South Africa - Current economic position and prospects

RESTRICTED ReportN o. EA-126a This report was prepared for use within the Bank. It may not be published nor may it be quoted as representing the Bank's views. The Bank accepts no responsibility for the accuracy or completeness of the contents of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CURRENT ECONOMIC POSITION AND PROSPECTS OF SOUTH AFRICA November 21, 1961 Department of Operations Europe, Africa and Australasia CURRENCY EQUIVALENTS 1 Rand = U. S. $1. 40 R 1 million = U. S. $1. 4 million U. S. t1 million = R. 714, 000 CURRENT ECONOIC POSITION AND PROSPECTS OF SOUTH AFRICA Table of Contents Page BASIC DATA CHARTS SUI-ARY I. INTRODUCTION 1 II. RECENT ECONO!IC DEVELOPENTS 2 i) Recession and Recovery 2 ii) Measures to Stimulate Growth 2 iii) The Capital Outflow 3 III., PROSPECTS 5 i) Export Prospects 6 ii) Creditworthiness and Conclusion 7 STATISTICAL APPENDIX Republic of South Africa BASIC DATA Area: 473,000 square miles, Population: (1960 estimate) - 14.9 million. of which - Europeans 3.1 - Africans 9.9 - Colored 1.4 - Asian 0.5 G.N.P. 1960 Market Prices: R 5,360 million (includes S.W. Africa, Basutoland, Bechuanaland and Swaziland). Contribution to National Income 1959: Agriculture 120 Commerce 12%, Mining 13% Public Authorities 10% Manufacturing 25% Other 28% Average Annual Rate of Growth in Real G.N.P. 1950-1960: 4.5% Average Annual Rate of Population Increase: 1.8 1960 Per Canita Income: R 271 (8380 equivalent) Savings and Investment as a Percentage of Gross Domestic Product: Average 1950-1960 1960 Gross Investment 22.5 20.2 Domestic Saving 20.8 20.8 Foreign Saving 1.7 (-) 0.6 1960 Trade Total Exports: R 1,400 million Total Imports: R 1,130 million Agricultural and Pastoral Produce 26% 8% of which - wool 7% Mineral and Metal Ores 19% 10% of which - uranium 7% - diamonds 5% Manufactured goods 15% 82% Gold 40/ Total External Debt - June 30, 1961: (403 million equivalent Foreign Exchange Reserves -October 1961:(I306 million equivalent Cost of Living Index, 195. = 100: 1950 = 81 1960 = 115 BANK LOANS TO SOUTH AFRICA: NET INVESTMENTS (EXCLUDES AMOUNTS UNDISBURSED) (MILLIONS OF DOLLARS) 160 I I II I I I 16I 0 JANUARY I OF EACH YEAR 140 ____140 EXISTING LOANS PLUS PROPOSED POWER AND RAILWAY LOANS TOTAL HELD BY BANK 120 a120 100- 100 80 80 8 EXISTING LOANS 18 TOTAL HELD BY BANK 60 60 40 40 20 20 0 I I 0 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 4-ACTUAL-- PROJECTED NOTE: TOTAL includes participations and sales from portfolio as of September 30 , 1961. IBRO - Economic staff 11/17/61 1940 REPUBLIC OF SO. AFRICA BALANCE OF PAYMENTS ON CURRENT ACCOUNT (MILLIONS OF RANDS) 0 200 400 600 800 1,000 1,200 1,400 1950 ,,P@EXPORTS NET GOLD OUTPUT R ECE IPT S PAYMENTS 1MPOR T S NE T INVISIBLE S 1955 RECEIPTS PAYMENTS '956 RECEIPTS PAYMENTS 1957 RECEIPTS PAYMENTS '958 RECEIPTS PAYMENTS 1959 RECEIPTS PAYMENTS GOLD AND FOREIGN EXCHANGE ASSETS (MILLIONS OF U.S. DOLLARS) 500 500 END OF PERIOD TOTAL 400 .400 ...... ............. 300 ..........300 FOREIGN EXCHANGE ASSETS 200 200 100 100 GOLD× 0 0 '50 '51 '52 '53 '54 '55 '56 '57 '58 '59 '60 J F M A M J J A S 0 N D 1961 7/13/61 19t1(R) IBRD - Economic Stoff REPUBLIC OF SO. AFRICA IMPORTS: VOLUME AND PRICE (INDEX, 1953= 100) 140 YEARLY VOLUMEzd 120 120 00 100 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 (Prelim.) EXPORTS OF PRODUCE: VOLUME AND PRICE (INDEX, 1953=100) 200 I I200 YEARLY 180 180 IGO 160 VOLUNIE (Excluding gold) 140 140 120VOLUME (Including gold)120 100# *1 PRICE (including gold)10 100. . 100 PRICE (Excluding gold) 0 O ___ 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 (Prelim.) TERMS OF TRADE (INDEX, 1953= 100) I2O 120 100 INCLUDING GOLD100 YEAR LY EX CLUDING GOLD .. ,, 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 (Prelim.) 7/13/61 1912 IBRD- Economic Staff REPUBLIC OF SO. AFRICA FINANCING OF INVESTMENT (MILLIONS OF RANDS AT CURRENT MARKET PRICES) 1,200 11,200 YEARLY ITOTAL GROSS I .....I DOMESTIC INVESTMENTf:t- IMPORT OF CAPITAL ..:0: AND USE OF FOREIGN EXCHANGE RESERVES DEPRECIATION ALLOWANCE 800 800 400 400 200 PRIVATE SAVING 200 uO PUBLIC SAVING00 0 0 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 *Excluding accumulation of Foreign Exchange Reserves CENTRAL GOVERNMENT - CAPITAL ACCOUNT (MILLIONS OF RANDS) 0 50 100 150 200 250 300 YEAR ENDED MAR.31 EXPENDITURES 1957 RECEIPTS EXPENDITURES 1958 RECEIPTS EXPENDITURES 1959 RECEIPTS EXPENDITURES 960 RECEIPTS EXTERNAL REPAYMENT7 196 EXPENDITURES EXPENDITURES 1962 (Est.) RECEIPTS CURRENT ACCOUNT SURPLUS OTHER INTERNAL RECEIPTS EXTERNL BORROWING REVENUE RECEIPTS TO LOAN ACCOUNT (PENSION FUNDS, ETC.) 7/13/61 1913 I BRD - Economic Staff REPUBLIC OF SO. AFRICA EXTERNAL PUBLIC DEBT OUTSTANDING (MILLIONS OF U. S. DOLLARS) 500 500 END OF YEAR 400 TOTAL 400 400 300 --- 300 200-- 200 J8RD 100 - - -... -.---.-- 100 0 0 1939 1945 1950 1955 1960 1961 1965 Projected on basis of data as of December 31, 1960 PAYMENTS ON EXTERNAL PUBLIC DEBT (MILLIONS OF U. S. DOLLARS) 150 150 100 100 50 50 0 0 '61 '62 '63 '64 '65 '66 '67 '68 '69 '70 '71 '72 '73 '74 '75 d Projected on basis of data as of December 31,1960 7/13/61 1914 IBRD- Economic Staff SUM4RY Since 1957, the increase in real national income has been modest, compared to the pace of economic progress set previously. Private in- vestment has leveled off. Among the reasons for this are the completion of the opening up of the new gold mining areas, a reduction in the inflow of private capital and possibly a temporary exhaustion of investment opportunities, ii, The authorities were quite concerned about the slow recovery from the 1958 recession and the indications that the growth of the economy and of private investment were lagging. The large outflow of private capital of around R 180 million which dominated economic events in 1960 was an additional complicatuion. It arose largely owing to political uncertainty set off by civil disturbances at Sharpville in March 1960. The outflow clearly created a dilemma; any measures to stem the outflow would be likely to have effects on economic growth. At first the Government attempted to deal with the p.,oblem by restricting credit despite the risk of hurting investment. But this proved ineffective and resort was taken to direct control of capital movements. iiio With the capital account under control and with imports rectricted it is expected that international reserves will reach a fairly ccmfortable level by the end of the year. iv. In the absence of a change in the political situation which would afford greater hopes of social peace and restore the confidence of foreign invrestrs, the South African economy may well have to rely largely on its own savings to finance its futuxre: growth. It seems doubtful, in these conditions, whether the achievements of the early Ififties can be repeated. Internal savings, however, have been growing and the country is in a position now to finance a greater share of total investment out of her own resources than it could ten years ago. At present, however, the rate of investment appears to be less than could be achieved from the resources available. v. South Africa's external public debt is quite low. The recent measures to meet the balance of payments difficulties have been effective. South Africa should therefore be able to service additional debt of the amount she is at present contemplating from the Bank. In making this appraisal, it is difficult to assess to what extent racial tensions are likely to have an adverse effect on the economy in the future. In the short run at least the Government should be able to avoid serious difficulties. In these circumstances South Africa can be regarded as creditworthy for the borrowing at present contemplated. I. INTRODUCTION 1. The economic situation and the nature of the problems now facing South Africa are markedly different from those which have been described in previous economic reports (the last report, No. EA-88a, was dated November 21, 1958). Until recently there was little reason for concern about the rate of economic growth. Throughout most of the postwar period economic growth has been rapid and the major concern of the authorities has been to avoid inflationary pres- sures and to ensure that the expansion of public utilities did not lag too far behind the growth of the private sector. The Bank's loans for railway and power expansion fell naturally into this context. 2. Around the end of 1954, however, economic growth in South Africa began to slow down. It was, however, a slowdown after a very rapid advance and hence cannot be regarded as wholly unfavorable. For the years 1947 to 1954 the average annual rate of growth of the real national income was about 5-1/2% whereas since 1955 it has been more like 3-1/2,. The former period saw the development of newly discovered gold fields and a rapid growth of secondary industry. Domestic savings were supplemented by a substantial inflow of pri- vate capital which averaged some R 135 million per year from 1947 to 1954. Gross fixed domestic investment amounted to about 25% of gross national product. 3. After 1954 the rate of increase in investment slowed down and the proportion of the national product devoted to investment declined from 25% to around 227. A number of reasons have been adduced to account for this. One obvious one is the completion of the opening up of the new gold fields. At the same time a temporary exhaustion of investment opportunities could well have made itself felt after ten years of postwar boom. Also, with the reduction in inflationary pressure import controls were greatly relaxed so that local industry was subjected to increased competition and its profit- ability lessened. 4. There was, in addition, a great reduction in the inflow of capital from abroad. In fact, in 1957 and since 1959 there has been a net outflow. While this change was in part an effect of lower investment demand in South Africa it was also partly due to the more restrictive attitude of capital exporting countries, particularly the U.K. More recently, the large outflow in 1960 was accelerated by political uncertainty set off by a civil disturb- ance at Sharpville in March 1960. 5. This slowing down was, of course, gradual rather than abrupt and its detection and analysis took some time. It was complicated by the 1958 recession. However, it was soon clear that the recovery from the recession was less vigorous than had been hoped and that it was private investment which was lagging. Public investment continued to expand markedly until 1959 but private investment grew barely at the rate of 2-1/2% per year. 6. In the budget for 1960/61, presented in March 1960, a number of steps were taken to encourage private investment. At that time South Africa's foreign exchange reserves were nearly R 300 million which is a fairly comfortable figure, so that the economy was well placed to expand. However, after the Sharpville incident the outflow of capital accelerated and reserves - 2 - began to drop rapidly. They had fallen to R 142 million, an uncomfortably low level, by mid-June 1961. Consequently the government has been forced to introduce controls over the outflow of capital. Meanwhile private investment is still lagging, but the problem of fostering economic growth has become more complicated by the necessity of simultaneously strengthening the external position and building reserves up to an adequate level. II. RECENT ECONOMIC DEVELOPTENTS i) Recession and Recovery 7. In 1958 and the first half of 1959 declining raw material prices and lower agricultural production combined with the leveling off of private investment to create a recession. Over these two years the economy hardly grew at all and real national income per head probably declined. There was some unemployment in the European labor force, especially in textiles and engineering. The recession showed that the rate of growth of the economy can still be markedly affected by fluctuations in farm income. More favorable economic conditions abroad, together with fiscal and monetary measures taken by the government to stimulate business, helped to bring about an economic revival which became apparent from mid-1959 onward and continued throughout 1960. In 1960 the gross national product was 6-1/2% larger than the previous year which represents an increase of approximately 5'0 in real terms. Expan- sion was fairly widespread in the economy -- gold production was greater than the year before and other mining activity also expanded; agricultural output rose; and employment in manufacturing increased. 8. The recovery was quite pronounced, especially when set against the background of the near stagnation of the two preceding years. Moreover, it took place despite the fact that the Sharpville incident of early 1960 caused a lack of confidence which resulted in an unprecedented capital outflow and a cautious attitude of investors throughout the country. However, some of the factors which generated the recovery and the growth of 1960 were excep- tional. The rise in output was based mainly on an increase in gold production and of commodity exports, both important expansionary forces. It was not started and had not been accompanied by a decisive rise in fixed investment. The leveling off of investment remains a weakness of the economic situation of South Africa and the authorities have shown much concern over it. Thus the expansion of 1960 is not likely to be repeated in the current year. ii) Measures to Stimulate Growth 9. Since 1958 the government has attempted to stimulate investment by both fiscal and monetary measures. Some tax concessions were made to encour- age private investment and, more recently, when public investment was also tending to decline, the government abandoned the policy, which had been introduced in 1953 and followed regularly since, of budgeting for a surplus on revenue account in order to provide funds to meet public capital expend- iture. This action tended to offset the deflationary effects of reduced expenditure. Expenditure on loan account for 1961/62 will be about R 225 million compared to R 228 million in the previous year and R 251 million - 3 - in 1959/60. For the current year loan expenditure will be financed mainly by internal government savings and accumulated surplus. The government does not expect to borrow any new long-term funds from the market. 10. Measures to stimulate private investment were started in the 1959/60 budget when initial depreciation allowances for industry were increased and quite substantial financial aid and credit provided for farmers. The 1960/61 budget introduced an investment allowance of 15%. The investment allowance represents an actual remission of taxation and could, therefore, be a power- ful incentive to new investment. At the same time the savings levy which had been a feature of the three preceding years, was not repeated, the undistrib- uted profits tax was abolished and income tax rates were reduced. The 1961/62 budget increased the investment allowance to 20l so that manufacturers are now able to write off in one year a sum which may amount to 45% of the cost of neir investment. 11. These fiscal measures were supplemented by monetary policy. In late 1958 the balance of payments had recovered from the effects of over- importing earlier in the year, the tempo of economic activity was slowing down, bank credit was declining and interest rates were tending to fall. In November 1958 the Reserve Bank therefore reduced the supplementary reserve requirements which had previously been imposed on commercial banks and, in January 1959, the discount rate was reduced from 4-1/2% to 4%. Other rates moved down correspondingly. The easy money policy was con- tinued until the second half of 1960 when it was reversed as a result, not of rising activity within the economy, but of the outflow of capital. iii) The Capital Outflow 12. Until the present year, South Africa has seldom had serious balance of payments problems. In the early postwar years some difficulties arose owing to large fluctuations in the capital inflow and in 1958 reserves fell to a very low level owing to the unusually large imports which followed liberalization. But a country in which gold production has risen from $410 million in 1950 to $740 million equivalent in 1960 could well be expected to maintain equilibrium in its international accounts without too much difficulty. And as far as the current account is concerned this is still true. It is the capital account which has caused the trouble and it has done so for political, rather than economic reasons. 13. Although there was an outward movement of private capital from South Africa in 1959 amounting to R 48 million, it accelerated consider- ably after the disturbances of March 1960. For the year 1960 the net outflow of private capital was R 194 million. This is a considerable sum; it is more than three times as large as the previous highest outflow in 1957. Since there was a net inflow of capital on public account of R 32 million and a current surplus of R 30 million, foreign reserves fell by R 132 million and were reduced to R 190 million by the end of the year. 14. The outflow was predominantly a withdrawal of foreign-oiwned capital. A large part took the form of the sale through the Stock Exchange of South Afiican shares, particularly gold shares, from non-residents to residents of South Africa. Some R 78 million was accounted for in this way. Gold- mining houses and institutional investors, taking advantage of the depressed prices of securities, were heavy purchasers. The withdrawal of long-term funds by foreigners other than through the stock exchange represented another R 42 million. A further factor contributing to the outflow was direct investment in the Federation of Rhodesia and Nyasaland. This flow has been growing steadily in recent years arid reflects the attractiveness of growing markets in the Rhodesias and the degree of protection applied in the Federation against exports from South Africa. The interest rate differential which existed between the Union and London was also partly responsible for an outflow of short-term capital, both South African and foreign., which amounted to R 42 million in 1960, The outflow was particu- larly heavy in the first part of 1960. During the year the authorities arranged a number of foreign bank credits and a drawing on the International Monetary Fund, Altogether, these brought in R 42 million which eased, at least temporarily, the pressure on foreign exchange reserves, 15. This large scale outward movement of capital, occurring at a time when the government was anxious to encourage activity by relaxing monetary measures and budgetary concessions, clearly created a dilemma. To tighten monetary conditions might. well depress investment even further butP the only alternative seemed to be to stem the capital movement by direct controls. The government was very reluctant to take this step, particularly in view of the long tradition of free transfer between South Africa and London. A change in monetary policy was therefore introduced despite the risk of its effects on investment. In the first part of 1960 the Reserve Bank had been offsetting the effect of the capital outflow on the internal money supply in order to avoid a sudden deflation. But it was realized that this ex7ansion of credit by the Reserve Bank was, in fact, facilitating the capital outflow since it was enabling enterprises in South Africa which were subsidiaries of U.K. enterprises to obtain short-term financing locally instead of from London. It was also encouraging imports which may have been increased by importers fears of future restrictions. Finally the difference in interest rates between South Africa and London was obviously inappropriate in the circumstances, Consequently in August 1960 the discount rate was raised to 4-1/2% and commercial banks were requested to exercise caution in granting credit for the financing of imports. 16. In the first months of 1961 the fall in the exchange reserves ceased. The government hoped that this indicated that the capital outflow was draw- ing to a close. There was some reason for such a view; the figures revealed a smaller outflow in the fourth quarter of 1960, the yield on gold shares was much higher and hence sales by non-residents should be much less and finally the tighter monetary conditions should be exerting their effects. It was in this atmosphere that the budget for 1961/62 was drawn up and the government decided it could safely continue its policy of concessions to encourage private investment. However, immediately after the budget came South Africals withdrawal from the Comnonwealth and an acceleration of the capital outflow. Further restrictions on the export of capital by residents soon had to be introduced but by mid-June reserves had fallen to R 142 million and resort had to be taken to more far-reaching measures. On June 17 the government announced that the proceeds of sales of shares by non-residents to residents would have to be paid into blocked accounts which could normally be used only for the purchase of other South African securities. This was a much more serious step since it constituted a major restriction on the repatriation of foreign capital. Although an individual shareholder can realize his investment by selling his shares to other non-residents, non- resident shareholders as a group are now, in effect, locked in South Africa. A discount varying from 10 to 20% soon appeared in the London prices of South African shares as against their prices in Johannesburg. 17. In announcing these measures the Finance inister said he hoped they would be temporary. But it is difficult to believe that the confidence of foreign investors in South Africa could be fully restored short of a major change in the political situation which would afford some greater hopes of enduring social peace. In the absence of such a change the South African economy will have to rely for its future growth largely on its oun savings. 18. As far as the immediate future is concerned, with the government now in control of the capital account and with imports being restricted, the exchange reserves may be expected to reach a more comfortable level before the end of the year. By October 23 they had risen to R 218 million. South African imports are compressible and they can be restricted when this is required by the overall foreign exchange position. III. PROSPECTS 19. Traditionally the South African economy has always been very much an "open" economy relying greatly on exports and on close relations with the U.K. both for markets and as a source of capital., Government controls have been held to a minimum and hence both the rate and nature of economic development have been very much a spontaneous phenomenon determined by the behavior of the private sector. 'Hith the decline in the rate of growth the government faced the dilemma of how to stimulate growth without endangering the balance of payments. This problem arose first over the issue of whether to use restrictive monetary measures in an attempt to stem the outflow of capital. But this was only one aspect of the general question of whether to give top priority to reviving investment by all available methods and main- taining the balance of payments by physical controls or whether to try to avoid additional controls by using monetary and fiscal measures instead while hoping for a revival of investment and possibly of capital from abroad, 20. In the end, the decision to introduce new controls had to be taken. It will, however, ease the problem of stimulating investment. The tightening of import restrictions which are expected to reduce imports by about R 100 million in 1961 will itself encourage the production of import substitutes. Moreover, the existence of the controls will make it easier to move in the - 6 - direction of expansion if unused capacity and unemployment persist. 21. If it proves necessary for the economy to finance its future growth without recourse to foreign capital, it cannot be expected to achieve the performance which characterized the early 'fifties. From 1950 to 1955 foreign capital provided about 17% of net investment. However, since 1955 there has been no net import of capital. The rate of growth has, it is true, been slower, but this cannot be regarded as arising solely, or even mainly, from an insufficient supply of capital. This period includes the effect of the 1958 recession. Furthermore, as is indicated by the steps taken by the government to encourage private investment, it has been the absence of incen- tives to invest, rather than a lack of capital, which has been responsible for slower growth, Hence the future course of investment in South Africa is likely to depend largely on whether the investment climate improves suffi- ciently to encourage investors to make use of all the savings which the econ- omy is capable of generating. This has not been true in the last few years. But only when the rate of growth begins to press against the available resources will it really be possible to know how fast the economy can progress without foreign capital. 22. One sector of the economy that may be directly affected by a shortage of capital is the gold mining industry. A substantial proportion of the capital which has entered South Africa since the war has gone into gold mining which is a highly capitalized industry. It also requires a high proportion of risk capital. If the mining finance houses encounter dif- ficulties in raising share capital in London they will have to rely largely on financing expansion from their own earnings. However, the Rand Selection Corporation, an associate of the Anglo-American Corporation, one of the largest mining houses, recently obtained a loan of $30 million from finan- cial institutions in the U.S. There has been no indication that a shortage of funds has yet had any effect on gold production although, in the long run, the development of new mines may have to proceed more slowly than it would otherwise have done. Finally it should be remembered that gold mining is a vital industry in South Africa. If necessary, there are many steps that the government could take, such as tax relief -- even devaluation -- to assist it to maintain the maximum possible output. i) Export Prospects 23. South Africa's foreign exchange income from merchandise exports and gold together amounted in 1960 to R 1,330 million of which gold accounted for 40%. In 1950 gold also accounted for about 40% of foreign exchange in- come. Since the gold exports depend entirely on production whereas other export earnings are affected by price and market factors, this stability is largely a coincidence. It just happens that the additional output from newly developed mines has approximately matched the increase in the value of merchandise exports. The present expectation in South Africa is that gold output will reach a maximum in the mid 'sixties; it may rise from the present figure of around 21 million oz. to about 25 million oz.by 1965. - 7 - 24. Of South Africats merchandise exports, agricultural and pastoral products and crude materials account for some 40%, wool alone is providing about 13%. The share of wool in total exports has declined considerably over the last ten years. The world market for wool is fairly stable now and the price has leveled off in the last couple of years. South Africa's immediate position is not unfavorable, especially considering that 90% of the clip is fine quality wool. In the more distant future, however, the outlook is still uncertain as the competition of synthetics may tend to grow. Exports of food products and wines increased fairly rapidly until recent years when both market and supply factors have been less favorable. Minerals and metals account for another 34% of merchandise exports, the most important being uranium (13%) and diamonds (10%). Uranium is sold under contract to the United States and the United Kingdom and earnings from thic source are declining and will drop sharply after 1965. Apart from uranium, the prospect for minerals as a whole is rather good as production is expected to show a gradual rise. Exports of manufactured goods amount to 24% of merchandise exports and have been expanding steadily. The future of these exports may be affected by embargoes such as those recently intro- duced by some countries but so far, at least, there have been no visible consequences of these measures in the figures. A large proportion of South Africa's manufactured exports find markets in the Federation of Rhodesia and !Hyasaland so that developments in this area will be particularly important. 25. An uncertainty in the export picture is the problem of Commonwealth preferences. These preferences are contained in a bilateral agreement between the U.K. and South Africa and South Africa's withdrawal from the Commonwealth does not, in itself, affect them. Whether and to what extent these preferences will be maintained still remains to be seen. South Africa certainly hopes to continue them but the U.K.'s position is more difficult since there may well be some pressure from other members of the Commonwealth to abolish, or at least reduce, the preferences granted to South Africa. There may also be complications resulting from the U.K.'s move to join the Common Market. 26. The benefits of the Commonwealth preferences are difficult to quantify, although it is clear that since their introduction in 1932, they have lost some of their importance to both countries owing to the diversi- fication of trade and the general rise in prices. About 25% of South Africa's exports, other than gold, go to the U.K. and in 1960 they amounted to R 230 million. The margin of preference -- that is, the difference between the duty charged on imports from the Commonwealth and that charged on imports from non-Commonwealth countries -- is estimated to average for all imports from South Africa around 5%. The average margin is 8% on food, beverages and tobacco which account for nearly 40% of South African exports to the United Kingdom; the bulk of it consists of citrus fruit, vegetables and tinned fruits. On manufactured goods the margin is 9%. With the exception of asbestos and oil seeds and fats, raw materials, in general, enter the United Kingdom free of duty from all sources and hence South Africa can receive no preference. - 8- ii) Creditworthiness and Conclusion 27. South Africa's public external debt at June 30, 1961 amounted to $403 million equivalent and the service of it absorbed only 2.3% of gross foreign exchange earnings in 1960. Owing, however, to the large amount of foreign capital invested in South Africa, there is a substantial charge on the balance of payments each year on account of private remittances of dividends and interest. The total foreign capital invested in South Africa is estimated at about R 3,000 million($4,200 million) ten times as much as the external debt. Almost all of the capital is in the form of equity and about two-thirds of it held in the U,,K. In 1960 investment income remitted abroad amounted to 10,5% of gross foreign exchange income. Thus the private remittances and public debt service together came to about 13% of foreign earnings. If on top of this there is any substantial outflow of private capital the burden on the balance of payments soon becomes fairly large. In fact, in 1960 the private capital outflow absorbed another 12.5% of foreign exchange earnings so that altogether about one quarter of these earnings were devoted to the service of the public debt and the "service," in the form of dividends and outflow, of private capital. The importance to South Africa of maintaining control of the capital account is thus very clear. 28. It is not easy to say how successful the authorities will be in maintaining a balance on capital account since a great deal depends on the ability of the Government to maintain the confidence of inve8tors. The Government hopes to do this by demonstrating the feasibility of its policy of "separate development" which is intended to solve the problem of a multi-racial society by physical separation of the different groups. It has announced programs for developing the African reserves and persuad- ing new industries to establish themselves in "border areas," i.,e., areas adjacent to the reserves. The Government hopes that in this way the drift of Africans into the major urban centers can be halted or even reversed and racial tension thereby reduced. However, the economic history of South Africa has been one of the steady growth of an integrated economy; the proportion of non-Europeans in the modern sector of the South African economy has increased steadily throughout this century. Thus the economic forces have been continually increasing the dimensions of the problems facing a policy of physical separation. So far, physical separation in the principal industrial areas has gone little further than residential segregation. 29. Occupational separation, in the form of the reservation of certain jobs and occupations to Europeans has, however, been a feature of South African life which goes back long before the notion of "apartheid." This practice has resulted in a less efficient use of labor than uould have been possible under a freer system. It has certainly contributed to racial tension but its effects have been ameliorated by the long-term growth of income per head. Figures on the distribution of the national income between racial groups are scarce but the evidence seems to be that the non-Europeans have certainly maintained their share of the national income - 9 - and may even have increased it. A slowdown in the rate of economic growth would probably be reflected in lower non-European employment and incomes. 30. The non-Europeans play an important role in the South African economy. So far the Government has been successful in preventing strikes or other labor action for political ends. A bus boycott some years ago in Johannesburg was a success but an attempt to call a general work stoppage last Yhy was a failure. Although social disturbances are always a possibility in South Africa, there is no evidence that they are likely to become a serious threat to the economy in the near future. 31. In these circumstances South Africa can be regarded as creditworthy for the borrowing at present contemplated. STATISTICAL INDEX Table Summary of External Public Debt.... ............. 1 Estimated Contractual Interest and Amortization Payments on External Public Debt as of December 31, 1960....... 2 Gross National Expenditure ....... ...... .... 3 Net National Income.......... ........................* 4 Gross Saving and Investmento...............6.6*.... 5 Gross Ca0ital Formation....... .......... ...... . 6 Gross Capital Formation (Fercentage Distribution)....... 7 Level of Foreign and Domestic Saving, 1950-1959......... 8 Central Government Revenue and Expenditure.............. 9 Agricultural and Pastoral Production................. 10 Mineral Production.................................... 11 Industrial Production.................. .O..*.. .... .... 12 Balance of Payments ....... ............................. 13 Net Inflow of Private Capital........c..........oo..... 14 Terms of Trade....... 15 Composition of Exports - 1950; 1956-1960................ 16 Imports by Commodity Groups..........oo.............o 17 Foreign Trade by Area..............,,.,........ ...... 18 Price Indices. ................ , .................. 19 Table 1 Summary of External Public Debt (In thousands of U.S. dollar equivalent) December 31 June 30 Type of Debt 1950 1955 1960 1961 TOTAL EXTERNAL PUBLIC DEBT 149,045 373,942 418,465 403,249 National and Government-Guaranteed Debt 94,988 35782 382,154 366,888 U. S. dollars 10,469 169,853 216,006 203,472 Publicly-issued bonds - 25,000 46,989 44,482 Privately-placed debt 10,000 38,018 65,500 64,625 I.B.R.D. - 87,235 80,207 71,912 U. S. Government loans (Export-Import Bank) 469 19,600 23,310 22,453 Pounds sterling 75,902 103,813 90,723 89,020 Publicly-issued bonds 73,102 70,941 50,174 49,464a/ Privately-placed debt 2,800 7,672 3,052 2,870 I.B.R.D. - 25,200 37,447 36,686 Swiss francs 8,617 36,786 48,969 48,862 Publicly-issued bonds - 28,004 39,488 39,398 Privately-placed debt 8,617 7,001 6,969 6,952 I.B.R.D. - 1,781 2,512 2,512 Other currencies - 11330 26456 25,534 Publicly-issued bonds - 13,158 13,812 12,891 I.B.R.D. - 2,172 12,644 12,643 Debt of Political Sub-divisions 54,057 48,160 36,361 36,361 Publicly-issued sterling bonds 54,057 48,160 36,361 36,361b a/ Does not include publicly-issued bonds held within the country which amount to the equivalent of $22,558,000. b/ Includes the equivalent of $13,671,000 publicly-issued bonds held within the country. Table 2 Estimated Contractual Tnterest and Amortization Payments on External Public Debt as of Dcember 31. 1960 / (Tn thousands of U.S. dollar equivalents) Total Debt U. S. Dollars Pounds Sterling Other Currencies Amorti- Amorti- Amorti- Amorti- Year zation Interest Total zation Interest Total zation Interest Total zation Interest Total 1961 35,207 18,774 53,981 29,129 9,487 38,616 5,018 5,802 10,820 1,060 3,485 4,545 1962 107,055 16,724 123,779 90,934 7,778 98,712 8,029 5,511 13,540 8,092 3,435 11,527 1963 54,097 12,184 66,281 28,047 4,265 32,312 21,860 4,931 26,791 4,190 2,988 7,178 1964 29,473 9,866 39,339 16,585 2,969 19,554 9,909 4,109 14,018 2,979 2,788 5,767 1965 26,676 8,466 35,142 13,925 2,180 16,105 8,318 3,667 11,985 4,433 2,619 7,052 1966 22,934 7,168 30,102 11,047 1,503 12,550 7,427 3,285 10,712 4,460 2,380 6,840 1967 40,070 5,637 45,707 11,097 912 12,009 24,477 2,586 27,063 4,496 2,139 6,635 1968 15,904 4,356 20,260 3,979 438 4,417 7,687 2,015 9,702 4,238 1,903 6,141 1969 25,447 3,234 28,681 3,929 281 4,210 4,926 1,543 6,469 16,592 1,410 18,002 1970 33,695 2,368 36,063 4,068 105 4,173 13,608 1,253 14,861 16,019 1,010 17,029 1971 2,082 1,162 3,244 - - - - 810 810 2,082 352 2,434 1972 2,082 1,060 3,142 - - - - 810 810 2,082 250 2,332 1973 3,873 925 4,798 - - - 1,896 777 2,673 1,977 148 2,125 1974 1,165 802 1,967 - - - - 744 744 1,165 58 1,223 1975 1,322 744 2,066 - - - 1,322 744 2,066 - - - //01.08 9t4h70 494,552 212740 he2ro918 po2s658 15 ml lo064 73D65 l4oa96n5 d8,830 ~/This table excludes the proposed ?25 million T.B.R.D. loan, and T.I..F. drawings. Gross National Expenditure" (R million at current market prices) 1948 19'5 1956 19-7 1958 1959 1960 Private consumption 1,526 2,642 2,851 3,026 3,225 3,350 3,610 Government consumption 234 423 473 493 529 551 599 Gross capital formation 558 984 997 1,L4 1128 980 1,120 Total gross domestic expenditure 2,318 4,049 4,321 4,603 4,882 4,881 5,329 Balance on current account -353 -91 9 - 19 -1d? 158 30 Gross National Expenditure at Market Price 1,965 3-4., 430 LM& 5L02 539 ,359 Percentage Distribution Private consumption 77.7 66.7 65.9 66.0 68.1 66.5 67.3 Government consumption 1l.9 10.7 10.9 10.8 11.2 10.9 11.2 Gross canital formation 28.4 2,.9 23 0 23.6 23.8 19. 20.9 Total gross domestic expenditure 118.0 102.3 99.8 100.4 103,1 96.9 99.4 Balance on current account -18.0 .3 -O,,2 - 0.4 - 3.1 301 0.6 Gross National Expenditure at Market Price 100.0 10010 100.0 100.0 100.0 100,0 100.0 * Including South West Africa and the Protectorates. Source: South African Reserve Bank. Table 4 ,et T,.tional Tnccme Year Ending At Factor Cost Constant (1953) Chanie from Constant (1953) Chango from June 30 Current Prices Wholesale Prices Previous Yoar Retail Prices Previous Year (R million) (R million) () (R million) () 1947 1,386 2,268 - 1,958 - 1948 1,585 2,450 + 8 2,136 + 9 1949 1,665 2,410 - 2 2,110 - 1 1950 1,866 2,567 + 7 2,309 + 9 1951 2,301 2,862 +11 2,685 +16 1952 2,373 2,535 -11 2,563 - 5 1953 2,611 2,611 + 3 2,648 + 3 1954 2,846 2,832 + 8 2,818 + 6 1955 3,039 2,979 + 5 2,933 + 4 1956 3,225 3,069 + 3 3,040 + 4 1957 3,534 3,334 + 9 3,269 + 8 1958 3,575 3,332 3,178 - 3 1959 3,714 3,468 + 4 3,230 + 2 1960 4,035 3,753 + 8 3,478 + 8 Note: Neither the wholesale price index nor the retail price index is an entirely satisfactory statistical basis for calculating constant prices. They are both used for purposes of approximation, however, and are considered useful for inter-temporal comparisons. Source: Bureau of Census and Statistics. Table 5 Gross Saving and Investment* (R million at current market prices) 1948 1955 1956 1957 1958 1959 1960 Gross Investment Building and construction 250 493 519 576 610 616 638 Machinery, plant and equipment 208 358 355 380 462 414 423 Net change in inventories 89 117 109 114 42 -64 44 Transfer costs 11 16 14 14 14 14 15 Total 55 984 997 11084 1,128 980 1,120 Gross Saving Personal saving** 24 333 367 352 269 363 295 Corporate saving 81 137 150 160 154 174 Current surplus of public authorities and social security funds 56 145 135 167 128 169 201 Lepreciation allowance 125 334 367 396 424 452 480 Total Gross Domestic Saving 205 893 1,006 1,065 981 1,138 1,150 less balance on current account -3} -91 9 _19 A 158 C Total 558 284 997 1,084 1,128 980 1,120 Percentage Distribution Gross Investment Duilding and construction 44.8 50.1 52.1 53.1 54.1 62.9 57.0 Machinery, plant and equipment 37.3 36.4 35.6 35.1 41.0 42.2 37.8 Net change in inventories 15.9 11.9 10.9 10.5 3.7 -6.5 3.9 Transfer costs 2.0 1.6 _ _L2 1.2 1.4 1.3 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Gross Saving Personal saving** 4.3 33.9 36.8 32.5 23.8 37.0 26.3 Corporate saving 8.2 13.7 13.8 14.2 15.7 15.5 Current surplus of public authorities and social security funds 10.0 14.7 13.6 15.4 11.4 17.3 18.0 Depreciation allowance 2.4 34.0 36.8 J6. 37-6 46.1 _L29 Total Gross Domestic Saving 36.7 90.8 100.9 98.2 87.0 116.1 102.7 Balance on current account 63.3 9.2 -0.9 1.8 13.0 -16.1 -2.7 Total 100.0 100.0 100.0 100.0 100.0 100.0 3.00.0 * Including South 4est Africe. and the Protectorates. * Including errors and omissions. So-,rce: South African Feserve Bank. Table 6 Gross Capital Formation* (R million at current prices) 1948 9M 1956 1957 1958 1959 1960 1. Gross Fixed Public Investment Union Government: 78 120 152 191 251 183 190 of which: S.A.R. & H. (50) (77) (105) (141) (200) (129) (133) Other enterprises (15) (22) ( 25) ( 25) ( 25) ( 24) ( 25) Provincial administrations 24 43 49 52 56 64 75 Local authorities 38 83 91 96 107 114 121 Public corporations 22 56 _3 5 72 77 60 Total ross Fixed Public nvertment 162 302 9 486 438 46 I-. Grosc Fixed Private Investment Residential buildings 68 127 105 117 120 126 135 Farming 76 113 105 116 118 113 116 M1ining 44 110 100 92 99 99 110 e,anufacturing 66 111 122 131 134 131 134 Gtm-e--, tr.nsport, etc. 42 88 97 106 115 123 120 Transfer cosca 11 16 14 14 14 14 15 Tctal Gross Fixed Private Inv7stent 365 542 576 600 606 630 Total Gross Fixed CaDital Formiation z.69 867 888 970 1,086 1,044 1,076 IT. Net Change in Tnventories 89 117 109 114 42 -64 _4 Total Gross Capital Formation 558 984 997 1,084 1,128 980 1L120 * Including South West Africa and the Protectorates. Source: South African Reserve Bank. Gross CaDital Formation* (Percentage Distribution) 19 8 1955 1956 1957 L958 1959 1960 I. Gross Fixed Public Investment Union Government: 14.0 12.2 15.3 17.6 22.3 18.7 17.0 of which: S.A.R. & H. (9.0) (7.8) (10.5) (13M0) (17.7) (13.2) (11.9) Other enterprises (2.7) (2.2) ( 2.5) ( 2.3) ( 2.2) ( 2.4) ( 2.2) Provincial administrations 4.3 4.4 4.9 4.8 4.9 6.5 6.7 Local authorities 6.8 8.4 9.1 8.9 9.5 11.6 10.8 Public corporations .2 3 5.1 _- _79 5.3 Total Gross Fixed Publin Investment 29.1 30.7 6 36.4 4.1 *7 39. 'I. Gross Fixed Private Investment Residential buildings 12.2 12.9 10.6 10M 10.6 12.8 12.1 Farming 13.6 11.5 10.6 10.7 10.5 11.5 10,4 Mining 7.9 11.2 10.0 8.4 8.8 10.1 9.8 Manufacturing 11,8 11.3 12 2 12.1 11.9 13,4 12,0 Commerce, transport, etc. 75 89 9.7 9.8 10.2 12-6 10.7 Transfer costs 2,,0 1.6 1.4 .2 1.2 1A ..J. Total Gross Fixed Private Investment 55.0 57A 5L.5 3.1 53.2 61.8 56.3 Total Gross Fixed Capital Formation 84.1 88.1 89.-1 89.5 96.3 106.5 96.1 III. Net Change in 1nventories _5.2 11.9 10.,9 10. . 3.9 Total Gross Capital Formation 100.0 100.0 1000 100.0 1000 100.0 100.0 * Including South West Africa and the Protectorates. Source: South African Reserve Bank. Table 8 Level of Foreign and Domestic Saving 1950-1959 Percent of Gross Domestic Amunt Product Total Domestic Foreign Gross Domestic Total Domestic Foreign Year Saying Savinr Saviri Product SavinF Saving Savinu 1948 558 205 353 1,996 28.0 10.3 17.7 1949 529 290 239 2,188 24.2 13.3 10.9 1950 546 519 27 2,570 21.2 20.2 1.1 1951 800 543 257 2,820 28.4 19.3 9.1 1952 676 517 159 3,084 21.9 16.8 5.2 1953 864 702 162 3,530 24.5 19.9 4.6 1954 951 846 105 3,820 24.9 22.1 2.7 1955 984 893 91 4,136 23.8 21.6 2.2 1956 997 1,006 - 9 4,518 22.1 22.3 (-) 0.2 1957 1,084 1,065 19 4,770 22.7 22.3 0.4 1958 1,128 981 147 4,917 22.9 20.0 3.0 1959 980 1,138 -158 5,221 18.8 21.8 (-) 3.0 2960 1,120 1,150 - 30 5,541 20.2 20.8 (-) 0.5 Average Percents 1950-60 1950-54 1955-60 Total supply of saving 22.5 24.2 21.6 Gross domestic saving 20.8 19.8 21.4 Foreign saving 1.7 4.9 0.2 Source: South African Reserve Bank Table prepared by I.B.R.D. Statistics TabLe 9 Central Government Revenue and Exrenditure Provisional Estimates 1956/57 1957/58 1958/59 1959/60 196o61 1961/62 Surplus revenue for previous year 37.1 26.7 42.4 22.7 32.3 38.0 Current revenue receipts 606.2 632.6 ___ 2259 2.24 745. 643.3 659.3 706,8 755.1 792.1 783.1 Current expenditure 549.5 563.2 588.7 628.7 684,8 744.8 Transferred to loan account: Surplus for previous year 37.1 2b.7 42.4 22.7 32.3 38.0 Contribution for current year -300 27.0 53.0 71.4 370 - 616.6 616.9 681,l 722.8 754.1 782.8 Revenue surplus 267 424 223 38.0 0. Loan Expenditure Financed from: Surplus or deficit on loan account 5.4 3.8 -12.6 - 0.8 46.2 - 1.6 Transferred from revenue account: Surplus revenue for previous year 37.0 26.7 42.4 22.7 32.3 38.0 Revenue contribution for current year 30.0 27,0 53.0 71.4 37.0 Receipts on loan account 39.8 34.5 37.2 39.3 47.6 23.0 External borrowing (net) -7.6 40.6 34.6 -15.0 9,0 Internal borrowing (not) (incl. loan levy) 98.2 96.2 123.8 179,3 Closing balance on loan account -3,8 12.6* 0.8" -46.2 1.6* Loan (capital) expenditure 199,2 241.5 279.1 250.8 228.3 2250 * Debit balance on loan account financed out of current year's revenue surplus. Source: Figures supplied by the South African Reserve Bank. Table 10 Agricultural and Pastoral Production Forecast Crops Unit 1946/47 1951/52 1954/55 L9582 1959/60 Maize (corn) Million bags 24,6 21.5 37.4 40.3 - Wheat Million bags 4.8 7.8 6.7 6.8 8.2 Sorghum Million bags 1.8 1.7 1.7 2.4 - Citrus fruit 000 tons 175.8 264.8 318.1 342.0 - Deciduous fruit 000 tons 241.0 290.9 390.1 361.7 - Sugar 000 short tons 475.0 533.0 829.0 1,128.0 - Pastoral Wool Million lbs 194.0 221.2 268.7 282.5 296.0 Hides Million lbs - 77.9 76.9 85.2 - Skins Million lbs - 39.5 4241 53.0 - Livestock Poulation Cattle Million head 12.1 11.8 11.7 12.0 - Wooled sheep Million head 24.4 30.3 32.9 34.4 - Non-wooled sheep Million head 6.3 5.2 4.1 3.8 - Gross Value of Agricultural and Pastoral Produc- tion R million 307.0 516.0 670.0 725.6 779.0 Index of Physical Volume 1950 19556 1957 1958 1959 of Agricultural & Pastoral Production 100 124 132 139 135 140 Sources: Data provided to the mission. South Africa Bureau of Census & Statistics Table 11 Mineral Production Unit 1950 1956 .157 1258 1959 1960 Gold Million oz. fine 11.7 15.9 17.0 17.7 20.0 21.4 Diamonds Million metric 1.9 2,6 2.6 2.7 2.8 3.0 carats Uranium Coal Million tons 28.7 35.6 37.7 40,0 39,0 42.0 Copper 000 tc ns 39.0 47,0 50-0 57.0 51.0 58.0 Asbestos 000 tons 133,0 158.0 176.0 133.0 176.0 Total Volue of 1'n~eral[ Proan - R million 336,5 633.6 688.5 705.3 765.1 829.3 of which Gold 289.6 397,0 425.2 440,1 500 3 536.0 Uranium - 774 100.0 106.6 97.5 98.5 Coal 29.6 41,5 43.3 47.2 49.4 55.1 Diamonds 28.8 26.8 289 31.1 31.3 33,9 Copper 11.3 26.6 19.7 17.8 19.2 22.2 Ratio of gold to total value 74.9 62.7 61.8 62.4 65.4 64,6 Source: South African Reserve Benk. Table 12 Industrial Production Unit 1950 1955 1956 1957 1958 12959 1960 Fig Iron 000 tons 1,389 1,432 1,499 1,668 1,877 2,007 Building bricks 1953=100 index 78 119 119 103 109 104 102 Cement 1953=100 index 87 110 116 119 128 125 127 Electric current generated 1953=100 index 82 123 132 142 151 162 173 Building plans passed 1953=100 index 85 121 104 107 112 120 121 Employment in manufacturing 1953=100 index 81 113 118 120 121 119 120 Sources: Quarterly Bulletin of Statistics of the S.A. Reserve Bank and the Bureau of Census and Statistics. Table 13 Balance of Payments 1/ (Rand millions) 1948 1952 191) 194 1955 1956 1957 1958 1959 19604 Merchandise - Imports, f.o.b. -716 -842 -863 -991. -978 -1,001 -1,116 -1,134 -998 -1,131 - Exports, f.o.b. 288 580 598 666 (41 -4 R21 - 893 _ 77 6 _8L - Trade balance -428 -262 -265 -225 -237 -177 -223 -361 -134 -261 Net gold output 199 304 306 329 365 395 429 440 504 531 Freight and insurance on impo:ts - 78 - 88 - 82 - 81 - 90 - 87 -106 - 94 - 77 - 85 Investment income (net) - 53 -118 -122 -131 -140 -149 -147 -145 -137 -146 Other current items (net) 7 5 1 3 11 27 28 13 2 - 9 Balance on current account -353 -159 -162 -105 - 91 9 - 19 -147 158 30 Private capitl (net)2/ 185 120 10T 152 22 17 - 61 83 - 48 -194 Official and banking institutions: Long-term liabilities (net): I.B.R.D. Icans - 16 17 30 2 - 3 6 10 14 - 8 Other dollar loans - 3 - 7 - 14 -4 - 25 10 9 Sterling loans - - - - - - -6 - 10 2 - 2 Swiss franc loans - 10 - 1 10 - - - 5 - 8 5 Dutch euilder loans - - - - 10 - - - - - Commercial banks' liabilities 1 - - 2 4 6 - 10 1 - 4 10 Short-term liabilities (net) Drawings on I.M.F. 5 - - - - - - 26 - 26 9 Reserve Bank loans - - - - - - 14 - 7 - 7 14 Other 5 4 - 4 3 3 5 - 1 16 13* - 5 Long-term assets (net )2/ -- - 1 11 - 40* - Total - Change in gold and foreign exchange reserves -167 LIj - 59 88 -40 23 - 61 8 80 122 I/ Including South West Africa and the Protectorates. 2/ Including errors and omissions. Increase -, decrease +. Preliminary estimates. Including subscriptions to I.M.F. Source: South 4frican Reserve Bank. Table 14 Net Inflow of Private CaDital (Rand millions) Union Resident-Capital- F o r e i g n __C a p i-t a 1 Long-term Funds Stock Omis- Long- Short- Exchange Short- sions term term Trans- Uranium term and Grand Year Funds Funds Total actions Loans Other Total Funds Total Errors Total 1948 ... . - ... ... .. ... ... 185 1949 .... -. ... ... ... ... 109 1950 ...... ... ... ... 134 1951 ... .. .. . ... - ... 0.-.. ... ... 157 1952 *a ... ... .. 25 ... ... ... ... ... 120 1953 ... ... ... ... 30 .. ... ... ... 100 1954 ... ... ... ... 26 ... ... ... ... ... 152 1955 ... ... ... ... 15 ... ... ... ... *.. 22 1956 -36 -2 -38 - 9 28 37 27 64 - 9 17 1957 -26 -2 -28 -23 - 5 11 -17 -13 -30 - 3 -61 1958 -23 -3 -26 - 2 -12 55 41 47 88 21 83 1959 -28 -3 -31 -40 -14 38 -16 4 -12 - 5 -48 1960* -18 -10 -28 -78 -14 -28 -120 -28 -148 -18 -194 * Preliminary estimates. Source: South African Reserve Bank. Table 15 Terms of Trade (Indices: Base 1953=100) Imports Exports of S.African Produce Terms of Tradev Excluding Gold Including Gold Excluding Including Year Volume Price Volume Price Volume Price Gold Gold 1948 113 74 71 66 131 68 89 91 1949 97 76 71 70 84 74 92 96 1950 86 84 81 92 83 96 109 115 1951 111 100 90 110 94 108 110 108 1952 92 107 90 102 97 102 95 95 1953 100 100 100 100 100 100 100 100 1954 106 98 122 91 119 93 93 96 1955 116 98 140 90 134 93 93 96 1956 116 101 149 94 1.44 96 93 94 -195? 127 103 159 96 156 97 93 94 1958 128 103 154 88 155 92 86 90 1959 116 100 171 87 172 90 86 91 1960* 132 100 178 85 186 89 84 90 1/ Including South West Africa and the Protectorates. 2/ Export price index divided by import price index. * Preliminary figures. Source: Figures supplied by South African Reserve Bank. Table 16 Composition of Exports* - 1950; 1956-1960 (Rand millions) 1950 1955 1956 1957 1958 1959 129 Agricultural and pastoral 216.86 317.60 345.10 357.48 330.36 343.28 344.92 Minerals and metal ores 150.64 185.42 219.46 246.82 237.56 247.48 254.42 Yanufactured goods 89.98 160-12 175.58 181.90 147.28 187.92 199.00 Total Merchandise Exports 457.48 663.14 740.14 804.20 715.20 778.68 798.34 Wool 124.46 117.88 124.00 134.26 85.02 105.40 96.64 T-anium - 59.92 77.40 99.88 107.32 98.46 97.54 Diamonds 40.2 63.94 63.78 69.64 61.36 76.04 69.00 Cold (net) 294.00 365.00 395.00 429.00 440.00 504.00 531.00 Total Exports L 1028.14 1 . 1255.20 1282.68 1329. Percentage Distribution Agricultural and pastoral 47.4 47.9 46.6 44-5 46.2 44.1 43.2 Mineral and metal ores 32.9 28.0 29.7 30.7 33.2 31.8 31.9 Monufactured goods 19.7 24.1 _Q.7 22.6 20.6 24.1 24.9 Total Merchandise Exports 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Wool 27.2 17.8 16.8 16.7 11.9 13.5 12.1 Uranium - 9.0 10.5 12.4 15.0 12.6 12.2 Diamonds 8.8 9.6 8.6 8.7 8.6 9.8 8.6 Gold (net) 39.1 35.5 34.8 34.8 35.1 39.3 39.9 Merchandise exports 60.9 64.5 65.2 65.2 64.9 60.7 60.1 Total Exports 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Including S.W. Africa, Basutoland, Swaziland and Bechuanaland. Table prepared by I.B.R.D. StatisticsDivision oources: S.A. Trade Statistics and S.A. Reserve Bank Bulletin Table 17 Imports by Commodity GrouDs* (Rand millions) 1955 1956 1957 1958 1959 1960 Animals & agricultural products (excluding foodstuffs) 8 8 10 8 8 9 Food, drink and tobacco 52 54 44 48 63 57 Textiles, apparel, yarns and fibres 180 170 194 163 153 184 Metals, metal manufactures, machinery and vehicles 410 438 506 564 435 516 Minerals, earthenware and glassware 32 34 38 40 37 42 Cils, waxes, paints and varnish 94 104 112 105 100 103 Drugs, chemicals and fertilizers 42 40 44 46 48 53 Leather, rubber and their products 28 26 28 25 28 30 Wood, cane and their products 36 32 34 31 23 27 .ooks, paper and stationery 48 48 52 52 50 55 Jewelry and musical instruments 16 16 16 16 16 17 Miscellaneous 32 _31 _38 30 6 - 3 Total: 978 1,001 1 1134 98 1,131 * Including S.W. Africa, Basutoland, Swaziland and Bechuanaland. Source: South African Reserve Bank. Table 18 Foreign Trade by Area/ (Rand millions) imports 1955 1956 1957 1958 1959 1960 Non-Sterling Area: United States 206 202 220 198 170 217 Other dollar area 40 48 36 39 42 43 O.E.E.C. countries 204 215 258 298 259 303 Other non-sterling area 76 96 112 108 99 120 Total non-sterling area 52' 61 64 743 570 Sterling Area: United Kingdom 340 316 366 379 312 321 Other sterling area 112 124 124 112 116 127 Total sterling area 452 440 490 491 428 448 Total 978 1,001 1,116 1,134 998 1,131 Exnorts (excluding gold) 1955 1956 1957 1958 1959 1960 Non-Sterling Area: United States 122 147 150 149 174 150 Other dollar area 4 10 10 8 11 18 0.E.E.C. countries 191 223 230 178 211 218 Other non-sterling area 36 38 69 38 58 68 Total non-sterling area 353 418 459 373 454 454 Sterling Area: United Kingdom 234 238 248 228 223 230 Other sterling area 154 168 186 172 187 186 Total sterling area 38-8 4 3Z4 70 410 416 Total 241 827 83 273 864 870 1/ Including South West Africa and the Protectorates. Source: Figures supplied by South African Reserve Bank. Table 19 Price Indices 1954 = 100 Wholesale Year nrices Cost of livinq 1948 66.5 75.4 1950 75.1 81.3 1951 85.8 87*3 1952 98.4 94.9 1953 99.3 98.2 1954 100.0 100.0 1955 103.2 103.1 1956 104.6 105.1 1957 106.2 108.3 1958 106.4 112.0 1959 106.3 113.3 1960 107.7 114.9 Source: Bureau of Census and Statistics