971/78 1,977,161 773,000 3.2 Nyasaland Loan from H.M.G. 695,451 1,340,000 Interest free Nyasaland Loan from H.M.G. 1979 1,090,000 5,OO0,000 2 $ Rhodesia Railways (ECA) Dollar Loan 19&4 2,819,53 3,571,429 4-3/4% F.0.A. Rhodesia Railways Loan 3,392,8W8 1,750,000 4% C.D.C. Loan to Central African Airways 1 1,750,000 28,571,428 5% I.B.R.D. Loan (Kariba Project) / 5,2714,?5 15,000,000 C.D.C. Loan (Kariba Project) 1997 2050,000 3,000,000 6% C.D.F.C. Loan (Kariba Project) 1981 1,000,000 Southern Rhodesia 2,000,000 4,% Southern Rhodesia Stock 1958/68 911,465 2,250,000 3% :0 1953/63 1,337,970 10,000,000 4-3/4% I.B.R.D. Electricity Loan 1956/77 9,285,7215 1,000,000 C.D.C. Loan (African Housing) 1985 2,/ 1,000,000 Northern Rhodesia 5,000,000 4-3/4% I.B.R.D. Railway Loan 1956/72 4,568,476 Nyasaland 1,000,000 C.D.C. Loan (African Housing) 1976/86 400,000 133,288,54b Less Federation Supplementary Sinking Fund 874,523 Southern Rhodesia General Sinking Fund 225,299 Northern Rhodesia Supplementary Sinking Fund 52,852 1,152,674 Total 132,135,8747 1/ Interest adjusted with Bank of England rate. 2/ Interest linked to H.1. Treasury lending rate. T/ Variable interest rate, initially 5-3/4%. Excludes amounts not drawn on loans for the Kariba project. Source: Federal Treasury.