Dahomey - The economy

RESTRICTE'D FILE COPY Report No. . AW-2 This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE ECONOMY OF DAHOMEY January 13, 1969 Western Africa Department CURRENCY EQUIVALENTS US $ 1. 00 CFAF 246.85 French Franc 1. 00 = CFAF 50. 00 CFAF 1. 00 = US $ 0. 004 CFAF 1. 00 = French Franc 0. 02 CFAF 1 million = French Francs 20, 000 CFAF 1 million = US $ 4, 000 (approximately) INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT lU ' Y RESTR-ICTED R69-14 FROM: The Secretary January 27, 1969 DAHOMEY There is attached for information a copy of a report entitled "The Econom of Dahomey" (AW-2) dated January 13, 1969. Distribution: Executive Directors and Alternates President President's Council Executive Vice President, IFC Vice President, IFC Department Heads, Bank and IFC FILE COPY 1. Circulation of this report was delayed in view of the political unrest which prevailed after the change of Government in December 19"7. The political situation did not settle until July 1968 when a new Government was formed under Dr. Zinsou. Financial dis- cussions with France were successfully concluded only in October 1968. 2. While the report covers some of the political and economic developments since the mission returned from the field in May 1967, it does not fully reflect more recent economic improvements which have taken place in conjunction with the resumption of French aid which is critical to the budget. An assessment of most recent developments will be contained in the economic section of the next President's rer on Dahomey to be Presented to the !xecutive Directors. It was felt i owever, that the economic report as it stands should now be distributed to Executive Directors as useful background information. Western Africa Department January 13, 1969 TABLE OF CONTENTS Page No. BASIC DATA ......... ................***** MAPS (2) ............................*** .**************** SU4ARY AND CONCLUSIONS .................... ................. i - iv I. The Country and the People ............................ 1 Population ...... o..........o..........o.............. 1 Political Developments ............................ 3 II. Economic Structure and Overall Developments .......... Structure of the Economy ............. 9..... * 4 Changes in the Economy ...v...... *e.......*... * 5 Sectors of Production ........*....**.*e......** 6 (a) Agriculture ..... ................ . ............** * 6 b) Industry, Construction and Power ............ 10 c) Transport and Cormerce ...................... 10 III. The Budget and the Public Sector ....................** 11 Structure and Past Development ................**** 11 Current Revenues ... .......... oo w*6* w............... ** 13 Current Expenditures .. ...........*00.....****** 14 Financing the Deficit .... .......................... 1 Local Budget ..................******************. 17 Public Investments ........ ........................ 18 Public Debt o............ ..******** 19 Conclusions and Outlook ........................... 19 IV. Money and Credit ....................*************** 21 A. Monetary Developments ............o............. 21 Money Supply ............................... 22 Structure of Credits ...............o....... 22 B. Conclusions and Problems .................... 24 TABLE OF CONTENTS (Continued) Page No. V. External Trade ....................................... 25 Introduction ..................*.. ..... .... .. 25 Balance of Trade .................... .......... 25 Exports ........................................... 26 Imports ........................................ ... 28 VI. Prospects and Projections .......................... 30 Development Plans ... ...................... 30 The 1966-70 Investment Program ................... 32 General Prospects and Mission Projections .........* 35 (a) Expected GDP ................ .... .......... 35 (b) Financial Position of the Government ......... 38 (c) Public Savings and Investment ................ 40 (d) Private Savings and Investment ............... 43 (e) The External Accounts and General Conclusions 44 STATISTICAL APPENDIX .................... Tables 1-42 This report is cased on the findin,.s of a Mission to Dahomey in A April/May 1Mx7. The assignments of the 1ission we7e as follows: J.F. Stolper (IB2D) Chief of Mission H. Bachmann (I-D) Economist H. Boumenil (7 0 ISTD) Irrigation Expert C. Brochu (7AO /I*RD) Agricultural Expert A. Duncan (I RD) Transportation Expert J. Kahane (I w) Aricultural Economist E. Minni - (IERD) Electric Power Expert DAH 0 ME Y Basic Data Area: 45,000 square miles Population (1966): Total (t000) 2,464 Density 55 per square mile Rate of growth 2.8p p.a. School attendance 24% (1965) Political status: Independant since April 1960 Gross domestic product (market prices): Estimates 1963 1964 1965 1966 (billion CFA francs 41.8 41.8 45.3 45.3 at 1963 prices ( (million US $ 169.3 169.3 183.5 183.5 Rate of growth (% p.a.) 2.7 / (CFA francs 18,700 18,380 per head ( (us $ 76 74 Rate of growth (% p.a.) / -0.1 / Structure of G D P (1966) Oripin _ Uses % Agriculture 45.9 Private consumption 75.5 Manufacturing and Construction 8.3 Public consumption 22.7 Public utilities 0.6 Gross fixed capital formation 14.2 Transport 6.9 Changes in stocks 0.4 Commerce 17.9 Export 5.7 Services 5.4 Less: imports 18.5 Government 15.0 Total 100.0 Total 100.0 -2 - billion CFA francs 1963 1964 1965 1966 Financing of gross domestic investment Estimates Gross fixed capital formation 7.1 6.5 6.8 6.4 Change in stocks .2 - .2 .2 Gross domestic investment 7.3 Z7. 7.0 .7 National savings n.a. 1.0 1.3 n.a. Capital inflowu and changes in foreign assets n.a. 5.5 5.7 n.a. Domestic savings 2.4 2.0 1.0 0.8 Central Government budget Total revenues/ 5.0 5.5 5.9 6.1 Total ordinary expenditures 6.8 6.9 7.9 7.4 Budget deficit 1. 1.T 2.0 1.3 financed by: French Annual Subsidy 1.2 0.8 0.8 0.9 French Treasury alances - - 0.9 - Domestic sources - 0.6 0.6 0.3 0.4 Development expenditures 4.4 4.0 3.9 2.9 financed by: French aid 2.9 1.5 1.8 0.8 FED 0.5 0.7 0.7 0.9 Other foreign aid 1.0 1.5 1.4 1.2 Money and credit Relationship to large monetary area: Member of the West African Monetary Union, and as such member of the Franc area. Money supply (end of December, 1963 1964 1965 1966 billion CFA francs) Total money supply 6.03 6.13 6.16 6.46 Credit to the private sector 4.67 5.03 4.74 4.50 Credit to the Government -0.05 0.13 0.52 1/ including net position of special funds I/ including increase in liabilities vis-A-vis the Central Bank (BCEA0). -3- Salance of Pa-ns atmtes) Pamens (cstinzae (billion CFA francsL 1964 1965 Merchandise trade Exports 3.8 3.8 Imports 10.4 10.5 Net merchandise -6.6 -6.7 Net services 0.7 0.6 Deficit on current account, excluding transfers -5.9 -6.1 Total net transfers received 4.9 4.5 Private 0.4 0.4 Central Government 4.5 4.1 External Trade Exports of goods and services as % of G.D.P. 9 8 Rate of growth (o) - 0 Imports of goods and services as % of G.D.P. 25 23 Rate of growth (%) - 1 Concentration of exports (f) Palm products and groundnuts 79 76 Export price index (1960 = 100) 93.8 101.1 International Reserves (External as of December 31 assets imputed within the West African Monetary Union) 1963 1964 1965 1966 Total value (US $ millions) 9.9 9.9 10.2 9.7 Monthsl imports of goods n.a. 2.8 2.9 neae IMF Position (US $ millions) Quota 7.5 7.5 7.5 8.0 Drawings - External Public Debt Deceinfer_31, 1967 Estimated total debt outstanding, including undisbursed (US $Vt-icusan~ds) 140,866 World Bank Group Operations none DAHOMEY AGRICULTURE AFRICA jO 900 ONI i 00 0c0, 0 ,000 ,0000 9000 IO¶ErR S S- - 00090SIE T 900 000 ou 9000SHEANUTS 900 900 /,000E..T 0010 900 1,20 ,220 c00FFEE 1,390000 /,'g0 0 T...CC. 10 •900 s. étéO /,200 Ana 00 ePrecipltation 9 A *I * ,200In milimeters 900 v ,oWo o 25 50 19 KILOMETERS :0'dh Co~oou - - rA w /7-c JANUARY 1968 IBRD-I348-R.I DAHOMEY T R ANSPORTATION N l G E R Mr Niger >- DAHOMEY 4K~ IÍ I{ otiin u Kound4 Nikki Rbfokou PROJECTEO RAICWAYS 2 na0d PA E R TODO V KILOMETERS: Lo~ne -T-AATRGoRCs JANUARY 1968 IBRD-I346-R.I DAHOMEY SUMARY AND CONCLUSIONS General 1. The Republic of Dahomey has experienced serious political,economic and financial difficulties ever since the years preceding the attainment of inde- pendence in 1960. 2. Political instability - with governments being overthrown every other year - finds its roots in the past history of a population of varied ethnic origin, language and religion. The present divisions for a great part continue and reflect the conflicts among the ancient Southern (Porto Novo), Central (Abomey) and Northern kingdoms. Thus, even during periods of formal coopera- ti cn and unity, the three main political leaders spent most of their time working against each other and devoted little effort to the tasks of financial and economic administration. Labor unions of private and government employees, as well as a large mass of urban unemployed resulting from excessive migration to the cities in the South, have also represented powerful destabilizing forces. 3. A military government took power in November 1965. It seriously en- deavored to tackle some of the most urgent problems in the financial field, but it could not overcome growing internal tensions and a group cilow- ranking officers seized power in December 1967. There followed a period of unstable conditions until, of their own will, the military ended their rule and organized popular elections. in July 1968, Dr. D. Zinsou was elected President by over two-thirds of the electorate. Economic Stagnation 4. Over the period 1963-1966, GDP at constant prices rose only about 8/ and virtually all of this increase took place in 1964. Since population actually grew somewhat more rapidly, per capita income stagnated at a level of about $7$. Exports declined from a peak of CFAF 4.5 billion in 1960 to 3.1 billion in 1963 and 2.6 billion in 1966, mainly as a result of a fall in the sale of groundnuts and above all of palm products which account for three-quarters of exports. Some increase in cotton production and exports took place, however, in 1965 and 1966. The decline of exports is to a great extent attributable to a growing diversion of production from exports into local ccnsumption under the pressure of population growth in the South where already 50% of the 2.4 million Dahomeans live on 10% of the country's area. At the same time, in the Center and the North considerable amounts of useable agricultural land remain uncultivated. Population pressure and the sluggish growth of agricultural production have resulted also in a continuous increase in food imports. 5. The importance of manufacturing is very limited (8% of GDP in 1966, including construction). It consists mainly of enterprises transforming local agricultural raw materials into semi-finished export products like palm oil and palm kernel oil and ginned cottn. These activities ar-e in the hands of public enterprises, whereas the private sector consists of little more than a brewery and a few minor chemical and mechanical enterprises. The relatively - ii - large size of the tertiary sectors is attributable to two typical and distinct aspects of the Dahomean economy. The first is the high degree of monetization of the economy, reflected inthe fact that commerce and transport contribute 25% of GDP not only is external trade, supplemented by transit trade for Niger, proportionately very important, but much of the food produced for local consump- tion enters the market. The second is the high "contribution" of government services to GDP (15%) and the large proportion that public consumption repre- sents in terms of total GDP (23%). These two ratios are among the highest in Western Africa. Financial Difficulties 6. The size and cost of the government sector and its claims on available resources have accounted to a critical extent for Dahomey's difficulties. As in many other African countries, current government expenditures grew considerably after independence, resulting in an average growth rate of over 7% between 1960 and 1966. Part of this increase was due to the unstable political situation, which made any reliable budgetary control impossible and facilitated a rapid increase in the number of civil servants, estimated at 57% between 1960 and 1966. In part, it was also the result of the government's policy of promoting education and other social and administrative services. 7. On the other hand, the government was not able to increase current revenues by more than 4% per annum on the average, already a remarkable achievement in a generally stagnating economy. Rates of most direct and indirect taxes were raised considerably and Dahomey now has the highest taxes among the French-speaking countries in West Africa. In fact, the high level of import and turnover taxes has already resulted in considerable smuggling, particularly with neighboring Togo which is a low-tax country and with which trade across a long land frontier can hardly be controlled. The base for direct taxation remains very limited, although collection could be improved. As a result of all these factors, the current budget deficit, which already existed during colonial times, has increased each year, reaching an average of 28% of total current revenues during the period 1963-1966. 8. About half' of the deficit of the current budget was covered by subsidies from France. The other half was financed through a number of measures.In part these involved in essence forced loans of a rather doubtful nature. Thus the government failed to pay bills amounting to about CFAF 1.8 billion owed to the private sector, and ran up a debt of CFAF 1.8 billion vis-a-vis the French postal services by not remitting the equivalent of private postal check trans- fers to France. The balance of the deficit was financed by short-term advances from the French Treasury, which remained unconsolidated, and by full utilization of the statutory credit facilities offered by the West African Central Bank (BCEAO). Thus, as of M.1arch 1, 1967, almost half of the total public debt of about CFAF 11 billion consisted of unconsolidated short-term debts incurred to cover part of the current deficits of the central government. 9. The rate of domestic savings is low and appears to have fallen from about 5% of GDP in 1963 to under 2% in 1966. This is partly due to the stagna- tion of per capita income, but more largely to considerable net dissavings in the public sector. The overall resource gap has increased and was 12.8% of - iii - GDP in 1966, representing over 85% of total investment. It was covered mostly by the inflow of foreign aid to the public sector, averaging around CFAF 3.8 billion per year, and a French budget subsidy of about CFAF 1.5 billion per annum. The inflow of private capital remained very small. Despite the high trade deficit, external assets have decreased by only 10% between 1962 and 1966 because of these capital inflows. As the bulk of past investment was for projects without immediate financial return, like the Port of Cotonou, and the oil palm plantations, or for social and administrative infrastructure, their impact on short-term economic growth and on government revenue was small. Pr ospects 10. The Five-Year Plan 1966-1970 places emphasis on the reduction of the government's current deficit as much as on the development of productive sectors. The Plan allocates 42% of total investment to agriculture. Indeed, with a market much too small to permit large-scale industrialization at the present time and with no known mineral resources, 1/ the development of the country's good agricultural potential is the only way in the long run to over- come economic stagnation. Since 1962 a sound program for the development of oil palm plantings and associated food crop production has been carved out by SONADER, a public corporation,and with financing provided by FAC and FED. This program is particularly important for developing resources in the densely populated Southern part of the country. For the development of all other agricultural products, however, little was done until 1966 when the government called on three semi-public French development agencies to start a broad and intensive agricultural program which consists mainly of providing extension services to local farmers and stimulating the use of farm implements. This program has already proven effective, notably for cotton, and to a lesser ex- tent, for groundnuts, other secondary oleaginous plants, and associated food crops. 11. If the investment program is implemented as outlined in the Plan, and if agricultural development services improve rapidly, an average annual in- crease of agricultural production of bo up to 1970 and 3.7% between 1970 and 1975 can be expected despite some decline in prices for export products. If account is taken also of the prospects of an expansion of construction and of some non-agricultural industries, total GDP may grow at a rate of 4.6i' per annum between 1966 and 1970. 12. Based on past disbursements of foreign aid and present commitments, it can be estimated that the amount of foreign public funds available over the Plan period will be sufficient to cover almost the entire public investment program. Assuming that political and institutional links with France and the EEC will be maintained, these two sources will continue to provide the bulk of aid and, as in the past, almost exclusively in the form of grants. 13. The government can hardly be expected to deal effectively with all finan- cial problems in the short-run, and particularly to pay all its overdue debts ard balance the current budget. However, it may be able to keep the growth of 1/ Petroleum deposits have been identified, however, in the course of off- shore investigations, in 1968. - iv - current expenditures below 3% per annum, thus reducing public dissavings from CFAF 1.6 billion in 1965 to CFAF 1.1 billion in 1970 (excluding debt service). The government in power in 1965-66 took some drastic austerity measures to check the growth of public expenditure, consisting primarily of a nominal 25% salary cut of its employees followed by an equally high surtax on salaries in the private sector. Some improvement was achieved also in budgetary control. In addition, essential steps to amortize the large amount of unpaid bills was taken by establishing for this purpose a special extra-budgatary fund financed by a new surtax on imports and some local transactions. The present government has declared its intention to maintain these measures. 14. The prospective continuation of budget deficits, an increase in the contractual debt service to CFAF 900 million in 1970 (as compared with some 200 million in 1963-65), and the existence of a large floating debt all pose serious problems. In the years immediately ahead the problems cannot be resolved without a renewal of French budgetary support, a rescheduling or consolidation of part of the short-term debt, and careful control of expen- ditures. It is also clear that the present financial situation and outlook for the next few years make it impossible to envisage any borrowing on commercial terms by Dahomey. Aid will have to be on very soft terms. I. THE CCUNTRY AND THE PEOPLE 1. Bounded by Nigeria to the East, Togo to the West, and Upper Volta and Niger to the North, Dahomey covers an area of approximately b5,000 square miles, stretching north from the Gulf of Guinea to the Niger River for almost 600 miles. The country is generally flat, except for the Atakora mountains in the northwestern part of the country, which rise to elevations of over 2,000 feet. The most important rivers are the Niger River, which forms the border with Niger, the Ouem6, flowing fran its sources in the Atakora for almost 300 miles through the center and the eastern part of the country, and the Mono, which comes from Togo and forms for its last 60 miles the border with that country. The Ou6m6 and the Mono are navigable for small craft for some 60-100 miles inland. A number of lagoons and inland lakes are very important for fishing, less so for transport. No natural ports exist and the new harbor at Cotonou is entirely man-made. 2. The climate is tropical at the coast and becomes a savannah type climate in the north. There are, however, no tropical forests in Dahomey, which is entirely covered by open bushland. In the coastal areas normal rainfall averages between 40 and 50 inches,!/ which is insufficient for coffee and cocoa, and is marginal for oil palms especially so since rainfall varies considerably from year to year and years with far below average rains are relatively frequent. Towards the north the country shades into wooded and open savannah characterized by one long dry season of over six months. Average annual rainfall is nevertheless as high as on the coast except for the western slopes of the Atakora mountains in the northwestern corner, and the plains in the farthest north, where average annual rainfalls do not reach more than about 30 inches. 21 The short rainy season allows the cultivation of plants with a short vegetative cycle only, mainly yamsand sorghum for local consumption and cotton and groundnuts as cash crops. Population 3. Total population is estimated at around 2.L million in 1965, increasing at an annual rate of 2.8% and consisting of a number of different ethnic groups. The south has been in contact with the outside world for a considerable time. It has been the main beneficiary of the establishment of modern schools, first by mission stations and then by the colonial power, and has thus a comparatively high percentage of educated people, but in the north where Islam is predominant the influence of France and the European culture has been small and the literacy rate is low. As a result, Southerners are dominant in the civil service, even within the local administrations in the North. 900-1,300 mm. The two dry seasons of three and two months respectively are short and allow two crops per year for most food crops. 3/ 800 mm. - 2 - 14. According to the 1961 census, L6% of total population are under the age of 15 and only 49% are between 15 and 60 years old. Slightly over 26%, or about 600,000 are of school age, of which 1h2,000, or 24%, are actually in school. Between 1961 and 1965, the number of children in primary schools increased from 97,000 to 131,000, or by an annual average of 7.7%, and in secondary schools from 4,600 to over 11,000 or by more than 24% per annum. Higher education is still very limited: there were less than 1,000 students in 1965. Annual expenditures for educational purposes of the central government have increased from CFAF 1.25 billion in 1962 (20.6% of total annual expenditures) to CFAF 1.7 billion in 1965 (22.4%). These figures exclude, however, the considerable amounts spent on education by local authorities as well as by private and religious organizations. 5. With slightly more than 50 persons per square mile, Dahomey is, overall, not overpopulated. However, over 50% of the population lives in the three southern provinces, which account for only 10% of the total surface of the country. Population density per square mile reaches almost 300, which comes in many places close to the margin of what the land can support without a basic change in agricultural techniques and/or a considerable shift of population, out of agriculture into other economic sectors. In the centre and the north, however, average density is only 32,despite an agricultural potential of the savannah region which could well support a much larger population. Only 13% of the population live in the seven towns with more than 10,000 inhabitants. Porto-Novo, the official capital, and Cotonou, the administrative and economic center, are the biggest towns with an estimated population of 75,000 and 110,000, respectively. 6. The unequal population distribution is more the result of historical reasons than of economic factors: during most of its past history, the belt of savannah countries which stretches in West Africa between the southern border of the Sahara and the northern limit of the tropical forest has been politically more unstable than the tropical south, and was the scene of frequent and destructive wrs by invading tribes. In consequence, there has always been a strong tendency among the inhabitants of these regions to move south out of the main avenues of invasion into relative security, a tendency which was reinforced during and after the colonial period by the establishment of the main commercial and cultural centres on the coast. Thus, the basic attitude among the Dahomean population is still a strong tendency to move south, out of the interior towards the coast, which makes it difficult to envisage any large scale migration from the coast to the center and the north. In addition, such an attempt would complicate intertribal relations and in- volve a difficult process of adapting agricultural techniques appropriate to the coastal region to the different conditions prevailing in the interior. 7. The difficulties created by the hi-' population increase, especially in the South, and the serious overpopulation in large sections of that region have been further aggravated by the return of many relatively well trained Dahomeans, who used to work all over former French West Africa as low and medium-grade civil servants in the colonial administration, and as - 3 - small traders, shopkeepers and clerks in the private sector. Although the availability of these professionals has helped to build up a relatively well functioning administration, it has proven very difficult to incorporate all the repatriates into the local economy. The modern sector of the economy is very limited and its development requires a considerable amount of capital; and it has proved almost impossible to reintegrate the returnees into the subsistence sector. In consequence, the repatriation resulted on the one hand in a considerable overstaffing of the public sector beyond the financial capability of the country, and on the other hand in a serious unemployment problem, especially in Cotonou and Porto-Novo, which in turn added to politi- cal instability. Political Developments 8. Dahomey became independent in August 1960 under former President Maga. The subsequent period of civilian rule (1960-1965) was dominated by the an- tagonism of the three political leaders of three parties based in three regions: Hubert Maga from the north, Sourou Magan Apithy from the former kingdom of Porto-Novo in the south, and Justin T. Ahomadegbe representing the former kingdom of Abomey in the center. The continuous political struggles between these three personalities seriously hampered government activities over the entire period of civilian rule, and thus became one of the main causes for the striking stagnation of the Dahomean economy since independence. Before the elections of December 1960, the three parties were combined into the "Parti Dahomeen de l'Unite" with Hubert Maga as President of the Republic and Sourou Apithy as Vice-President. In October 1963, widespread unrest organized by the labor unions in protest against the government's austerity policy forced President Maga to relinquish the Presidency and to leave the country. To restore order, the army took over briefly under its chief-of-staff Christophe Soglo. A new constitution was approved by referendum in January 1964 and Messrs. Apithy and Ahomadegbe were elected President and Vice-President, respectively, maintaining the one-party system. 9. Increasing antagonism between Apithy and Ahomadegbe led to an almost complete breakdown of the new government within a few months after its forma- tion and made it impossible to solve any of the urgent economic and financial problems of the country. As a result, a coup d'etat in November 1965 forced Messrs. Apithy and Ahomadegbe to leave the country and the army took over control under General Christophe Soglo. First, the new government was com- posed mainly of army officers and civilian technicians, but the ban on former politicians was abandoned by the end of 1966, when several "technicians" left the government and were partly replaced by former cabinet members. 10. In the spring of 1967, a group of petty officers and lower ranking officers formed a Committee of National Renovation 1/ with the aim of exer- cising some control over public administration. Its actions primarily con- sisted of reviewing the financial operations of some government offices and public enterprises. The austerity measures taken by the Government in 1966, such as the imposition of a 25% surtax on all salaries, and the increase in the head tax, caused renewed political unrest; several times the enforcement of taxes resulted in local violence, including the killing of tax collectors. 1/ Comite de Renovation Nationale. In December 1967, a strike in the public sector against the austerity measures resulted in a new coup dletat carried out by lower ranking army officers against their superiors. It ended by the removal of President Soglo and by the formation of a new military government. The military endeavored to open the way to a new civilian government by organizing elections between presidential candidates nominated by them and excluding other former political leaders. However, the participation of the elector- ate was very low (less than one-third) in the April 1968 elections and the president-elect never assumed responsibilities. In July 1968, Dr. Zinsou was nominated as president by the military junta. This time the nominee was strongly confirmed by the electorate on July 28, when he obtained 77% of the votes. Dr. Zinsou took power formally on August 1, 1968 and formed a government mainly of technicians. The formation of the new government was well received both in other African countries, notably those of the Conseil de l'Entente, and in France with which relations had been strained during the period of military rule since December 1967. II. ECONOMIC STRUCTURE AND OVERALL DEVELOPMENTS Structure of the Eccnomy 11. The economy of Dahomey is predominantly rural, disposing of only a very limited industrial sector and virtually no mineral resourses. The aver- age per capita income of between CFAF 18-19,000 (about $75 at the official exchange rate) is low, considerably below Togo's, and corresponding approxi- mately to the level reached in the northern,most underdeveloped, part of the Ivory Coast. Since agricultural production has not grown in line with the high population increase, the average per capita income has slightly fallen over the last years. Agricultural production is oriented primarily toward foodstuffs for local consumption and is tending to lag behind the growth in local demand. Less than one-sixth of agricultural production consists of modern-type export products (mainly oil palm products), so that the taxable part of the economy is small and clearly insufficient to support the oversized government apparatus, which can only exist thanks to a perma- nent French subsidy to the current budget of the central government. The level of private and public consumption is high, reducing national savings to less than 2% of GDP in 1966, so that the volume of local investments depends almost entirely on the level of foreign aid. The balance of foreign trade is negative with exports covering only 30-40% of imports. 12. In 1963 1/ about 48% of GDP originated in agriculture, forestry and fishing. Only somewhat less than 3% originated in industry (including extractive industries, electricity and water supplies). Another 7% came from construction; h2% originated in the various service sectors, including 17% in commerce, 13% in public administrations, and 7% in transport. The major industries are palm oil processing, cotton ginning, and palm kernel crushing. The relatively high percentage attributable to construction in 1963 was due to a considerable extent to the construction of the Port of Cotonou, which was finished in the spring of 1965. 1/ - The last year for which official detailed GDP calculations exist. Details are given in Appendix Table 3. 13. Private consumption is estimated at about three-fourths of GDP. How much of this is satisfied by subsistence production is uncertain, but apparently a large part, even of domestic food consumption, is bought in the market. Public consumption is about one-fifth of GDP, about twice as much as in neighboring Togo. Defence absorbs, however, only about 9% of public consumption, or under 2% of GDP. Total private and public consump- tion absorbed 94% of GDP in 1963 and has probably further increased since then. Accordingly, total savings accounted for only 6% of total GDP and were estimated at only 1.8% in 1966. 14. Gross fixed investment in 1963 is estimated at CFAF 7.1 billion, or 16.7% of GDP, and inventory accumulation of CFAF 200 million, or 1/2%. Thus, in 1963, domestic savings financed only about one-third of domestic capital formation,and in 1966 they amounted to only one-eighth of total investment. 15. The high investment ratio in 1963, and its association with a high consumption ratio, require two comments. The first is that in 1963 foreign assistance, mostly frcm France and FED, attained its peak-CFAF 4.4 billion.2 of which a considerable portion went to the Port. The second is that the estimate for gross fixed capital formation included CFAF 1.4 billion for traditional buildings and CFAF 2 billion for plantations and land clearance, two items often neglected in GDP estimates. Thile the CFAF 2 billion in- cluded substantial amounts of land clearance and planting undertaken by SONADER, 2/ it undoubtedly included also (and quite reasonably) a substantial element of subsistence investments. Even if only the investment of CFAF 1.4 billion in traditional buildings is assumed to have taken place within the subsistence sector, about 20% of GFI and 58% of domestic savings were attri- butable to the traditional sectors. Thus, capital formation has been fi- nanced either within the traditional sector or by small enterprises, or pre- dominantly from abroad. Government has not been a saver. 16. Of the total population of 2,24,000 in 1964, 1.1 million, or 89%, are listed as "active", i.e. of working age (between 15 and 59 years old.3/ Only 29,400 (or 2.8%) are listed as "salaried", somewhat less than half in the public sector. Unemployment and underemployment, on which no figures exist, appear to be important problems. Changes in the Economy 17. Estimates of GDP by sectoral origin exist only for 1963 and 1959. The two calculations, however, are not comparable. They show an annual growth rate in current prices of 4.8% per annum, almost certainly offset for the greater part by price rises. Per capita income is there- fore likely to have decreased. The Mission has made rough estimates for GDP in constant 1963 prices for the years 1964-1966. These estimates suggest that total GDP stagnated in 1964, increased by about 8.5% in 1965 and stagnated again in 1966, resulting in an average growth rate at constant prices of 2.7% between 1963 and 1966. With total population estimated to have increased by 2.8 per year, GDP per capita probably 1/ See Appendix Table 23. 2/ Societe Nationale de Developpement Rural, a public enterprise. j/ See Appendix Table 2. -0- fell between 1963 and 1966; gross fixed investment almost certainly declined after the Port of Cotonou was finished since no new comparable projects have taken its place. Total consumption, however, probably increased faster than GDP, although private per capita consumption probably remained constant, resulting in a sharp fall of the already low domestic savings ratio from 5.7% in 1963 to 1.8% in 1966. Table 2.1: GDP AT MARKET PRICES 1/ (In billion of CFA francs at 1963 prices) Official Mission Estimates 1963 1964 1965 1966 Agriculture 19.9 19.1 20.5 20.8 Manufacturing and Power 1.3 1.4 1.4 1.5 Construction 2.8 2.8 2.8 2.5 Services 12.4 12.0 13.6 13.7 Public Administration 5.4 6.5 7.0 6.8 Total GDP 41.8 41.8 65.3 56.3 Total Consumption 39.4 39.8 43.h -.5 Total Savings 2.L 2.0 1.9 0.8 Total Investments 7.3 6.5 7.0 6.6 GDP Per Capita ('000 CFAF) 18.7 18.1 18.9 18.h 1/ Details are given in Appendix Tables h and 5 18. The implications of these estimates have been confirmed by responsible Dahomean officials, who have characterized the situation as one of rapidly increasing population, falling production and fi- nancial stringency. However, the situation is not hopeless, as will become apparent in the following chapter on Agriculture, but it re- quires unorthodox measures as will be suggested in the budgetary chapter. Sectors of Production (a) Agriculture 19. About half of total GDP originates in agriculture, which employs over 75% of the total male population of working age. Of the estimated GDP (1965) of CFAF 20.. billion attributable to agriculture, CFAF 15.1 billion originat d in crop production. - 7 - CFAF 2.9 billion in livestock, CFAF 1.6 billion in fishing and CFAF 0.9 billion in forestry. 20. The main agricultural products are cassava, yams and corn for domestic consumption, accounting for 70% of the value of agricultural output. A considerable part is commercialized through the monetary sector. Industrial crops account for only 15% of agricultural output; three-fifths consist of oil palm products, one-fifth of groundnuts and the remainder primarily of cotton, coconuts and sheanuts. Between two- thirds and three-quarters of the production from oil palms is exported, mainly in the form of oil, accounting for about 75% of Dahomey's total exports, whereas, the export of groundnuts has fallen to little over one-tenth of total groundnut production, accounting for only 3% of total exports. All other agricultural products together account for 16% of total exports. Cultivation methods for foodstuffs as well as for industrial crops have remained traditional and have hardly improved in the past. Yields are low, especially for corn, groundnuts and cotton, but also for oil palms, and could be doubled and tripled with- out major investments, but with intensive extension services as well as the use of some fertilizers. 21. About 80% of Dahomey's total surface, or approximately 9 million hectares, is usable for cultivation. In the average, only 11% of this surface is presently used, but in the southern three provinces, where the bulk of the population lives, the average land use is between 50-60% and in many regions population density has in- creased so much that good agricultural land has actually become scarce. This has produced a type of land tenure akin to absolute private owner- ship and unlike that prevailing in most other parts of Africa and in the center and north of Dahomey. The few existing plantations belong either to agricultural reseaych stations or to the co-operatives recently formed by SONADER1 for the cultivation of oil palms. - 22. Although there are 500,000 head of cattle in the country and one million sheep and goats, little of this stock is commercially exploited, and urban meat consumption is largely satisfied by imports. Fish is important in the traditional diet and the per capita consump- tion of over 25 pounds per annum comes close to that of the Ivory Coast. About 90% of total consumption is produced locally, mostly by traditional fishing in the lagoons. The opening of the mouth of the lagoon in Cotonou, however, resulted in a serious fall of produc- tion, a problem which has not yet been solved. Modern deep sea fish- ing does not yet exist, but is expected to develop rapidly after the completion of the modern fishing port in Cotonou, hopefully replacing the increasing import of frozen fish. 1/ Societe Nationale de D6veloppement Rural, a Dahomean public corporation. - 8 - INDEX OF AGRICULTURAL PRODUCTION Y/ (August 1952-1954 - 100) 1958 1959 1960 1961 1962 1963 1964 1965 Total Production 77 113 118 126 118 118 122 119 Per Capita Production 68 97 99 102 94 91 92 87 23. Between 1952-1954 and 1961, production increased in step with total population, but since then it has stagnated at a low level and per capita production has fallen to a point where a bad agricultural year can have a dramatic impact on the local food supply. This unsatisfactory trend is mainly the result of the growing over-population in the south and the increasing scarcity of good agricultural land in that part of the country.This resulted initially in a progressive shift towards the culti- vation of basic foodstuffs and away from the production of export crops (mainly oil palm), with the consequence that palm trees were neglected and even cut down to allow the cultivation of corn and cassava, and that hardly any new planting of oil palms took place. At a later stage, overall agricultural production was no longer in a position to grow at the same rate as population, leading to a continuous fall of per capita production. 24. This unfavorable trend could have been changed by the intro- duction of modern production methods through the work of an intensive agricultural extension service. However, agricultural extension work in Dahomey sharply deteriorated after independence; for several years, little activity existed in this field and the few efforts made, like the establishment of compulsory peasant cooperatives, did more harm than good. 25. Since 1962, serious efforts have been undertaken to reverse the adverse brend of oil palm production. In that year, SONADER was established as a public corporation almost entirely run by Dahomean technicians with some technical advice from IRHO 7/. With financial assistance from FAC and FED it successfully planted over 7,000 hectares with oil palms within three years. Due to the long gestation period, its impact on total palm oil production will hardly be felt before the middle of the 1970's. For all other products, however, it was not until 1964 that serious efforts were started to build up a new extension service. Due to the lack of adequately trained local staff,the government called on three semi-public French institutions specialized in the field of agricultural development 2/ to play a leading part in the 1/ Established by USDA, updated by the Mission; regarded as being representative of the general trend. See also Appendix Table 6. Institut de Recherches pour les Huiles et les 014agineux, a French semi-public agricultural research institution. SATEC (Soci4t4 d'Aide Technique et de Coop4ration) CFDT (Compagnie Francaise pour le D4veloppement des Textiles) BDPA (Bureau poirle D6veloppement de la Production Agricole) (continued) -9- agricultural extension work of the country. Effective work, however, was seriously delayed by administrative and technical difficulties and did not start before 1966. By that year each of the three French institu- tions was made responsible for the agricultural development work in one of the three inland provinces, with the task of increasing agricultural output by providing technical advice to the local farmers and by stimulating the use of more effective means of production. Meanwhile, in the south, SONADER is con- tinuing its program of oil palm planting based on peasant cooperatives recently enlarged by the parallel planting of traditional foodcrops. Although little time has passed since the new system has become effective, it has already shown its merits and Dahomey is now endowed with a more satisfactory agricultural development system. However, an effective self- sustaining agricultural program will require increased training and use of Dahomean staff in all agricultural agencies. 26. This new system expresses the determination of the Dahomean Government to concentrate its efforts in the agricultural sector, a fact which is underlined by the high proportion of total expenditure under the 5-Year Plan, 1966-1970, earmarked for agricultural development 1/ and by the growing orientation of foreign aid towards this sector. Uhder these conditions, the long-term outlook for agricultural production is much more positive than the past trend would suggest, and it can be assumed that the good agricultural potential of the country will, for the first time, be systematically developed. In the south, there are good possi- bilities for increasing yields of corn, groundnuts and cotton without major investments even in highly populated areas, and the work of SONADER will increase the production of palm oil as well as of traditional food- stuffs. In the center and the north, a large amount of unused good agri- cultural land can be newly cultivated by improving the traditional methods of production, primarily for groundnuts and cotton, in addition to in- creasing yields on already utilized land. 27. Marketing of the main export products has been gradually taken over by specialized public enterprises, which intervene also in the commercializaticm of corn. These enterprises generally function satis- factorily, but a negative side effect of their intervention has been the withdrawal from the hinterland of most private modern-type commercial companies which used to sell consumer goods but found most of their profit by exporting agricultural produce. Thus, today there are several centers in the interior without a single permanent shop selling durable consumer goods like bicycles or transistor radios, which obviously reduces the incentives for farmers to produce more cash crops. 3/ (Cont'd) A detailed discussion of the modus operandi of these institutions is given in the book of John C. de Wilde "Agricultural Development in Tropical Africa", Volume I, pp. 158-161. 1/ 42% of total public investments. - 10 - (b) Industry, Construction and Power 28. Except for the processing of local agricultural products for export, manufacturing is practically non-existent. The most important industrial enterprise is SNAHDA,l/ a public company in charge of pro- cessing palm oil and palm kernels. Its plants are run efficiently and the company's cash position is favorable. Renewals, however, are needed. There are 5 cotton ginning mills operated by CFDT, which is responsible for the cotton development program in the country. There is one brewery. A government-owned factory for the processing of kenaf is almost completed, but does not appear to be a profitable enterprise. Plans for future investment include the construction of a government- owned groundnut mill, a cement factory, and a textile mill. The execu- tion of these new ventures depends not only on the availability of in- vestment funds, but also on the availability of local raw materials. 29. Construction reached a peak in 1963 when the bulk of the port of Cotonou construction was undertaken; it has declined since and is likely to remain at a low level. Total installed electric capacity was, in 1965, 10.2 MW but is already inadequate to cover the resent demand. At one time, it was expected to provide additional electricity through a joint project with Togo providing for the construction of a dam on the Mono River. Technical as well as economic considerations make the linking of the Dahomean (and Togolese)grids to the Akosombo power plant in Ghana preferable. An agreement between Dahomey, Togo and Ghana has been reached in principle. The project which is now being considered would require external financing. (c) Transport and Commerce 30. There are some 3,800 miles of roads, 400 miles of which are paved. Almost 900 miles are feeder roads, mostly impassable during the rainy season. Although Dahomey is well endowed, by African standards, with roads, the system is in many stretches under-designed and under- maintained. Dahomey and Niger share ownership and management of a rail- way running from Cotonou inland for 380 miles. A considerable part of the railway traffic is from and to Niger. The railway's operations have stagnated at around 70 million passenger km and 50-60 million ton/km a year, not sufficient to cover operating costs at present tariffs. Recently, the railway has benefited from the diversion of Niger's ground- nut shipments from Nigeria to Dahomey, due to Nigeria's political diffi- culties. The port of Cotonou was inaugurated in March 1965 after 5 years of construction, at a cost of 7. billion CFAF francs. Commerce plays an important role in Dahomey and employs a large part of the female labor force. While import trade is predominantly in the hands of foreign com- panies, export trade is increasingly becoming a public sector responsibi- lity. The interior of the country, however, remains badly served with imported goods. 1/ Societe Nationale des Huileries du Dahomey. - 11 - III. TIE BUDGET AND THE PUBLIC SECTOR Structure and Past Development 316 Since the break-up of the Federation of West African territories (A.O.F.) in 1959 shortly before independence, the Government of Dahomev has constantly experienced financial difficulties. It is not possible to determine the exact amount of current expenditures siace the ordinary budget has always included some investment outlays. _ It is, however, obvious that in every year since 1959 total revenues have fallen short of total current ex- penditures by 15% to 20%. Hence, there have been no government savings, and the small amount of government investments included in the budget have been financed mostly by annual French subsidies and by increasing the unconsoli- dated short-term public debt. Since the Government is expected to play an important role in economic development, the complete absence of government savings, which can only partly be replaced by foreign grants and long-term loans, severely handicaps economic growth. 32-. Successive governments have been painfully aware of their financial problems and various solutions have been considered. As early as 1961 a first cut in government salaries was decided, followed by a much more severe cut in 1966. Other reductions in expenditures were planned through shifting more and more responsibilities from the central government to the local authorities. In addition, there were a number of tax increases. The results of all these measures have generally been disappointing, partly because they have not been carried out with sufficient determination. 33.. In part, however, the reason was that the central government has little room for cutting expenditures or increasing revenues, so that it was difficult to achieve the aims of any desirable Itausterity" policy. The most important expenditure items are salaries, which account for about 60% of total annual government expenditures. They could be reduced either by dimin- ishing the number of civil servants and/or by cutting salaries. Both pos- sibilities have been tried by the civilian governments in the past with little success since the political influence of the well organized public labor force bas been strong enough to prevent any serious action in this direction.2J As pointed out before, one such attempt led to widespread political unrest and the fall of the Maga regime in October 1963.3/ An important constraint in raising revenues is the ease of large-scale smuggling from Togo and Nigeria. Increases in indirect tax rates result primarily in increased smuggling, especially from Togo which has tra- ditionally been a low-tax and low-tariff country. In several instances 1/ Estimated at about 8% of total current expenditures in 1966, including an average of about 2% per annum for capital subscriptions in public and semi-public enterprises. See Appendix Table 22. 2/ See Appendix Table 18; except for a minute decline in 1963, the number of civil servants has continuously increased since 1960. 3J The military government was able to impose a salary reduction in 1966, resulting in a 6% decrease of current expenditures in that year, but at the price of serious political tensions, which led to various outbreaks of violence, culminating in a new coup d'etat in December 1967. - 12 - tax increases have actually led to lower tax revenues. As long as no common tax policy is agreed on irth Togo, the possibilities of increasing indirect taxes in Dahomey are limited. The possibilities of augmenting direct tax revenue are, as in most developing countries, not very promising either. 34. The public sector in the narrow sense consists of the Central Government budget, the budget of the Post Office, six provincial budgets, and five local budgets. The public corporations operate outside the normal budgets. They are: the Railway, owned jointly with Niger; the Port; SONADER,1/ the company in charge of oil palm development; SNAHDA2/ the company in charge of palm oil processing; SODAIC_4 an importer of consumer goods; OCAD-/, the export monopoly for certain agricultural products; and a public pharmacy. In addition, several public funds exist, mostly fed by special taxes, which are earmarked for special purposes. The mogt important are the road mainte- nance fund5, the national investment fund 2/, and the stabilization fund for agricultural exports!.; In addition, there is a fund ('A /), responsible for the payment of the accumulated volumWe of unpaid bills and fed by a special tax on imports and local services, and the Social Security Fund to which employers and employees make contributions. :,ot all of the public corporations have pub- lished budgets. For this reason it is not possible to present a consolidatedocd budget for the public sector as a whole. Most of the public enterprises and the special funds deposit their funds with the Tr6sor, which serves as a banker for the entire public sector. 35. Until 1966, the central government published a single budget, including current and investment expenditures. Investments were relatively small, estimated at about 8% of total expenditures. 'The adiiistrative and the cash budgets refer to the same time period, though they are not identical, because cash expenditures under the budget can continue to be made for one month following the terminaticn of the budget year. In 1967, a separate investment budget iras for the first tizie presented, with revenue in the form of a CFAF 200 million advance from SKAMDA to the government. 36. It is not possible to present a consolidated account even for the Government proper since no complete revenue and expenditure figures are available for all local entities. However, it can be estimated that the 1/ Soci6t6 Nationale de D6veloppement Rural. 2/ Soci6t6 Nationale des Huileries du Dahomey. 3/ Soci6t6 Dahom6enne pour le D6veloppement du Commerce et de l'Industrie (66% government, 34% private). 4/ Office de Commercialisation Agricole du Dahomey. 3/ Fonds Routier. T/ Fonds d'Investissement National. 7/ Fonds de Soutien des Produits a 1'Exportation. B/ Caisse Autonome d'Amortissement. - 13 - budgets of the six provinces and five townships amount to roughly 15-20% of central goerve ent revenues and between 10-15% of central government expenditures*M . In order to ease its financial situation, the central government shifted in 1961 a number of responsibilities and some direct tax revenues to the local authorities. Table 3.1: CENTRAL GOVERNMENT BUDGET Revenues and Expenditures of the Central Government (In billion of CFA Francs) 1960 1961 1962 1963 1964 1965 1966 Revenues a .4 4.1 4.5 5.3 5.4 5.7 5.5 Current Expendituresai 5.4 5.7 6.1 6.6 6.8 7.6 7.1 Current Deficit 1.0 1.6 1.6 1.3 1.4 1.9 1.6 a/ Excluding debt amortization, but including a small amount of investments. Current Revenues2/ 37. Between 1960 and 1966, total revenue of the central government increased by 26, , or at an annual average of 4%. During this period, however, some direct taxes were transferred to the local authorities; excluding these taxes, the average growth rate of total revenues of the central government was around 5.% per year. Direct taxes grew by 9% per year; total indirect taxes, except export taxes, increased by an annual average of 6.80. Export taxes decreased sharply over the period and practically disappeared by the end of 1966. An average annual increase of total revenue of between 5-6% achieved in an almost stagnating economy is a major achievement and reflects the determination of the Dahcmean Government to increase its income as fast as possible 38. However, there are several disquieting features in this picture: First, revenues reached their peak in 1965, and decreased in 1966, probably as a result of the completion of the Port of Cotonou. Second, the satisfactory increase in direct taxes is due mainly to a sharp increase 1J See Appendix Table 21. See Appendix Table 16. - 14 - in tax rates by 20-50% in 1962, leaving little room for further increases.1/ Third, the indirect taxes are levied almost entirely on imports. Export taxes represent only about 2% of total indirect taxes in 1966, compared to 10% in 1960. Import tax receipts also appear to have levelled off after 1965. The decrease in export taxes is partly due to a fall of the value of exports of over 40% between the peak year in 1960 and the year 1966. Partly it results from a shift of exports from highly taxed palm kernels to little taxed palm kernel oil after the opening of the palm kernel fac- tory in 1966. 2/ Fourth, the overwhelming importance of import taxes has the result that austerity measures in government which heavily influence local consumption and imports, tend to reduce at the same time government revenues, as happened in 1966. A shift towards taxes less sensitive to imports and local consumption wculd partially avoid this reaction, but is extremely difficult to achieve. 3/ Current Dcpenditures- 39. Budgetary expenditures refer to a period of 13 months. The system is set up to reflect total government spending over this period, independent of the way of financing. It is not a cash budget, since all authorized government expenditures, whether paid in cash or financed through the non- payment of bills, are supposed to be counted as expenditures. However, for several years, ministries have taken advantage of the weakness of the finan- cial control to make purchases and other commitments not provided for in the budget;these "expenditures" are not included in the official expenditure figures and are not even fully known by the Ministry of Finance and the Tr6sor. Thus, official expenditure figures are smaller than the total amount of goods and services consumed by the Government by the amount of unpaid bills not yet recognized by the Tr6sor, but are higher than the total cash payments of the Government by the amount of unpaid bills recog- nized by the Government. Whereas the accounts of the Tr'sor show an accumulated total of outstanding bills of CFAF 1 billion at the end of 1965, the claims of the private sector vis-a-vis the government amounted to about CFAF 1.6 billion at the same date. 1/ Commercial profits are presently taxed at 35% with a minimum of 0.5% of annual turnover, independent of any profits made. Salaries are taxed at 27% minimum, with a maximum well over 50%. 2/ Export taxes on palm kernels are 20.46%, whereas palm kernel oil pays only 4.2% so that a ton of palm kernels pays export taxes of about CFAF 7,000, whereas the corresponding amount of oil (400 kg.) pays only CFAF 960. This difference in taxation reflects Dahomey's competitive advantages for the two products, which are considerably better for unprocessed palm kernels since palm kernel oil is difficult to sell in industrialized countries. It amounts in fact to a govern- ment subsidy towards the government-owned palm kernel crushing plant. 3/ See Appendix Table 17. - 15 - 40. The unrecognized bills will probably never appear in the budget or in the accounts of the Ir6sor. The Government created the Caisse Autonome dtAmortissement (CAA) at the end of 1966 with the responsibility of amortizing this debt with funds derived from a special tax on imports and local transactions, the proceeds of which will be kept outside the budget and the Tr6sor. 41. Between 1960 and 1965 total current expenditures, excluding debt amortization but including some minor investment expenditures, steadily increased at an average rate of slightly over 7% per annum. As a result of the austerity measures, of which the reduction of Government salaries was the most important, total expenditures fell by roughly 6% in 1966 and the current deficit slightly decreased. 42. The incomplete functional distribution of current expendituresd which includes unallocated expenditures with a share of 24% in 1965, shows education as the most important single item. It accounted for 22.4% of total current expenditures in 1965, compared with 20.7% in 1962. Taken as a group, expenditures for general administration and security reach the highest share with over 27% in 1965, compared with 24% in 1962. By contrast, agriculture, the only sector which contributes directly to economic growth, accounts for less than 5% of total expenditures. In accordance with the First Plan, expenditures for social services (educa- tion and health) have increased faster than total expenditures, reaching a share of over 35% in 1965, whereas expenditures for agriculture and public works accounted for only 12% of total expenditures in the same year. The tendency of giving preference to long-term development (education) by neglecting the short-term growth of the economy (agriculture) has re- sulted in an amount of social expenditures beyond the financial capacities of a stagnating economy. Together with the increase in general adminis- tration expenditures, this has contributed to the present financial pro- blems of the Government. The identifiable budgetary subsidy to the railway averaged around CFAF 100 million between 1960 and 1965, in addition to the contribution by Niger of about the same amount. No subsidies for the railway were expected for 1966 and 1967. Financing the Deficit 43. The current budget deficit, excluding amortization, increased by over 55% between 1960 and 1966 from CFAF 1 billion to CFAF 1.6 billion, fluctuating around 25% of total expenditures. It must be remembered, however, that "expenditures" do not include the accumulation of unpaid bills not recognized by the Tresor. Such bills average an estimated CFAF 75 million per year over the past eight years. 44. In discussing the methods of financing the budgetary deficit, the special role which the Tr6sor plays in the French-type budgetary system should be remembered. The Tr4sor is not only the fiscal agent of the central government, but also holds deposits of a number of special 1/ See Appendix. Table 17. - 16 - funds and public or semi-public enterprises. VAhile it is normally not possible to say that the payments into one particular account have financed a particular expenditure, it is possible to state whether the Tr6sor is a net debtor to or creditor of a particular fund. Since for a long time already the Tr4sor has been using all funds deposited with it to finance the current budget deficit of the central government, it is possible to say that the increase in the debtor position of the Tresor towards a particular fund is due to the financing of the current deficit. h. Among the special funds the Road Maintenance Fund and the National Investment Fund are the most important. Both are fed by special taxes and their funds are supposed to be used for special purposes. Among the other depositors the Dahomean postal checking system has been the most prominent as will be mentioned in more detail in paragraph 46. It should be clearly understood that the legal nature of the obligation of the Tresor vis-A-vis the postal checking account (or vis-i-vis any other account) is that of any bank vis-1-vis its creditors (depositors); no treasury bills or other government paper is involved. 46. During the years 1960 to 1966, between 35,0 and 901 of the annual deficit was financed by French subsidies. For the years 1963-1966 detailed information is available on the year-by-year changes of the Tr6sor's posi- tion in relation to the yearly bud t deficit and on the results of the annexed budgets and special funds* Over these four years, the special funds as a group have been in surplus, which has substantially reduced the overall deficit of the current budget. This is, however, not neces- sarily desirable, since it means that funds earmarked for special purposes (mostly road maintenance and investments) were used to cover the operating deficit of the government, or more broadly that the intended expenditure pattern was distorted towards more consumption.2 47. Between 1959 and the end of 1966, the cumulated total current deficit amounted to CFAF 12.2 billion. Of this, CFAF 6.8 billion, or over 5O5, was financed by the French annual subsidies. In addition, CFAF 0.8 billion was financed by surpluses of the annexed budgets and special accounts. Of the remaining CFAF 4.5 billion three quarters were financed by so-called domestic sources, with the rest by advances from the French Tr6sor and the Fonds de Solidarit&, a fund common to the five countries of the Entente, financed primarily by the Ivory Coast./ However, the largest source of "local" financin, 1 See Appendix Tables 19 and 20. One of these funds is the agricultural stabilization fund, and the use of its resources by the Tresor makes it impossible for this fund to reimburse exporters of agricultural products quickly, a situation which certainly does not stimulate exports. To avoid a continuation of this situation, the stabilization fund started in April 1967 to deposit its funds in private banks rather than in the Tresor. 3] In 1966 the Fonds de Solidarit6 was changed into a guarantee fund for foreign investments in the five member countries. - 17 - has been the drawings o.f the Tresor on the postal checking account, in an amount of CFAF 1.5 billion,which was possible onl, because for several years the Dahomean post office had received local funds for transfer to France without carrying out these transfers, thus accumulating a debt of over CFAF 1.8 billion vis-A-vis the French Post Office by the end of 1965. The funds so accumulated by the Post Office were deposited in the Dahomean Tresor. Thus, what is formally and legally a local source of financing is in reality an involuntary advance of the French postal system to the Dahomean Tresor. In addition, the biggest part of unpaid bills are due to subsidiaries of French companies in Dahomey and thus in fact represent advances from the companiest headquarters in France to the Tr6sor in Dahomey. On the other hand, up to 1963 the Tresor extended considerable short-term (4 months) credit to the local private sector by accumulating customs bills, which amounted to over CFAF 600 million by the end of that year. But this was reduced to almost zero in 1964 and has never become important again. L8. In addition to the reported annual subsidies, the French Tresor has twice made special advances to the Dahomean Tr6sor, the biggest in 1965 when the advance of CFAF 870 million was the only major source of financing after all other possibilities had been e.ehausted during the preceding years. In 1966 the deficit was financed mainly by a large advance from the Central Bank, which became legally possible after the former restriction of Central Bank credit to a period of 240 days was extended to 360 days, opening the possibility of renewing these credits at the end of each year. In addition, considerable funds were deposited in the Tr4sor by the social security fund, which had received a substantial and extraordinary back-payment from France during the latter part of the year. At the end of 1966 the total cash in the hands of the Trsor amounted to only CFAF 200 million, or less than 3 weeks of average annual expenditures of the central goverament. Local Budgetsi/ 49. Local budgets depend entirely on their own tax sources for their ordinary expenditures. They do not get any transfers from the central government, but are allowed to borrow from the CCC27 for investments. They are responsible for the maintenance of secondary roads, the construc- tion of primary schools, local maternity centers and dispensaries. They have to contribute towards the operating costs of these schools and dis- pensaries jointly with the central government. The amount of outstanding bills on account of local budgets is negligible except for the public bus company in Cotonou. The local authorities have generally lived within their means and have gradually increased revenues as well as expenditures. The main source of revenue is the head tax (taxe civique) which varies slightly among local authorities. Total debt to the central government 1/ See Appendix Table 21. L/ Caisse Centrale de Coop6ration Economique, a French public institution. -18 - outstanding at the end of 1966 was about CFAF 250 million representing unpaid contributions of the local authorities towards joint projects. Public Investments 50. Until 1967, no separate investment budget was prepared and the small amount of investments of the central government was carried in the ordinary budget. The National Accounts 1/ report public investments for 1963 at CFAF 4.4 billion and public savings at CFAF 1.5 billion. This latter figure, however, is somewhat misleading. It amounts only to one- third of total transfers from abroad to the public sector during that year, which are considered income of the public sector. Although some road maintenance and road construction has been paid out of the current budget, as well as the purchase of cars and other capital goods, it is clear that there has been on balance no savings or gross capital forma- tion out of Dahomean domestic budget resources.2/ 51. The bulk of investments in the public sector have taken place outside the budget and were financed mainly by FAC, FED and the U.S. Appendix Table 23 shows the development of foreign financial aid. All this aid,except the German loan for the palm kernel factory and some CCCE credits, were in the form of grants. Total aid disbursements reached a peak in 1963 with almost CFAF 4.4 billion, but have since con- siderably fallen to under CFAF 3 billion in 1966, due mainly to the completion of the port of Cotonou. 52. Between 1960 and the end of 1966, Dahomey received commitments for foreign financial assistance on grant basis of CFAF 23.8 billion, of which over CFAF 9 billion was from the U.S., and over CFAF 7 billion each from FAC and FED. During the same period, CFAF 18 billion were actually disbursed, over CFAF 10 billion by FAC, about CFAF 5 billion by the U.S. and over CFAF 3 billion by FED. Since the financing of the Port of Cotonou was committed before 1960 but disbursements made mainly between 1960 and 1965, disbursement of FAC funds considerably exceeded new com- mitments, resulting in a sharp fall of the balance of unused FAC funds. In the case of FED and the U.S., however, less than half of the commit- ments were actually disbursed between 1960 and 1966, and at the end of 1966 both aid givers had unused balances of over CFAF 4 billion. The slow use of foreign aid (outside the special case of the port) suggests that project preparation and execution has been a major bottleneck in the past, and that an amelioration of work in these sectors would considerably speed up the use of foreign financial assistance.3/ 1/ Lohmann "Comptes Nationaux de Dahomey, Annees 1962 et 1963", Bruxelles 1967. 2/ In the 1966 budget, about 6% of total expenditures might be con- sidered as investments in the National accounts sense. In addition, the central government has participated in the capital subscription of different public and semi-public enterprises, with an amount of CFAF 550 million during the 5 years 1961-65, or an average of CFAF 110 million a year (Appendix Table 22), which brings total invest- ment expenditures to about 8% of the current budget. 3/ As pointed out in para 103 below, there are good reasons to assume that project preparation and execution will in fact improve over the next years. - 19 - 53. Of the total aid of about CFAF 12 billion disbursed for Dahomey by FAC and FED between 1960 and 1965, details are available for CFAF 9.5 billion.& More than half of this amount was spent on infrastructure, almost all on the Port of Cotonou; agriculture and related activities received less than 10%. German aid consisted mainly of one loan to finance the construction of the palm kernel mill, built in 1964. About three fourth of American aid disbursement was for technical assistance, the rest was Food for Peace. The aid of the other donors goes overwhelmingly for technical assistance in agriculture. Public Debt * 54. The best estimate of the public debt at the time of the Hission was that as of liarch 1967 showing a total public debt of CFAF 10.3 billion, of which CFAF 9.2 billion could be considered "external"l debt in th2 formal sense and the remainder owed to foreign firms operating in Dahomey.--' At least two-thirds of the debt was owed to France7 about half of the total debt (CFAF 4.96 billion) was unconsolidated short-term debt. In addition, there was a supplier credit of CFAF 1.9 billion due to an Italian manufacturer. 55. Information on repayment schedules relates only to the conso- lidated debt vis-A-vis France and Germany. The Xission was unable to obtain the repayment schedule of the supplier credit from Italy. Dis- cussions between France and Dahomey were underway on repayment schedules for the non-consolidated debt. To deal with the unconsolidated debt towards the private sector, the Caisse Autonome dtAmortissement was established in October 1966 and endowed with revenue from a special tax on imports (3) and local services (1%). It is expected that this institution will be in a position to repay between CFAF 250-300 million of unpaid bills per year. At this rate the present volume of unpaid bills will be amortized within 6-7 years. o*. In the past, servicing of the recognized debt has been very small. Even in 1966 itwas estimated to be only CFAF 163 million, which vas less than 1-1/2% of total budgetary expenditures. Debt services to the CCCE will rise to CFAF 75 million in 1974, to which has to be added the service of the German loan in about the same amount. The smallness of the debt service payments reflects the fact that most aid was received in the form of grants, but also that most of the outstanding debt is unconsolidated and therefore not regularly serviced. Conclusions and Outlook 57. The condition of public sector finances is very serious. The Dahomean Government has depended since 1959 on foreign aid, not only for its investments but also for part of the current expenditures, and there is no possibilitycf dmnging this situation in the short run. Until 1 See Appendix Table 24. 2J See Appendix. Table 25. Since this report was written the Government of Dahomey has submitted to the Bank a report on the external public debt as of December 31, 1967 showing a total debt outstanding of CFAF 10.1 billion ($40.9 million); See Appendix Tables 25A and 25B. - 20 - recently, public investments have at least not been a burden to the economy. The setting up of the palm kernel factory, however, has resulted in an erosion of tax revenues2/, and the kenaf factory which is being installed will require major budgetary subsidies for its operations and add substantially to the repayment requirements of the public foreign debt. 58. There is no indication that the productive and taxable base of the economy has increased; at the same time, tax rates are already high compared with Dahomeyls neighbors. The fact that public revenues depend almost entirely on import taxes means that austerity measures will not automatically lead to a correspondingly improved budgetary situation, whereas direct taxes and export taxes cannot be increased in the short run. It is also difficult to see how the composition of expenditures can be changed quickly towards more economic sectors, although every reasonable effort should be made in this direction. This means that the Dahomean budget will not be able to generate surpluses in the foreseeable future. It cannot therefore create the local counterpart funds normally necessary to match foreign aid. At the same time, the 1ission feels that Dahomey has a good potential in agriculture. The problem, therefore, is to realize this potential by increasing production .nd thus broaden the revenue base while, at the same time, reducing the relative tax burden. Efforts have been mnade to red,;ce salaries and to hold in check the growth of civil servants, but the limits of what can be done in this respect are rapidly being approached. These remarks should not be regarded as a criticism of the government, but rather as an analysis of a critical situation which requires energetic and possibly even unorthodox measures. The remedial measure that should, as far as possible, be taken include the following: a) a major effort should be made to increase agricultural output, aind Droductive projects which can be financed from abroad should be developed as fast as possible; b) external financing of new productive projects in the public sec- tor should provide for the recirrent costs related to these pro- jects for as long as the taxable production of the country has not sufficiently increased to permit the coverace of these additicnal. current expenditures by increased current revenues. c) major investment errors, such as the .eiia f,-ctcr,, must be avoided at all costs, d) meanwhile, the current budget s1iould be isolated from new demands and prevented by all means from rising; and every effort should be made to consolidate the debt and reach an agreement uith creditors, private and public, on an acceptable repayment schedule. 1/ See paragraph 37 above. - 21 - The major purpose of such measures would be to allow the economy to grow without siphoning at once all additional production in the form of higher taxes for the day-to-day needs of the government, and to use the increase in current revenues over the next years for the gradual elimination of the current deficit. IV. MONEY AND CREDIT 60. Dahomey is a member of the Franc area and the West African Monetary Union.! The local currency is the CFA franc (CFAF),2/ issued by the West African Central Bank,i and circulating freely within the seven-member states of the UM0A. Full convertibility into French francs at the rate of CFAF 5O for 1 French franc is guaranteed by the French Tresor under an agreement between UMOA and France. There are no reserve requirements for the indivi- dual member countries and the requirements for the monetary system as a whole are very liberal. Monetary circulation is regulated through credit ceilings determined periodically and separately for each member country, and within each member country for each borrower, including the public sec- tor, while total advances to the central government are limited to 10% of last year's tax revenue. Interest rates are uniform within the entire UMiOA with a discount rate maintained by BCEAO at 3.5% since 1956. Varia- tions in interest rates are not used to influence the amount of credit. A. Monetary Developments 61. Monetary institutions in the country comprise a local branch of the BCEAO and three commercial banks, two of which are entirely foreign-owned, while the Dahomean Government has a 5110 share in the third. Specialized development institutions are the Dahomean Development Bank,-4/ of which the Government is the majority shareholder, and the CCCE,5/ the minority partner. There is a branch office of the CCCE, which is, however, not part of the local banking system, but an agent of the French Government. To the above should be add d the Tresor, which operates in many ways like a Bank, the Savings Bank / and the Post Office checking accounts, which collect de- posits but do not lend to the public. 62. The CCCE operates in Dahomey as the main source of long-term financing. Loans to the public sector are made directly by the CCCE to the respective public entities; credits to the private sector are channelled through the BDD, over half of whose resources have been provided by CCCE loans. Most credits to the agricultural sector are in fact financed by CCCE through BDD, which is the only bank in the country active in this field. 1/ Union Monetaire Ouest Africaine (UMOA). 2/ Communaute Financiere Africaine Franc. 27 Banque Centrale des Etats de l'Afrique de 1'Ouest (BCEAO). / Banque Dahomlenne de Developpement (BDD). 5/ Caisse Centrale de Cooperation Economique. / Caisse d'Epargne, closely connected with the postal checking system. - 22 - Money Supply 63. The total money supply between the end of 1962 and 1966 increased by about 15%. Money supply rose between 1962 and 1963 and again during 1965 and 1966. During the first of these two periods a sharp increase in credits to the economy was responsible for the expansion and was accompanied by a reduction in external assets in an amount roughly two-thirds of the increase of credits to the economy. Government operations had only an insignificant impact on money supply during this period. 64. From the end of 1964 to the end of 1966, however, credits to the economy fell by about 10%, or roughly CFAF 500 million. The increase of total money supply was traceable almost entirely to the credits extended by the banking system to the government, particularly in 1966 when the BCEAO made an advance of CFAF 500 million to the Tresor. By the end of 1966 external assets were slightly below the level at the end of 1962, whereas credits to the economy were 10' and total money supply almost 15% bigger than at the end of 1962. This moderate expansion of the money supply took place despite the virtual stagnation of production and exports. 65. The CCCE, as already noted, is a source of credit for the public sector. The Tresor also extends some credit to the private sector by holding customs bills. 1/ The agricultural stabilization fund and other special funds have not participated in the financing of credits to the economy, but, by depositing their cash with the Tresor, have helped to finance current budget deficits. Structure of Credits 2/ 66. On the average, between 70 and 80% of total credits to the private sector are short-term and are used to finance imports and,to a much smaller extent, export operations. Of the remaining 20-30% between one-half and two-thirds are long-term. Rediscounting with BCEAO is not very important. It has never exceeded 25% of total lending and has normally stayed below 20%. 67. Although the purpose of the Dahomean Development Bank (BDD) is to provide long-term credits, the structure of its lending 2 suggests that the demand for long and medium-term credits is small, forcing the BDD to invest almost half of its resources in short-term loans. The small por- tion of credits going into agriculture is primarily due not to a lack of demand but to the difficulties of extending agricultural loans in 1/ Appendix Table 20. Appendix Table 26. Appendix Table 27. Table 4.1: FACTORS AFFECTING THE MONEY SUPPLY (Million CFAF) Situation End of Period March December March 1960 1961 1962 1963 1964 1965 1966 1966 1967 1. Bank Notes and Coins n.a. n.a. 3,080 3,260 3,369 3,307 3,461 3,280 3,320 2. Demand Deposits (Banks and Post Office) 1,940 1,950 2,550 2,630 2,547 2,748 2,619 3,110 2,980 3. Time Deposits (Commercial banks only) 100 100 170 140 214 107 92 70 90 Total Money Supply n.a. n.a. 5,810 6,030 6,130 6,162 6,172 6,460 6,390 Other net items of the Balance Sheet 40 60 43 16 232 230 240 Total assets - total liabilities 5,850 6,090 6,173 6,178 6,404 6,690 6,630 Credits to the Economy 4,130 4,670 5,036 4,737 4,889 4,500 4,980 Credits to Goverment -060 -050 -1 128 228 520 120 External Assets (net) 1,780 1,470 1,139 1,314 1,287 1,670 1,520 Source: BCEAO "Statistiques Ouest-Africaines". IFS. -24 - such a way as to reduce the heavy risks ivolved and to make them acceptable to CCCE and/or BCEA0 for rediscounting,. 68. Interest rates are generally low, in line idth the BCEAO discount rate which has remained at 3.5% over the last ten years, and they are by law the same for all banks. For rediscountable credits rates vary according to borrower and purpose between 4.5 and 6.5% for short- term credits and between 5.5 and 6.25% for medium-term loans; non redis- countable credits will cost 8-8.5% per year. For long-term loans BDD charges from 4% (for agricultural credits) to 10% (for construction of rental housing. B. Conclusions and Problems 69. Membership in the West African Monetary Union limits the individual members' possibilities of carrying out autonomous monetary policies. The economic realities of Dahomey would, however, limit the effectiveness of a national central bank's economic policies in any case. Obviously, a national central bank could allow the Government to borrow above the limits of 10o of the current revenue presently enforced, and could thus offer the Government some additional leeway in its present financial difficulties, but this would very quickly result in a dangerous inflationary situation and in unmanageable balance of payments difficulties, and would hamper rather than aid the long-range economic development of the country. Against these dubious gains, the advantages of the present system are enormous: absence of internal inflationary pressures and of all balance of payments difficulties; full convertibility guaranteed by France; monetary confidence; a generous supply of credit to the private sector at low interest rates; and last but not least, highly efficient management. 70. The supply of funds to the private sector appears to have been plentiful at all times. A major exception is, however, the supply of medium- and long-term agricultural credits, where difficulties of institution building have prevented the Development Bank from taking advantage of the credit facilities available through CCCE and BCEAO. Real limitations exist also in the public sector. The unsatisfactory budgetary situation makes it impossible for the government to raise the local funds necessary to attract foreign financing, or to finance the recurrent costs of such projects. In the immediate future, the problem of public investments can only be solved by financing all investments entirely from abroad. - 25 - V. EXTERNAL TRADE Introduction 71. All figures in this Chapter must be used with great caution since, for several reasons, official foreign trade statistics reflect only part of the foreign trade of the country. Traditional trade with neighboring countries has always been important in Dahomey, especially the export of fish and the import of cattle; it is almost entirely unrecorded. In addition, the traditional low tariff policy of Togo has resulted in a steady unrecorded import of modern consumer goods from Togo. The considerable increases in import and turnover taxes during the last few years have further increased this illicit trade. Very recently, the failure of Togo to implement the OCAM sugar agreement has created a sharp price differential between local sugar prices in the two countries and has resulted in a considerable drop of recorded sugar imports into Dahomey. On the other hand, Dahomey profits from the high import taxes on certain products in Nigeria, and it is estimated that almost all leaf tobacco, 80% of all cigarettes and a high percentage of all textiles, wine and whiskey imported by Dahomey are re-exported unrecorded by traditional trade channels to Nigeria. Although good estimates exist for some goods and some years, it is difficult to estimate the total volume of these illicit movements which has tended to fluctuate with relative ch=Cnes in the t,x rates of the three countries. Balance of Tradei/ 72. The overall balance of payments is in equilibrium, with a large foreign trade deficit financed primarily by a high inflow of foreign aid.j/ Imports are characterized by a large and increasing proportion of consumer goods, whereas the relative importance of raw materials and investment goods is small and has considerably decreased over the past seven years. This is partially due to the fact that during the last years foreign aid started to turn away from financing investment projects (port, roads, schools, etc.), and to put more emphasis on agri- cultural extension work where a high proportion of expenditures is for salaries creating a demand for import of consumer goods. Hore important, however, was the impact of the high deficit of the current budget almost entirely financed by foreign sources.3 Since the current budget has a very high salary component, its (voluntary and involuntary) financing by foreign sources served primarily to pay the salaries of the civil servants which have a high propensity to consume imported goods. The gradual reduction of the current budget deficit parallelled by an increase in local savings could modify the unsatisfactory relation between imports of consumer and investment goods in the future, and would reduce the overall deficit of the foreign trade balance. 1/ Appendix Table 28. 2 See paragraph 83 for details. 2 See the discussion in paragraph 41. - 26 - 73. Except for two or three years, Dahomey's foreign trade balance has always shown an import surplus, financed in the earlier years mainly by large transfers of savings of Dahomean employees 7o rking in other African countries, and later by foreign subsidies to the local adminis- tration. With exports increasing by 501o between 1950 and 1965 and imports growing four times over the same period, the deficit has con- tinuously increased from an average of CFAF 0.7 billion between 1950 and 1953 to almost 5 billion in 1963-1965. Exports in 1963/65 paid for only about 40% of imports compared with an average of almost.70% between 1956 and 1959 and over 80% during the period 1950-1953. The quantities of exports increased by only 10% between 1950 and 1965, while import quantities tripled over the same period. Table 5.1 Recorded Imports and Exports (In Billion CFAF) Average Average 1950-53 1956-57 1960 1961 1962 1963 1964 1965 1966 Imports 2.9 5.6 7.6 6.3 6.6 8.2 7.8 8.5 8.4 Exports 2.2 3.8 4.5 3.6 2.7 3.1 3.3 3.4 2.6 Balance -0.7 -1.8 -3.1 -2.7 -3.9 -5.1 -4.5 -5.1 -5.8 Exportsi/ 7h. Dahomey's export performance has not been satisfactory. This is mainly due to the fact that, over the last 15 years, population and local consumption have increased considerably faster than agricultural production,E so that a growing portion of agricultural output has been diverted from export towards local consumption. This trend was facilitated by the fact that the main export products of Dahomey form at the same time an important element of the traditional diet. A typical example is the export of groundnuts, where an average groundnut production of 25,000 tons during 1957-59 resulted in average exports of 11,500 tons, while in 1964-66 a production of 27,000 tons resulted in-exports of only 3,400 tons since local consumption had increased in the meantime from 13,500 tons to almost 24,000 tons per year. / 1/ Appendix Tables 29 and 30. Z21 In 1965 total agricultural production is estimated at 119% of the average 1952-54, whereas total population had increased to about 137% of the same base years. J/ Appendix Table 31. Part of the increase in local-consumption is- due to an increase in per capita consumption, but most of it is the result of increased population. - 27 - Exports of coffee, cotton and sheanuts, on the other hand, for which no, or little, competition exists between local consumption and export, have not been affected by this trend. 75. Over the last fifteen years, the tonnage of exports increased only by 10% from 75,000 tons in 1950 to 82,000 tons in 1965 but fell sharply in 1966 due to a bad harvest of oil palm products. Exports fluctuated widely during this period, mainly as the result of variations in the export of oil palm products (palm oil, palm kernels, etc.), which accounted in most years for over 3/4 of the total export volume, and which vary heavily from year to year as a result of climatic conditions. Over the last twelve years the export of oil palm products stagnated ,reaching an average level of 62,000 tons during the years 1955-57 as well as during 1964-66. Groundnuts were the second most important export product, with an export share of around 15% in the middle of the 1950's, but fell sharply since and accounted for less than 3% in 1965. The tonnages of coffee and tobacco exports also stagnated over the past twelve years, each accounting for 1-2% of total exports . The export of sheanuts depends on climatic conditions and varied widely during the last years. Both 1964 and 1965 were especially favorable years, but the large exports in 1964 led to a sharp price fall which considerably reduced the export earnings from the increased export volume. Recorded export of fish fell from 2,400 tons in 1960 to practically zero in 1966, but as only a minor part of total fish exports are recorded, these figures are not very meaningful. 76. The value of total e;ports increased by about 50% between 1950 and 1965, or by 2.8% per year. In 1960, exports attained a peak of cFAF 4.5 billion, and in the next two years export earnings fell by 40h to CFXF 2.7 billion partly as a result of a drop in export prices. A recoverr in pricos for oil palm products, as well as an increase in volume, caused exports to rise to a level of betueei CFAF 3.2 and 3.4 billion in the years 1963-1965. In 1966, however, the bad harvest of oil palm products resulted in a sharp fall to below CFAF 2.6 billion, the lowest export figure in ten years. The inauguration of the palm kernel factory in Cotonou at the beginning of 1965 resulted in a shift of exports from palm kernels to palm kernel oil and oil cakes but did not increase the total export volume of oil palm products. For all of the important export products, France remained the most important destination, but durir)g the last two years, the importance of other EEC countries increased.1/ In 1965 over 75% of total exports went to EEC countries, and about 55% to France alone. Recorded exports to other members of the West African Customs Union have been low, restricted almost entirely to palm oil, and have fallen con- siderably since 1961. They now account for about 5% of total exports. Unrecorded exports might increase this figure somewhat. J Appendix Table 33. - 28 - Imports 1J 77. Between 1950 and 1965 imports have increased almost three times in tonnage and four times in value, from over CFAF 2.1 billion to CFAF 8.5 billion, an average annual increase of 9.5%. Table 5.2 Composition of Recorded Imports (In Percent) (By Major Categories) 7 Months 1959 1960 1961 1962 1963 1964 1965 1965 1966 Energy, Raw Mate- rials and Semi- Finished Products 25.4 27.8 20.7 19.4 19.6 17.9 16.7 16.9 14.7 Equipment Goods 23.3 17.2 19.7 15.2 14.4 11.3 12.3 12.2 12.8 Foodstuffs, Bever- 51.3 55.0 59.6 65.4 66.0 70.8 71.0 70.9 72.5 ages and Finished Consumption Goods 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.01 100.01 100.0% 78. Most of the increase in imports consisted of foodstuffs, bever- ages and finished consumer goods. Between 1959 and 1965, imports of those products have increased from CFAF 2.2 billion to over CFAF 6 billion, or at an average rate of 18% per year. Imports of equipment goods, energy, raw materials and semi-finished products were in 1965 hardly bigger than in 1959. The imports of these products had strongly increased in 1960, but had then decreased year after year until 1964 after which date they remained stable at about the level reached in 1959. As a consequence, the share of foodstuffs and other consumer goods in total imports has increased from 51% in 1960 to 71% in 1965 and almost 73% in 1966. Although part of these imports might have been re-exported unofficially to Nigeria, it can safely be assumed that the unrecorded inflow of consumer goods from Togo more than outweighs those re-exports, so that the real share of consumer goods in total imports is likely to be even higher than the official figures suggest. 79. The increasing inflow of consumer goods in the generally stagnat- ing economy of Dahomey is mainly the consequence of the deficit of the Government budget financed predominantly by sources from outside the coun- try. About 60% of current government expenditures is for salaries of civil servants, whose consumption habits are strongly oriented towards imported L/ Appendix. Table 35 and 36. -29 - goods of all kinds, including a high proportion of imported foodstuffs. Over 3% of Dahomey's imports consist of beverages, mostly alcoholic, although beer and soft drinks are produced locally,and another 2-1/2% of canned food. In addition, foreign development aid also tends to increase the import of consumer goods, especially in Dahomey, where a high percentage of foreign assistance is for agricultural extension work as well as for other agricultural projects (oil palms, etc.) in wYhich the salary proportion is high . In such projects salaries tend to be spent to a considerable extent on imported consumer goods, and imported equipment goods and construction materials account for a relatively small share of total costs. 80. The fact that imports of equipment goods stagnated between - 1959 and 1965 and that imports of raw materials and semi-finished pro- ducts (including construction materials) have declined since 1960, although the port of Cotonou was constructed during these periods at a total cost of roughly CFAF 7.4 billion, shows how little investment in machinery and modern construction has taken place in the country during the last eight years, outside that one big project. 1/ 81. The increasing import of rice, accounting for almost 3% of total imports in 1965 and the relatively high import of dairy products point to areas where economic import substitution might be possible. With the eventual exception of construction materials like bricks and some textiles, based on local cotton, few other important sectors exist where import substitution seems economically possible. 82. Imports come predominantly from France 2 with a share slightly decreasing from 58% in 1959 to Sh% in 1965. Imports from other EEC countries increased five times between 1959 and 1965 and their share grew from 5% in 1959 to over 13% in 1965, so that in 1965 total imports from all EEC countries accounted for 2/3 of Dahomey's imports. Recorded imports from member countries of the West African Justoms Union have declined during the past years from CFAF 800,000 in 1961 to OFAF 650,000 in 1965, accounting for less than 7% of total imports in 1965. 83. The statistical basis for determining Dahomey's balance of payments was so incomplete at the time of the Pission that only rough estimates were possible. The IMF has made such estimates for 1964 and 1965.3/ They show an 1/ The next biggest project was the establishment of the oil palm plantations by SONADER, demanding very little imports of machinery and equipment, since land clearance was done by hand. 2/ Appendix Table 34. 3/ IMF, Dahomey 1966 consultation report. Details are given in para- graph 110 (Table 6.6) together with a Mission estimate for 1970. - 30 - import surplus of over CFAF 6.5 billion per year or CFAF 1.5-2 billion more than the recorded deficit shown in Table 5.1. The deficit of the balance of goods and services was roughly CFAF 6 billion in both years. It was covered mainly by an inflow of public capital of approximately CFAF 5 billion net per year, and to a much smaller extent by private transfer payments and by the inflow of private capital totalling about CFAF 1 billion per year. Dahomey's total net position was almost balanced in both years, showing a small deficit in 1964 and a similar surplus in 1965. During 1966, total net external reserves increased by about CFAF 350 million and at the end of December 1966, the part of total external assets of the monetary union imputable to Dahomey reached 20% of recorded imports during the same year. The foreign aid picture has been discussed in Chapter III. VI. PROSPECTS AND PROJECTIONS Development Plans 84. Comprehensive economic planning began in Dahomey soon after indepen- dence with the elaboration of the first Four-Year Plan (1962-1965)1/. This voluminous plan, however, paid little attention to the ability of the existing administrative and planning structures to prepare for and carry through development projects. Efforts to stimulate agricultural production through the establishment of compulsory peasant cooperatives have failed and agricultural production has continued to stagnate and so have exports.2/ The major achievements during the first plan period were: (a) the formation of SONADER, which led to a sharp increase in the establishment of new oil palm plantations from an annual average of under 500 hectares between 1955 and 1962, to over 2,000 hectares between 1963 and 1965, and (b) the con- struction of the Port of Cotonou. The Port is now functioning, but the plantations are still in the investment phase and do not yet add to the productive capacity of the country. Both projects have through indirect effects and import stimulation generated some limited additional income to the government; but overall, the government has not been able to improve its financial situation over the plan period. 85. After the takeover by the army, work on a new Five-Year Plan (1966-70) was started by the Dahomean authorities with technical and Plan de Developpement Economique et Social du Dahomey (3 main volumes and 5 regional annexes) by SOGEP, not dated. 2 The lack of data does not permit to compare planned and real invest- ments. But a comparison of plan targets for total GDP in 1965 with the Mission estimates for the same year shows that real GDP in 1965 was at least 15% below plan targets, mostly because of a shortfall in agriculture and construction, whereas manufacturing and power came close to the forecast. (Appendix. Table 37). The shortfall of agricultural production was especially high for palm oil, cotton and tobacco (between 38 and 50%) and somewhat less for groundnuts (24,). No plan targets had been set for food crops. - 31 - financial assistance from FAC and FED. This Plan 1/ was approved in January 1966 and has since then represented the official guideline for government action in the field of economic development. Its broad object- ives are: a. to arrive within a reasonable period of time at a balanced current budget of the central government by enlarging the taxable base through economic development and by reducing current expenditures, and to start generating some public savings to match foreign financial assistance; b. to consolidate the floating debt of the government, with a view of re-establishing its creditworthiness; c. to increase production, especially ' concentrating government activities (extension services, credit and marketinG) in agri- culture, and by investing heavily in productive infrastructure projects,diminishing as much as possible social and adrinistra- tive investments; d. to lay the groundwork for long-term growth by carrying out basic studies, as well as long-term agricultural projects like palm oil, sugar cane, rice, cotton, etc. and by in- tensifying the cooperation with neighboring countries with a view to creating larger markets for manufactured products. 86. The Yission endorses these general guidelines and the practi- cal conclusions derived from them, especially the heavy emphasis put on agricultural development, to the detriment of social infrastructure which has under the First Plan already reached the limit of what the country can presently support. It agrees that the difficult financial situation of the government is a serious handicap for the future devel- opment of the country, and that it should be tackled primarily by enlarging the taxable base through an expansion of the economy in general and particularly the agricultural sector, where the country has its biggest potential at the present time. As pointed out in more detail in paragraph 97 below, the Mission is less optimistic than the Plan as far as timing is concerned and believes that the envisaged process of changing past trends and of redressing the financial situation of the Government will take more time than envisaged by the Plan. 87. For the period 1966-1970, the Plan projects an average annual increase of 3.8" for agriculture, compared with 1% p.a. between 1963 and 1966. Fishing is planned to grow at an average 5.9, compared with an actual fall in production since 1963; the planned growth rate is based on the development of oceanfishing, and the new fishing port in Cotonou. The entire primary sector of the economy is expected to expand at an 1/ R6publique du Dahomey "Plan de Developpement Economique et Social 1966-1970". Ordonnance No. 1/PR/HCFT du 6 janvier 1966, quoted as "Five-Year Plan 1966-1970". -32 - annual rate of 4%. Based on the planned construction of a few large manufacturing enterprises (cement factory, integrated textile mill) a growth rate averaging around 8" is forecast in the secondary sectors and services are projected to grow by about 3% a year. These sectoral goals would result in an overall annual growth rate of 4% between 1965 and 1970. The 1966-70 Investment Program 88. These increases in production are based on planned invest- ments of CFAF 35 billion for the entire plan period, slightly over CFAF 25 billion in the public sector and almost CFAF 10 billion by pri- vate companies and individuals. Total planned investments of about CFAF 7 billion per year would correspond to approximately 16' of the expected GDP, compared with 17.4- in 1963, and an estimated 14.3% in 1965. The distribution of planned investments is strongly production- oriented, with almost half of total planned investments in productive sectors and only 18Z in social and administrative buildings. Table 6.1 Planned Investments 1966-19701/ Public Private Total % (CFAF Billion) Directly productive investmefts (agriculture, manufacturing, tourism) 12.7 3.9 16.6 47 Productive infrastructure and services (transport, commerce, etc.) 8.5 3.9 12.4 35 Social and administrative infra- structure (urban development, educa- tion, etc.) 4.5 1.8 6.3 18 Total planned investments 25.7 9.6 35.3 100 1/ See Appendix, Table 38. 89. The financing of the public share (CFAF 25.6 billion) of total planned investments is based on three assumptions: a. that the ordinary budget of the central government will be balanced by 1970 and that in the four preceding years the sharply decreas- ing current deficits will be covered by annual French subsidies. This would allow the central government to use the revenues of the National - 33 - Investment Phnd 1/ and of the Highway Fund 2, which during the last years have been used mainly to cover part of the current deficit, for investment purposes; b. that the public enterprises (railway, post office, port, palm oil and palm kernel factories and airports) will achieve yearly surpluses averaging CFAF 250 billion, to be used for investments within these companies; c. that the ordinary budgets of local authorities (de- partments and townships) will develop surpluses of about CFAF 120 million a year for the financing of local invest_qent rams, and that about bOO,000 working days of local labor 2/ at no finandlar cost to the government can be mobilized each year for local development programs. 90. Under these assumptions the public sector is expected to praide savings of nearly CFAF 4.7 billion over the entire Plan period, or slightly less than 20'O of total planned public investments. The remainder is planned to be financed by foreign grants (CFAF 15.5 bil- lion) and foreign loans (CFAF 5 billion). V 91. For the private sector, the Plan foresees total investments of about CFAF 9.5 billion VJincluding some current investments for major maintenance and renewal. Of this total, CFAF 2.9 billion, or 30%, are expected to come from outside the country. Net new invest- ments can be estimated at CFAF 7 billion, 40% to be financed by foreign sources. Main sectors for private investments are manufacturing - (CFAF 2.5 billion, all foreign financed); small machinery for the pro- cessing of agricultural products (CFAF 1 billion); commerce, transport and other services (CFAF 3.6 billion, of which approximately CFAF 2.5 billion maintenance and renewal);and private housing(CFAF 1.5 billion). 92. The Mission projections differ from the Plan in two main points: a. Based on what was known in the middle of 1967, the Mission believes that total investments in manufacturing over the Plan period are not likely to exceed CFAF 1.5 billion, finLnced mostly by public sources, rather than CFAF 4.9 billion foreseen in the Plan. 1/ FondsNational d'Investissement, disposing of a revenue estimated at CFAF 200 million per year, based on a special tax of 2% on all salaries. 2J FondsRoutier, disposing of a revenue estimated at CFAF 250 million per year, based on a surtax of CFAF 6 per liter of gasoline. Estimated value: CFAF 100 million per year. For details see Appendix Table 39. For details see Appendix. Table 42. - 34 - Table 6.2 Summary of Plan Forecasts and Mission Projections Plan Forecasts Mission Projections 1. GDP at constant prices average annual increase 1966-1970 Agriculture + 4% + 4% Manufacturing + 8% +10.5% Services +3% + 5% Government +2% + 2.8% Total GDP +1V% + 4.6% 2. Public Finances Billion CFA Francs in 1970 Current revenue of the central gov. 8.2 7.3 Current expend, of the central gov. 7.9 8.7 Net result of the current budget + 0.3 - 1.4 Net savings of the entire public sector 1/ +0.9 - 0.7 3, Public Investments Billion CFAF, total Plan Period Agriculture 10.2 10.2 Manufacturing 2.5 1.2 Other sectors 12.5 12.5 Total public investments 25.2 23.9 4. Financing of Public Investments Local resources 4.7 2.4 Foreign resources 20.5 21.5 Total resources available 25.2 23.9 5, Private Investments in the Modern Sector Manufacturing 2.4 0.3 Other sectors 7.1 7.1 :/excluding public enterprises but including special funds and local authorities - 35 - b. Detailed projections of central government revenue and expenditure lead to the conclusion that no net savings can be expected from the central government by 1970, and that the public sector as a whole will continue to show a current account deficit, although considerably below the 1963 figure. General Prospects and Mission Projections (a) Expected GDP 93. The remarkable success achieved by SONADER and the regional agricultural extension projects over the past few years and the con- tinuing effort of the Government assisted by the three foreign agri- cultural development companies as well as by SONADER allow some opti- mism in the field of agriculture. The organization of agricultural development work in the center and the north on a regional basis rather than by crops, will have a positive impact not only on the production of cash crops, but on the production of the hitherto stagnating traditional food crops as well. The same will be true in the south for SCHADE is nou following a new polic,r designed to develop oil palm plant- ings and the production of traditional food crops side by side.Therefore, an increase in production is foreseen for traditional agriculture as well as for cash crops. For the period 1966-1970 the Mission foresees an average annual increase in total agricultural production of I7 despite some price falls for export products. This compares with a growth rate averaging little over 1% over the years 1963-66. Manufacturing, half of which is based on the processing of local agricultural products, will be strongly stimulated by the growth of modern agriculture (groundnuts, cotton, oil palm products) and is expected to increase by l0.5D per year if the planned groundnut mill is realized as ex- pected. Assuming that the government succeeds in carrying out its investment program more or less along the lines foreseen in the Plan, construction will increase by 8% per annum after having stagnated and even fallen over the last several years. Services can be expected to grow in accordance with the projected growth in agriculture, manu- facturing and construction. 94. Government salaries are projected to increase by no more than 15% over the entire Plan period. This is a considerable slowdown of the past growth rate, which had averaged over 7% per annum between 1960 and 1965. It presupposes that the Government systematically continues its austerity policy over the entire Plan period, and it is, in fact, a policy target rather than an economic forecast. 1/ Total GDP is estimated to increase by 4.6% per annum, or about 1.8% per 1/The great importance the Mission attributes to a slowing down of the inevitable growth of current budgetary expenditures is stressed again in the paragraphs discussing the financial position of the Government. -36 - Table 6.3 Mission Projection of GDP at Market Prices (In billions of CFA francs) 1965 1970 By Sectoral Origin Estimate Projection Agriculture 20.5 25.0 Manufacturing 1.2 2.0 Power 0.3 0.4 Construction 2.8 4.1 Transport 3.1 3.7 Commerce 8.0 10.6 Other services 2.4 2.9 Government 7.0 8.1 Total GDP at 1963 prices 45.3 56.8 GDP per capita (CFA francs) 18,900 20,900 By Use Private consumption 32.8 725) 39.3 69 2) Public consumption 10.6 23.3)95* 12.2 21.5)90.7 Gross investments: 7.0 15.4 10.1 17.8 modern sector (3.5) (7.7) (6.1) (10.7) traditional sector (3.3) (7.3) (3.7) (6.5) inventories (0.2) (0.4) (0.3) (0.5) Exports -3.4 7.5 6.1 10.7 -Imports -8.5 -18.7 -10.9 -19.2 Total GDP at 1963 prices 45.3 100.0% 56.8 100.0% Total savings 1.9 4.2% 5.3 9.3% private n.a. (6.0) public n.a. (-0.7) - 37 - capita over the period 1966-1970, compared with an average increase of total GDP of 2.5% between 1963 and 1965 and a small fall of GDP per capita over the same period. 95. The Mission forecast of GDP assumes that, except for the reduced estimate for manufacturing, investments in the modern sector will about reach the amounts foreseen in the Plan. This would demand an increase in investments of h% between 1965 and 1970, resulting in total investments of 17.8% of GDP in that year, or about the same share as in 1963. Private consumption is estimated to increase by 20% between 1965 and 1970, but its share in total GDP would slightly fall from 72% in 1965 to 69% in 1970, which is considerably below Togo's but above the Ivory Coast's relative consumption level. Total private consumption per capitamay increase by slightly over 1% per annum from CFAF 13,700 in 1965 to CFAF 14,500 in 1970. In line with the assumed increase in the Governimnt's current budget, public consumption, which is extremely high in Dahomey, has been optimistically assumed to increase by less than 3% per annum compounded between 1966 and 1970. Even so it will still account for over 21% of total GDP in that year compared with under 8% in Togo and less than 14% in the Ivory Coast. The burden of an excecsive civil service will continue to press heavily on the Dahomean economy. Total consuTption is thus expected to decrease from 96% of total GDP in 1965 to 91% in 1970, with a corresponding increase in savings from under 4% in 1965 to over 9% in 1970. It must be repeated that this increase in savings can only be achieved if the central government continuously restrains public consumption over the whole Plan period in order to reduce net public dissavings from almost 6% of GDP in 1963 to about 1% in 1970. The rate of private savings is estimated to remain virtually constant at around 11%. The increased savings rate would reduce the relative resource gap from almost 12% of total GDP in 1963 to 8.h in 1970. In absolute terms, however, the gapIwould hardly decrease - from CFAF 4.9 billion in 1963 to CFAF 4.7 billion in 1970. 96. The longer range economic development of Dahomey, especially in the manufacturing sector, will depend to a considerable extent en the possibilities of creating effective regional economic collaboration. Dahomey is a member of the West African Customs Union, comprising most former French territories in West Africa. Up to now, this customs union has not had a significant impact on interregional trade but it might eventually form the base for developing a larger market and might help to arrive at a satisfactory coordination of industrial development between its member countries. Dahomey is also an associated member of the EEC and as such has the possibility of exporting manufactured products at preferential tariffs and eventually duty free into the Common Market. Up to now, it has not been in a position to take advantage of these opportunities and this will not change as long as the very high production costs in manufacturing cannot be reduced. However, the regional collaboration in the West African 1bnetary Union as described in chapter V has been very effective. A close collaboration with Togo and Ghana is possible in the power sector if Dahomey and Togo implement the agreement to form a joint company to buy electricity from Ghana. This might represent the first real step towards a closer economic and financial cooperation - 38 - with Togo which is vital for Dahomey, especially with regard to the estab- lishmet of a common customs policy to reduce the excessive smuggling from Togo into Dahomey. (b) Financial Position of the Government 97. Between 1966 and 1970 the Mission projects a considerable improvement in the financial situation of the public sector, reflected in the fall of net public dissavings from over CFAF 2,300 million in 1960 to CFAF 670 million in 1970. Contrary to the Plan forecast, however, it seems unrealis- tic to the Mission to expect a considerably reduced current deficit of the central government by 1970. The estimated increase in government revenues by 27% between 1966 and 1970 and in current expenditures by only 15% will reduce the deficit from 22% of current expenditure between 1963 and 1965 to 16% in 1970, but will only slightly reduce the absolute amount from an aver- age of CFAF 1.52 billion in 1963-65 to CFAF 1.44 billion in 1970. This means that the revenues of the special funds (mainly road fund and invest- ment fund) will still have to be used to cover the current deficit and will not be available for investment purposes as foreseen in the Plan. Through the use of these funds, the current budget deficit can be reduced to about CFAF 1.1 billion by 1970. Table 6.4 Mission Projection of the Central Government's Current Position (In Billion CFAF) 1965 1970 real projection Current revenues 5.74 7.3 Current expenditures 7.60 8.7 Deficit of the current budget -1.8T -1.7 Net position of special funds 0.21 0.3 Total current deficit -1. -1.1 Amortization of foreign debt 0.16 0.6 Total deficit of current payments -1.1 -1.7 98. The amortization of the existing public debt will increase from about CFAF 160 million in 1965 and 1966 to CFAF 300 million in 1970, excluding any repayments of unpaid bills and excluding the amortization of the supplier credit to the Kenaf Company, guaranteed by the Central Government. As the servicing of the latter debt will most probably fall on the Central Govern- ment*, amortization expenditures in 1970 will almost certainly reach as much as CFAF 600 million, so that the total need for cash to cover current expen- ditures of the Central Government will amount to roughly CFAF 1.7 billion in 1970. 99. The establishment of the amortization fund 1/at the end of 1966 has created additional extra-budgetary revenue in the public sector of about CFAF 250 million per year. This revenue contributes to the overall improve- ment in the public sector, but is not available to cover the current deficit of the Central Government, since it is kept outside the Tresor to be used * It was learned, after the Mission took place, that the Guarantee Fund of the Conseil de 1'Entente has guaranteed a portion of the Italian loan for the kenaf factory. 1/Caisse Autonome d'Amortissement. - 39 - exclusively for the amortization of the accumulated stock of unpaid bills. Local authorities can be expected to create some surplus in their current operations, available for the financing of local investment projects. Thus, by 1970, the public sector (excluding public enterprises) will show a large deficit in the current budget of the Central Government, some amortization of unpaid bills and some real savings by the local authorities. Therefore, two main problems will arise: the financing of the current deficit (in- cluding amortization), and the financing of public investments. 100. By the end of 1966, the Dahomean Tresor had virtually exhausted its possibilities of financing part of the current deficit of the Central Govern- ment from local resources.l/ Private deposits in the postal checking system have stagnated over the last few years and cannot be expected to increase substantially in the near future, and the floating debt vis-a-vis the French postal checking system cannot be increased any further. Thus no new funds will be available fran the source which in the past financed over one-third of the total net cash deficit of the Central Government since independence. No substantial additional advances from the West African Central Bank are possible since Dahomey has already borrowed up to the legal limit of 10% of current tax revenues. The amount of customs duty bills in the hands of the Government has been sharply reduced in the last few years, leaving little room for the mobilization of additional funds from that source, and the ad- vance from the social security fund in 1966 was only possible because France had made a substantial back payment to the fund in the autumn of that year which is unlikely to be repeated in the future. In the past, the only other major local source was the accumulation of unpaid bills; this, too, is be- coming more difficult since the private sector is less and less inclined to grant credit to the Government. It should in any case be strictly avoided since it increases substantially the prices the Government has to pay for materials and supplies and it is hard to control and thus allows the differ- ent technical ministries to escape budgetary controls. The increasing diffi- culty of finding local financial sources led to a serious shortage of trea- sury funds at the turn of 1966, which could only be overcome by asking for an emergency assistance of CFAF 600 million from a friendly West African country. 101. Although the deficit of the current budget (including amortization) will be smaller in 1970 than in 1965 and only slightly above the average 1963-1966, the virtual exhaustion of local funds useable to cover this deficit increases the need for foreign assistance towards the ordinary bud- get. In 1970 the Central Government will probably need CFAF 1.7 billion of foreign funds to cover the deficit of its current operations, compared with French annual subsidies and advances from the French Tresor which averaged CFAF 0.9 billion between 1959 and 1962 and CFAF 1.1 billion between 1963 and 1966 and which covered about 60% of the deficit of the Central Government. 102. The outlook is thus very disturbing. The relatively low per- centage of total public revenues in GDP of 15.5% /, in 1965 and 1970 seems to suggest that current revenues could easily be increased. As pointed out before, however, this is not so. Dahomey's long uncon- trollable border with a traditional low tariff country heavily restricts 1/ DetailscC the position of the Tre'sor at the end of 1966 are given in Appendix Table 19. Including local authorities, but excluding the special funds. -140 - its freedom to increase indirect taxes. At the same time, the base for direct taxation is small and already well utilized. On the expenditure side, there is little doubt that current expenditures could not be considerably reduced without creating serious political problems and that it will be very difficult to stay within the limits of an an- nual increase of 3% believed by the Mission to be the highest tolerable rate which does not jeopardize the possibility of balancing the current budget in the foreseeable future. Nevertheless, every effort should be made to reduce the number of civil servants and shift them from admini- strative activities in the capital to economically more important acti- vities in the understaffed hinterland. But whatever the Government will achieve in raising revenue and/or reducing expenditures, it would be unrealistic to foresee a considerably smaller need for foreign financing of current expenditures than the CFAF 1.7 billion indicated above, a figure already based on a reduced growth rate of current ex- penditures achieved by strict austerity measures. (c) Public Savings and Investment 103. As shown in detail in Appendix, Tables 38, 39 and 40, the Five-Year Plan foresees total public investments of CFAF 25.7 billion, financed by CFAF 4.7 billion of local resources with the remainder expected to come from outside the country. Taking into account the reduced estimates of manufacturing investments and a slight increase in the power sector, the Mission believes that public investments might reach CFAF 24.9 billion. Of this total, over 42% are in the agricultural sector, mainly for oil palm, cotton and groundnut devel- opment schemes, where the newly established agricultural development institutions allow a faster and better use of foreign aid than in the past; another 25% concern transport projects (mostly feeder roads) which can well be planned and executed by foreign companies to avoid the past bottlenecks in the use of foreign aid. Hence for the bulk of planned investments, planning and implementation should become considerably less of a bottleneck than in the past, although the average volume of planned public investments (CFAF 5.1 billion p.a.) will slightly exceed past public investments (estimated at CFAF 4.4 billion in 1963). 10. Thus the size of the public investment program as foreseen in the Plan will be mainly limited by the amount of available financing. About CFAF 2.4 billion of domestic public savings will be available over the entire Plan period, including CFAF 1.3 billion profits of public enterprises, the remainder being savings of local authorities, including the value of unpaid labor of the local population. 1/ This total amounts to less than 10% of the entire public investment program, leaving an amount of CFAF 22.5 billion, or CFAF 4.6 billion per year to be financed by foreign public sources. 2/ Between 1963 and 1966 1J Appendix Table 39. 2/ The possibility of using domestic private savings in the public sector is almost non-existent. See the short discussion in paragraph 108 thereafter. - 41 - foreign financial aid to the public sector has averaged around CFAF 3.8 billion 1/, of which about COFAF 0.2 billion were going to the private sector through the Development Bank, and another estimated CFAF 0.4 billion of technical assistance 2/ going to projects out- side the Plan, as was also the case for most French non-financial assistance. This left an average of CFAF 3.2 billion of financial and technical aid available for Plan projects, of which CFAF 450 million was in the form of loans. In this average, however, the construction of the Port of Cotonou accounts for CFAF 1 billion, or almost one-third of the total. Since the financing of this large project resulted in average French investment expenditures in Dahomey considerably above the amounts made available to other former French territories in Africa, a continuation of French financial assistance on the same level as during the past few years cannot be taken for granted. In addition to the grants and loans from public sources, the Government of Ihomey has received a supplier credit of CFAF 1.9 billion for the construction of a kenaf factory,-of which about CFAF 250 million p.a. were spent on the average in 1-963-66, bringing the total annual disbursements of foreign funds in the public sector to an average of CFAF 3.45 billion and the average commitments to CFAF 3.8 billion per year. 1/ Excluding French technical, cultural and military assistance, roughly estimated at CFAF 1 billion per year. See Appendix Table 23. 2/ Estimated at one-third of U.S. technical assistance plus Federal Republic of Germany, Switzerland and Israel. - 42 - Table 6.5 Five-Year Plan 1966-1970 and Mission Estimates (In billion CFA francs) Plan estimates Mission estimates Total Total Average Plan Period Plan Period per year Public Investments Agriculture 10.2 10,2 Manufacturing and Tourism 2.5 1.2 Power and Water 1.9 2.4 Transport Infrastructure 6.6 6.6 Social Infrastructure 3.9 3.9 Studies 0.6 0.6 Total 25.7 9 5.0 Expected Shortfall of Fbrds - 0.5 - 1.0 0.2 Total Public Investments 2 .2 23.9 . Financing of Public Investments Local resources: Special funds 2.3 - Local authorities 1.1 1.1 Public enterprises 1.3 1.3 Total 777 2.4 --07 Foreign resourcesl/: FED and E.I.B. 6.0 5.0 FAC and CCCE 8.0 6.0 U.S.A. 1.5 6.5 Other public assistance 5.0 3.0 Supplier credits - 1.0 Total 20.5 21.5 7. Grand total: Entire Plan Period 25,2 23.9 4.8 105. The Five-Year Plan assumes an average annual inflow of foreign capital into the public sector of CFAF [.1 billion or CFAF 20.5 billion for the total Plan period. The Mission reaches a slightly more optimistic estimate: taking into account the high unused balance of PL 480 funds (CFAF 3.5 billion at the end of 1966) which is entirely excluded from the Plan estimates, and assuming an inflow of some additional PL 480 money (CFAF 1.5 billion for the entire Plan period) the mission projection of total contributions from the U.S. exceeds the Plan estimates by CFAF 5 billion, compensating the reduced Mission estimates concerning other foreign sources. In addition, the Mission has taken into account the supplier credit of roughly CFAF 1 billion for the construction of the 1/ For details see Appendix Table 40. - 43 - groundnut mill in Bohicon, which is likely to be realized during the Plan period, and which is justified on economic terms if the problem of groundnut supplies can be satisfactorily solved. 1/ Thus the 14is- sion projects total foreign resources of CFAF 21.5 billion, or CFAF 4.3 billion per year; CFA 1.7 billion on a loan basis. This optimistic figure assumes, however, that the preparation of new projects for foreign financing can be accelerated by making use of the experiences of SONADER and the foreign agricultural development companies. Thus, the total demand for foreign funds for the public sector of 2FAF 4.5 billion per annum only slightly exceeds the probable availability of such funds, necessitating a small decrease of the public investment program of CFAF 200 million per year or CFAF 1 billion over the entire Plan period. This cut of only 4' will hardly influence overall economic growth, as long as it is not made in investments in agri- culture or industry. 106. The continuous high deficit in the current budget clearly precludes on balance any local contribution to match foreign grants or loans, though for some individual projects of public enterprises or local authorities, small local contributions might be envisaged. In its projection the Iission foresees some increase in the use of foreign loans relatively to grants. During 1963-1966, loans represented only about 20'3 of total assistance received for Plan projects; while in 1970 this relation might be as high as 400, due primarily to the increasing importance of PL 480 funds. These loans, however, must be on very concessionary terms. The tight budgetary situation does not permit Dahomey to contract loans on conventional terms, with the possible exception of some self-liquidating projects which will not have to rely on the current budget for servicing and amortization. Unfortunately, the only major commercial type credit in the past for the Kenaf project, will likely not become self-liquidating, whereas the one supplier credit envisaged in the new Plan for the groundnut mill will be of this nature. (d) Private Savings and Investment 107. The Five-Year Plan foresees total private investments in the modern sector of CFAF 9.5 billion. 2/ As pointed out in detail in the description of the manufacturing sector (Annex II) the Ilission projects a smaller investment in manufacturing and assumed total private invest- ments of CFAF 7.5 billion in the modern sector, or CFAF 1.6 billion per year. Traditional investments on the other hand are estimated at about CFAF 3.7 billion a year, resulting in aggregate yearly investments in the private sector of CFAF 5.2 billion. Private savings amounted to CFAF 4.7 billion in 1963 and are assumed to increase to CFAF 6 billion in 1970, so that they will slightly exceed private investments over the Plan period, as 7was the case already in 1963. In the absence of any good balance of payments estimates, the past utilization of the excess savings in the pri- 1/ The supplier credit for the kenaf factory is excluded from these con- siderations since the whole project was financed and implemented out- side the framework of the first and second Five-Year Plans. Appendix Table 42. vate sector cannot be ascertained with any degree of accuracy. Capital transfers certainly were important and will continue to be so; in addi- tion, the accumulation of unpaid bills by the government has resulted in a continuous involuntary transfer of private savings to the public sector, to cover part of the current deficit of the Central Government. 108. Ideally, means should be found to mobilize at least part of the future savings in the private sector to finance public investments. It is very difficult to see, however, how this could be achieved under the circumstances presently prevailing in Dahomey. The by-laws of the monetary union seem to allow long-term loans frcm the private banks to the govern- ment up to 10% of their own private deposits, but this facility is not available when the Central Bank's advance to the Tresor has reached the limit of 10% of current government revenues, as is the case in Dahomey. To place government bonds, either short-term or long-term, voluntarily with the non-bank public at a time when the government is running a high annual deficit on current account and the general economic as well as political situation is far from satisfactory is practically impossible. The intro- duction of a 25% surtax on all salaries in 1966 has already resulted in considerable and continuing political unrest. The establishment of a scheme of compulsory purchase of government bonds might well create very serious political tensions and can hardly be envisaged at the present time. The creation of a government lottery in the spring of 1967 might result in the transfer of some savings from the private to the public sector, but its net effect is likely to be small. (e) The External Accounts and General Conclusions 109. Between 1965 and 1970 exports are projected to increase by over 80% mainly because of the expected increases in the production of groundnuts and cotton. Cotton is expected to be the main, if not the sole engine of growth for exports up to 1970. On the basis of the fast progress currently (1967) observed, the Plan has revised its forecast for 1970 from 14,000 tons (ginned cotton) to 21,000 tons or four to five times the level estimated for 1967. This is an ambitious target but not an impossible one. The growth in quantities, however, will be somewhat ccunterbalanced by an expected decline in prices of around 25%. In 1970, as now, oil palm products will remain the main item in exports. The oil palm program however will not sensibly influ- ence exports before the beginning of the 1970's since the increasing local demand will absorb a considerable portion of the increasing production. As compared with levels prevailing in 1964-65, it is forecast that by 1970 palm oil prices will have declined, perhaps by as much as 206. However, it is expected that the price for palm kernels will remain at around the 1965 high level, while the price for palm kernel oil will also decrease by about 20%. During the same period, imports are projected to increase by only 30%, with consumption goods increasing by less than 20% in line with the projected rise in private and public consumption, and investment goods increasing by over 60%. Although exports will pay for a much higher proportion of imports, the size of the deficit of the balance on goods and services will fall only to an estimated CFAF 4.8 billion in 1970, compared with CFAF 6.1 billion in 1965. The bulk of this deficit will hopefully be covered by the inflow of foreign funds into the public sector projected at a yearly average of CFAF 4.3 billion between 1966 and 1970, whereas the inflow of private capital will -145 - hardly reach more than CFAF 100 million per year. In addition, the expected financing of the current budget deficit primarily by foreign sources is to add another CFAF 1.7 billion to the inflow of foreign funds, so that even the projected sharp rise in amortization payments for the public debt will not endanger the net overall balance of payments, which can be assumed to be positive. 110. Little detailed information on the balance of payments is available. Even the foreign trade figures reflect only part of the real transactions. For this reason the 1ission has not tried to make balance of payments estimates of its owm, but has relied on the IF estimates for 1964 and 1965, the presentation of which has been slightly changed. The 1ission has used these estimates to make its own projections for 1970. Assuming that the entire deficit of the current budget of the Central Government is covered by subsidies from abroad the balance of payments will show a surplus. This surplus however would disappear if the current budget deficit were not completely financed by foreign sources. Table 6.6 Estimated Balance of Payments (In billions of CFA francs) Mission IF Estimates Projections 1964 1965 1970 Current Account Imports -10.4 -10.5 -11.9 EKports 3.8 3.8 6.6 Servic es -0.7 0.6 0.5 Balance of Goods and Services -9 7 -4 Private current transfers -0.4 0.4 0.14 Balance on Current Account 7 "Capital"Account Repayment of public debt -0.1 -0.2 -0.9 Public loans and grants 5.1 5.5 6.o Private capital (net) 0.5 0.5 0.2 Balance on Capital Accounts .* 7*- 3 Net Errors and Onissions -0.3 - - Change in Foreign Assets -0.3 +0.1 +0.9 -46 - The servicing of the public debt is projected to grow con- siderably from the past average of under OFAF 200 million to about CFAF 200 million in 1970, including the servicing of the Kenaf supplier credit/ On this basis it would increase from about 51 of total exports in 1964 and 1965 to slightly over 13% in 1970. However, given the specific arrangements governing the monetary system of the OFA area, the problems of debt service and of creditworthiness in general lie with the Central Government budget rather than the balance of payments. No transfer problem can arise because of the external balance and of the state of "external reserves" as long as the special arrangements be- tween UNOA and France continue. The ratio of service of the external debt 2/ to current revenues is still modest (3% in 1965) but it is expected to exceed 12% in 1970. 1.ith current government ex- penditures exceeding current revenues by almost 25%, the Government cannot at present amortize out of its current budget any debt no matter how small and this situation is not likely to change before the middle of the 1970's. Thus, new loans to the public sector are possible only at v-y acessionalterms and Dahomey is at present not creditworthy for conventional loans since its capacity to service the public debt depends entirely on the amount of current subsidies the Government can obtain from France. This situation is not expected to change much before about 1975. 112. If Government expenditures can be prevented from increasing by more than about 3% per year, the long-term prospects are more favor- able. If current revenues can be raised from the present level of 15.51 of total GDP to 17% in 1975, an increase of total GDP of not more than 3.8% per year between 1970 and 1975 will be sufficient to achieve a balanced budget by 1975, thus freeing the special funds for the financing of public investments. It is not unrealistic to believe that such a growth rate can be achieved between 1970 and 1975, as the mission estimate for the period 1965-1970 shows an average growth of total GDP of 5.3% and the estimate of agricultural production for the period 1970-1975 shows an average increase of 3.7/ for that sector alone. The realistic approach the Government of Dahoney has recently taken vis- a-vis agricultural development by the establishment of a well function- ing agricultural development service and the implementation of real austerity measures leading to a 6% reduction in current expenditures in 1966, are two developments justifying some guarded optimism for the long-term improvement of the economy in general, and the financial situa- tion of the Central Government in particular. 1/ Mission estimates based on the Plan figure plus estimated amortization of the credit for the kenaf factory. 2] Ex,cluding amortization of unpaid bills,which is not the respons- ibility of the ordinary budget, but of the autonomous amortization fund. STATISTICAL APPENDIX LIST OF TABLES Table No. 1 Land Use 2 Estimates of Total and Working Population: 1964 3 Origin and Uses of GDP - 1963 4 GDP by Sectoral Origin: 1963-1966 5 GDP, by Use: 1963-1966 6 Agricultural Production 7 Average Yields 8 Industry and Services:Situation in 1965 of the Modern Sector 9 Investments of Priority Enterprises Under the Investment Code 10 Road Network, Situation 1965 11 Road Transport in Dahomey - 1967 12 Railway-Traffic Statistics (OCDN) 13 Port of Cotonou - Cargo Loaded and Unloaded 14 Port of Cotonou - Import Traffic Summary 15 Port of Cotonou - Export Traffic Summary 16 Central Government Revenue 17 Central Government Current Expenditures 18 Number of Civil Servants 19 Position of the Tresor 20 Financing of the Budget Deficit (Changes during the year) 21 Estimated Local Budgets, 1962-1965 22 Public Participation in Capital Subscriptions 23 Foreign Aid LIST OF TABLES (Continued) Table No. 24 Sectoral Breakdown of Investment Aid by FED and FAC, 1960-65 25 Estimated Debt Outstanding; as of i1arch- 1, 1967, Government and Government Guaraiteed 2 5A B -Ext(rntl Public 1xt - Decede 31, 1967 26 Credits of the Banking System to the Economy 27 Sectoral Distribution of Credits by the Dahomean Investment Bank 1965-1966 (22 months) 28 External Trade 29 Main Exports 30 Exports of Main Agricultural Products 31 Production and Exports of Groundnuts 32 Export Prices 33 Principal Trading Partners for Exports of Principal Commodities 34 Commodity Trade Balance by Areas 35 Imports of Principal Commodities 36 Distribution of Imports by Major Categories 37 First Four-Year Plan 1962-1965: Plan Targets and Probable Achievements 38 Five-Year Development Plan 1966-1970: Total Planned Investments 39 Five-Year Development Plan 1966-1970: The Financing of Planned Public Investments 40 Estimated Foreign Financing of Plan Expenditures in the Public Sector 41 Forecast of Investments in Manufacturing 42 Five-Year Development Plan 1966-1970: Private Investments Table 1: LAND USE (thousand hectares) South Center North Total 1. Not Cultivable Watersurfaces, Swamps, etc. 80 - - 80 2. Classified Fbrests and Game Reserves 67 110 1,981 2,158 3. Usable for Cultivation a. Actually cultivated 318 84 244 646 b. Fallow A 122 34 163 319 c. Unused 585 12642 5,832 8,059 d. Total 1, 4. Total Surface 1,172 1,870 8 220 11,262 5. Unused land in % of total usable land 57% 93% 94% 89% Total usable land per head of rural population (in hectares) 1.0 3.8 9.6 4.3 1/ Theoretical fig-ure, based on total cultivated area. In the south and center the Rission assumed that two years of fallow followed five years of production. However, this estimate, which departs from that in the Plan document, still assumes the practice of rather advanced production techniques, mostly unknown in Dahomey, and the real need for fallow at present is higher. In the north, the iiission accepted the Plan esti- mate of two years of fallow after three years of production. Source: 5-Year-Plan-1966-1970, preliminary edition, technical annexes Table 2: ESTIMATES OF TOTAL AND WORKING POPULATION:1964 (in 000) Males Females Total In % Total Population 1,100 1,144 2,244 100% Under 15 530 500 1,030 46% 5 - lb 310 278 588 26% Adults over 60 69 54 123 5% Of working age 501 590 1,091 49% (15-59) Working on own account in agriculture and fishing 381 99 480 44% Working on own account in traditional handicrafts 5 41 46 4% Working in industry and construction 31 4 35 3% of which: employees n.a. n.a. (7) Working in private services: 35 299 334 31% of which employees: n.a. n.a. (8) Working in public services: 12 2 l4 1% Not working 37 16 182 17% Total population of working age 501 590 1,091 100% Sources: a) Aspects Economiques 1966, Ministere des Finances b) 5-Year-Plan 1966-1970 c) Mission estimates Table 3: ORIGIN AND USES OF GDP - 1963 Current Market Price (Million CFAF) Origin Uses 1. Agriculture, Forestry 19,900 1. Private consumption 31,300 2. Manufacturing and Industries 1,100 2. Public consumption 8,100 3. Electricity, gas, water 200 3. Gross capital formation 7,100 h. Construction 2,800 4. Inventory accumulation 200 5. Transport 2,800 5. Exports 3,L50 6. Commerce 7,300 6. Less Imports -8,350 7. Banks and Insurance [00 8. House Rents & Other Services 1,900 9. Public administration 5,o 10. GDP hl,800 7. GDP hl,800 1/ Only goods, excluding services. Source: G. A. Lohmann, Comptes Nationaux du Dahomey, Brussels 1967, p.1, 18. Table 4: GDP BY j,CTORAL ORIGIN (Dillion CFF at 1963 Prices) Real iission Estimates 1963 196h 1965 1966 1. Agriculture, etc. 19,900 19,100 20,510 20,800 2. Nanufacturing 1,100 1,150 1,200 1,250 3. Electricity, Gas, Jater 200 225 250 275 h. Constraction 2,800 2,800 2,790 2,500 5. Transport 2,300 2,750 3,130 3,125 o. Comerce 7,300 7,010 8,030 8,110 7. Batnks and Insurance 400 390 410 410 8. (a) 7ousi rents 600 620 (ho 660 (b) Oth4r Services 1,300 1,120 1,360 1,360 9. Public Administration 5,h00 6,500 7,020 6,800 10. Gip 41,00 41,785 5,3 40 45,90 11. GDP per capita (in CFft france) 18,700 18,090 10,910 16,380 12. Population (in thousands) 2,235 2,310 2,397 2,46 Source: a) 1963:UoCMtes Nationaux du Dahomey, EC (Lohmann) Bruxelles 1967. b) 196-66:Mission estiiates. See comments in Annex III. Table $: GDP, BY USE (Hillion CFAF at 1963 prices) Real Mission istimates 1963 1964 1965 1966 1/ Private Consumption 31,300 30,050 32,660 3h,180 Public Consumption 3,100 9,720 10,600 10,300 Gross fixed. investments 7,100 6,520 6,300 6,390 Inventory Accumulation 200 - 200 200 xports 3,t450 3,250 3,370 2,590 I.mports - ,350 -7,760 -8,490 -8,370 Total GDP 1,800 41,780 45,3L0 45,290 2/ Gross investment ratio 17.h;O 15.6 15.417' 1.3 GDP at market prices 4l,300 41,780 45,340 L5,290 - Total consurtion 39,00 39,770 b3,V.0 LL,L80 Total savings 2,100 2,010 1,8t0 810 2/ Savinrs ratio .7 L.1! 1.8j Private consumption per capita(in CFAF) 1h,000 13,200 13,700 13,900 1/ Estimates madIe by the IflT on foreign trade and services suggest that the not deficit ofi the balance of goods and services is about CFAF 1 billion above the deficit of recorded foreign trade used in this table, so that private consumpti.n might be underestimnted by about the same amount in all four years. 2/ in percent of total GDP. Source: a) 1963:Comptes N;ationaux de Dahomey, EEC (Lohmann), Bruxelles 19(7. b) 196-196:hission *stinates. See detailed comments in ..nnex III. Table 6: AGRICULTURAL PRODUCTION (metric tons) Industrial (Estimates' Crops 1960 1961 1962 1963 1964 1965 1966 Palm kernels 61,300 42,900 47,000 50,500 56,000 53,300 40,000 Palm oil 42,000 36,000 35,000 32,000 30,400 30,800 24,000 Groundnuts 32,600 22,300 29,000 28,700 24,400 29,000 27,000 (unshelled) Cotton (raw) 4,800 2,500 4,800 4,700 3,800 6,700 9,200 Tobacco 900 750 800 1,000 420 700 600 Coffee 1,300 1,950 1,300 1,000 1,300 900 800 Copra l/ 350 1,250 n.a. 3,000 n.a. 2,500 (000 metric tons) Food Crops Corn 197 220 222 206 228 218 Sorghum, Millet 71 68 59 70 63 65 Rice 2.1 0.7 0.7 0.9 1.0 1.4 Cassava2/ 970 1,200 1,000 1,200 1,000 930 Yams 589 614 494 496 553 540 1/ Data not reliable. 2/ Overestimate. Data was to be revised in 1967. Sources: a) Ministry of Agriculture b) 5-Year Plan 1966-1970 c) Ministry of Economic Affairs Table 7: AVERAGE YIELDS (kilo pur hct,-ro) 1/ 1963 Possible- Food crops Cassava 5,300 8,000 Yams 8,700 10,000 Corn 510 1,500 Sorghum 580 1,200 Rice 410 1,000 Industrial crops Groundnuts 360 1,200 Cotton (Allen) 400 1,200 Tobacco 330 500 1/ Without major investments, but with intensive extension services as well as some fertilizer. Sources: a) Department of Agriculture (rapport annuel 1965) b) Research Institutes (demonstration plots) Table 8: INDUSTRY AND SERVICES - SITUATION IN 1965 OF THE MODERN SECTOR Number of Number of New Investments in 1965 Turnover Exports No. of Salaries Enterprises Plants BuildinEs Equipment Machinery Total (Mil.CFAF) MiFA)Employees Raid in '65 (Million CFAF) (Mil. CFAF) Manufacturing and Power Processing of agricultural products and production of foodstuffs & beverages 7 19 321 79 6 L06 2,181 & 1,bL1 I 984 190 Mechanical & electrical industries 3 h 4 - 3 7 69 12 34 20 Chemical industry 3 3 - - 12 12 227 82 80 27 Printing L 5 b 1 9 Lb 52 - 89 10 Miscl. manufacturing (incl. power) 6 8 4 3 5 12 5hh1k! 22 297 73 Total Manufacturing & Power 23 39 333 83 35 451 3 073 1,530 1,L84 320 Construction 1_ y17 7T _3FT __77 n.a. 1 303 Services Transport 12 46 101 106 32 239 2,137 n.a. 2,042 608 Import-Export Trade 42 91 172 59 111 342 13,710 n.a. 1,789 606 Local Trade 46 69 5 12 17 34 1,537 n.a. 380 113 Banking 3 4 - 2 1 3 277 n.a. 125 69 Insurances 5 5 - 1 1 2 207 n.a. 28 17 Miscl. Services 3 3 - 1 - 1 118 n.a. 48 25 Total Services 111 162 72 179E6 n.a. 14,12 Grand Total 150 273 625 292 233 1,150 22,354 n.a. 7,019 2,061 3/ Of which: processing of oil palm products turnover CFAF 1,180 million; cotton ginning: turnover and exports CFAF 140 million. 2/ Including railway. F Of which paid to the 336 non-African employees: CFAF 563 million. Of which: electricity CFAF 98. Source: Recensement des Entreprises by Direction de la Statistique, Cotonou, December 1966. Table 9: INVESTM4ENTS OF PRIORITY ENTERPRISES UNDER THE INVESTMENT CODE Date of Total Investments Agreement December 1965 Employees (Million CFAF) Manufacturing Palm oil and palm kernel processingl/ 1963 1,500 240 Beverages (beer, soft drinks) 1961 600 180 Construction material 1962 34 76 Construction material 1963 25 27 Construction material 1964 24 20 Stationery 1966 35 33 Soap factory 1963 572 60 Jute sack factory 1965 4 1h Automobile assembly plant 1965 65 46 Radio assembly plant 1963 25 22 Total manufacturing 10 enterprises 2,884 718 Commerce Import and distribution of petroleum products 1962 178 25 1963 300 44 Total commerce 2 enterprises 478 69 Tourism2/ 1962 267 83 Grand Total 13 enterprises 3629 870 1/ 100% government. / 83% government. Source: Haute Commissariat au Plan et au Tourism. Table 10: ROAD NETWORK, SITUATION 1965 Category Responsible Agency Miles Km. National highways: paved Public Works Department 400 640 unpaved Public Works Department 1,850 2,960 Total 2,250 3,6oo Local roads Regional and local authorities 720 1,150 Feeder roads None 870 1,40 Total 3,840 6,150 Source: Department of Public Works. Table 11: ROAD TRANSPORT I21 DAIICMEY - 1967 (motor vehicles) A. Estimate of ton-kilometers Tons, Average Annual Vehicle Average Load Number of km. in Ton-km. Type Capacity Factor, % Vehicles Dahomey (millions) Pickup 1.5 50 1,000 24,000 18 Truck 6 60 500 30,000 54 Truck 10 70 350 40,000 98 Truck 16 75 150 40,000 72 Total 242 B. Estimate of passenger-kilometers Seats, Average Number Annual Passenger- Vehicle Average Load of km. in km. Type capacity Factor, % Vehicles Dahomey (millions) Private passen- ger automobiles 5 40 4,000 10,000 80 Taxis and station wagons (Peugeot ho) 5 60 2,500 40,000 300 Microbus (Renault 1400 kg) 16 50 800 30,000 192 Motorcycles 1 100 500 10,000 5 Motorbikes 1 100 1,000 5,000 5 Police, military, etc. 4 50 200 7,500 3 Total 585 Sources: a) Mission Estimates; b) Vehicle registration data. Table 12: RAIDJAY-TRAFFIC STATISTICS (OCDN) (millions of units) Passengers Goods Year number pass.-km tons ton-km 1960 1.22 71 0.20 54 1961 0.95 66 0.50 106 1962 1.41 73 0.89 160 1963 1.51 79 0.95 168 1964 1.46 80 0.25 58 1965 1.h 76 0.13 65 1966 1.30 70 0.16 57 1967 1.32 71 0.25 90 Notes (a) In 1961, 1962, 1963 heavy tonnage of stone was hauled for construction of the port of Cotonou. (b) Figures for 1967 are official forecasts. Sharp increase in tonnage consists mostly of groundnuts from East Niger (50,000 ton increment). Source: OCDN Table 13: FORT OF COTONOU CARGO LOADED AND UNLOADED ('000 tons) Imports Exports Total Wharf 1/ 1955 226 1956 256 1957 248 1958 265 1959 241 1960 179 126 305 1961 161 117 278 1962 176 96 272 1963 186 100 286 1964 161 113 274 Wharf/Port 1965 247 104 351 Port 1966 265 104 369 1967 2/ 265 125 390 1/ Excluding liquid fuels, handled through Porto Novo. 2/ Mission forecast. Source a) Europe/Outremer July 1965. b) Port Authority. Table 14: PORT OF COTONOU - IMPORT TRAFFIC SUMMARY (tons) Liquid Alcoholic Construction fuels beverages Foodstuffs Salt Sugar Cement?/ Materials Miscellany Totals 1960 2,595 3,462 15,93 11.,522 7,938 76,445 13,99h 46,779 178,678 1961 245 2,840 11,163 9,774 7,00 76,237 8,649 44,664 160,972 1962 63 3,767 22,829 11,034 11,61h 72,624 7,010 47,00 175,981 1963 1,012 3,65 15,7h 10,636 12,190 80,96h 11,971 49,528 185,699 1964 813 3,250 10,452 10,858 6,6L1 71,261 11,085 [2,340 160,700 1965 72,967 4,215 25,737 10,041 8,665 72,357 21,082 32,262 247,326 1966 86,921 4,733 32,948 12,122 11,122 71,148 1,853 31,h21 265,268 1967 90,000 5,000 38,000 12,000 13,000 60,000 10,000 37,000 265,000 2/ Prior to 1965, liquid fuels were handled through Porto Novo. 2 Cement imports will drop beginning in 1967 as Malbaza (Niger) cement factory enters into production. J Figures for 1967 are Mission forecasts. Source: Port Authority Table 15: PCRT OF COTONOU - EXPORT TRAFFIC SUMMARY (tons) Vegetable Palm Caster Shea oils kernels Groundnuts Coffee Cotton beans nuts Kapok Miscellany Totals 1960 15,891 63,453 35,633 826 2,171 986 862 LL 5,742 125,608 1961 11,536 48,461 61,214 2,272 1,229 642 4,593 55 7,067 117,069 1962 9,417 b4,803 31,0b4 1,885 993 273 1,180 26 6,551 96,172 1963 9,561 49,345 36,793 1,079 2,179 - 963 - 10,610 100,530 1964 13,793 57,313 19,470 1,105 2,479 32 8,665 18 9,960 112,835 1965 31,134 16,543 18,225 882 1,340 182 4,761 18 31,000 104,085 1966 30,482 8,430 29,465 77h 2,747 219 4,70h 6 27,127 103,954 1967 I/ 29,000 7,000 70,000 500 3,200 200 1,100 11,000 125,000 1/ Figures for 1967 are Mission forecasts. 2 In 1967 Cotonou will handle groundnuts from East Niger which normally are exported through Lagos. Source: Port Authority. Table 16: CENTRAL GOVERNMENT REVENUES (Million CFAF) 1960 1961 1962 1963 1964 1965 1966 Direct Taxes 780 4o5 52 625 653 671 670 Income taxes (360) (301) (409) (495) (502) (557) (630) Other direct taxes (420) (lob) (11) (130) (151) (1) (40) Indirect Taxes 3,040 3,1U6 2,987 3,701 h,05h 4,266 4,079 Import Taxes (2,1h0) (2,125) (1,969) (2,558) (2,741) (2,990) (3,021) Export Taxes (30) (311) (217) (226) (2W2) (155) (82) Internal excise taxes (510) (631) (682) (796) (89L) (887) (739) Other indirect taxes (50) (79) (119) (121) (177) (234) (237) Registration and Stamp Duties 80 89 107 9h 84 94 106 Total Tax Revenue 3,900 3,6h0 3,618 b,420 4,791 5,031 4,855 Public Property and Services ) 309 315, h08 288 309 ) 470 310 Miscellaneous Revenues ) 1hh 206 61 177 188 Transfers from Local Budgets 10 202 17h 127 181 243 180 Liquidation of Ex-Federation (AOF) - Le 20 - - Total Non-Tax Revenue 80 512 867 868 650 708 677 Total Ordinary Revenue h,380 4,152 4,485 5,288 5g14l 5,739 5532 Source: Dahomean Tr6sor. Table 17: CENTRAL GOVERNMENT CURRENT EXPENDITURES (Million CFAF) Percent 1960 1961 1962 1963 1964 1965 1966 1962 1965 Presidency, Parliament, Supreme Court 206 248 261 301 3.h L.0 Justice 80 96 107 120 1.3 1.6 Foreign Affairs 117 185 186 210 1.9 2.8 Interior and Security 1,07h 1,185 1,339 1,431 17.7 18.8 Finance, Economics, Planning 350 470 506 539 5.8 7.1 Labor and Social Affairs 50 19 63 66 0.8 0.9 Agriculture 260 287 355 367 4.3 L.8 Education 1,254 1,315 1,5621/ 1,7051/ 20.7 22.4 Public Health 773 780 842 982 12.8 12.9 Public Works (incl. maintenance) 54b 500 519 561 7.3 7.4 Not allocated expenditures and subsidies 1,456 1,520 1,098 1,31L 24.0 17.3 of which: subsidies to the railway (133) (115) (58) (100) - (65) (0.9) (0.9) subsidies to the post office n.a. n.a. n.a. (150) (50) (50) - (0.7) Total current expenditures 5,00 5,743 6,064 6,605 6,838 7,596 7,120 100.0 100.0 Debt amortization 50 32 13 118 40 166 163 Total expenditure of the Ordinary Budget 5150 5,775 6,077 6,723 6,878 7,762 7,283 of which: salaries n.a. 3,082 3,267 3,503 b,279 4,563 L,454 " Including Youth, Sports and Tourism x Estimate Source: a) Ministry of Finance and Tr6sor; b) IMF 1966 Consultation Report. Table 18: NUMBER OF CIVIL SERVANTS Real Maximum Budgetary Allowance Number Central Government 1960 1961 1962 1963 1964 1965 1966 1967 July 1965 Presidency, Parliament, Supreme Court 155 215 223 245 440 1426 356 311 443 Justice 156 177 170 229 215 226 237 238 229 Foreign Affairs - 65 67 123 154 138 144 141 106 Interior and Security 2,101 3,016 3,587 2,965 3,053 3,116 3,294 3,287 2,859 of which : Army and Mobile Police (1,150)12,092) 2,085) (1,646) (1,762) (1,771) (1,933) (1,957) (1,782) Finance, Economics, Planning 658 678 844 1,004 1,047 1,113 1,331 1,310 1,165 Labor and Social Affairs 79 81 7h 97 156 184 85 83 132 Agriculture 581 652 763 806 842 852 756 747 781 Education 1,656 2,072 2,036 2,202 2,573 3,008 3,167 3,349 2,612 Public Health 1,822 2,044 2,096 2,063 1,873 2,085 2,148 2,164 2,024 Public Works 612 573 646 707 691 733 732 708 685 7,820 9,573 10,506 10,h14 11,044 11,881 12,250 12,338 11,036 Non permanent workers in agriculture n.a. n.a. n.a. 88 225 117 839 696 235 3/ Local Authorities (provinces, towns) 1,829 Public Enterprises: Post Office 785 Railway 1,238 Port 159 Airports 1UL GRAND TOTAL 15,426 Including Garde Republicaine 2/ Excluding non permanent workers in agriculture 7/ Figure for January 1, 1966 Source: a) Budgets of the Central Government. Table 19: POSTION OF THE TRESOR Average End of End of Changes Deficit of the Central Government 1966 1962 1959-1962 (In millions of CFAF) Cumulative Deficit of the Ordinary Budget 12,177 5,529 1,382 Cumulative French Annual Subsidies 6,827 3,266 816 Cumulative cash deficit of the OrdiZary Budget -5,350 -2,263 566 Accumulated net unclassified Revenues & Expenditures +266 +36 +9 Net result of the Special Budgets and Special Funds +585 +297 +74 Net Cash Deficit of the Central Government -4 499 -1,930 -483 Financing of the Cumulative Deficits Domestic Sources: Accumulation of short-term debt vis-a-vis the private sector 1/ -946 -589 147 Drawing on postal checking deposits -1,590 -981 245 Advances from BCEAO -505 - - Portfolio of customs duty bills 109 563 -140 Drawing on social security funds -262 - - Foreign aid projects accounts 57 -9 2 Other domestic sources -228 -487 122 Total domestic sources -3,365 -1,503 376 Foreign Sources: Accumulation of short-term debt vis-a-vis the French Treasury -1,073 -200 50 Fonds de Solidarite -260 -260 65 Liquidity Position: C/a with domestic branch offices 229 -136 34 C/a with French Treasury -15 h7 -12 Sight liabilities -103 -115 29 Cash 88 235 -59 Total liquidity position 199 31 -8 Total financing -4 499 -1,932 483 1/ Unpaid bills. Source: a) Comptes du Tresor; b) JF 1966 Consultations Table 20: FINANCING OF THE BUDGET DEFICIT (Changes during the year) (million CFAF) Average Deficit 1959 1960 1961 1262 1963 1964 1965 1966 1963-66 Current Deficit of Ordinary Budget 1,020 1,591 1,579 1,317 1,399 1,857 1,588 1,50 Amortization of public debt 50 32 13 118 40 166 163 122 Total Deficit of Ordinary Budget 1,146 1,070 1,623 1,592 1,435 1,439 2,023 1,751 1,662 French Annual Subsidy 906 900 460 1,000 1192 765 754 850 890 Total Cash Deficit of Ordinary Budget240 -170 -1,163 -592 -243 -674 -1,269 -901 -772 Unclassified revenues and expenditures -215 23 23 399 58 Net result of Special Budgets and Special Funds -108 11 185 200 72 Net Cash Deficit of Central Government Operations -566 -640 -1,061 -302 -642 Financing Domestic sources Deferment of payments to private sector 1/ 63 81 151 62 89 Drawing on Postal Checking Deposits 605 471 -162 -305 152 Advances from BCEAO - - - 505 126 Portfolio of customs duty bills -76 591 21 -82 114 Drawing on social security funds - - 20 242 65 Foreign aid project accounts -32 -52 46 -28 -16 Other domestic sources -164 7 -38 -64 -65 Total domestic sources 396 1,098 38 330 465 Advances from French Treasury - - 873 - 218 Liquidity Position (increase -) C/a with domestic branch offices 73 -520 110 -28 -91 C/a with French Treasury -16 137 -35 -24 15 Sight liabilities -31 -7 -6 32 -3 ,ash 143 -68 80 -8 37 Total liquidity position 17 - iT9 -2T -2 Total Financing 565 6ho 1,060 302 641 1/ Unpaid bills Sources: a) Comptes du Tr6sor b) IMF 1966 Consultations Table 21: ESTMRATED WCAL BUDGETS, 1962-1965 (Million CFAF) 1962 1963 1964 1965 1) 4 Departments and 3 Towns Receipts - 663 b) 78 b) 849 b) Expenditures - 603 b) 695 b) 827 b) 2) Estimated Total for all 6 Departments and 5 Towns Receipts 854 a) 782 a) 1,000 c) 1,200 c) Expenditures 830 a) 57 a) 1,000 c) 1,200 c) Sources: a) G. A. Lohmann, Comptes Nationaux du Dahomey, p. 38, Brussels, 1967. b) Government of Dahomey, "Exercice". The Departments missing are Ouem6 and Zou. The towns missing are Abomey and Porto Novo. c) Rough Mission guess, on basis of proposed budgets as given in Annuaire Statistique 1965, Direction de la Statistique, Cotonou, p. 132/133. Table 22: PUBLIC PARTICIRATION lil CAPITAL SUBSCRIPTIONS (Million CFAF) Central Government In Cash In Kind Total Others Total 1961 273 1/ 438 1/ 711 10 721 1962 - 24 24 20 44 1963 1 - 1 19 20 1964 - - - - - 1965 275 2/ 12 287 16 303 Total Period 549 474 1,023 65 1,088 1/ Mostly SO'NADER and SNAHDA. 2/ Mostly SODAK (kenaf). Source: Conjuncture Ouest Africaine 139 April 1967 by BCEAO. 1/ Table 23: FOREIGN AI-N (Million CFAF) I. Grants 1960 1961 1962 1963 1964 1965 1966 FED Uomitments 500 1,571- 1,865 713 607 922 1,245 Disbursements - 359 470 706 737 898 Unused Balance 500 2 3,577 3,820 3,721 3,906 4253 FAC Tuiteents 756 1,162 582 1,780 985 822 1,162 Disbursements 1,113 1,376 1,623 2,621 1,325 1,548 530 Unused Balance 4,081 3,867 2,826 1,985 1,645 919 1,5 USA Uomitments - 1,402 2,310 1,066 1,364 1,487 1,479 Disbursements - cc o,/ 1 0o/! 1 2O 0 1,070 Unused Balance - 1,352 ±326*/ 3j328± / 3 979/ 38 FRG Disbursements 1 1 19 3 28 24 19 Switzerland: Disbursements - -- n.a. n.a. 17 18 Israel: Disbursements - 1n.a. 100 65 Rep. of China: Disbursements - - n.a. n.a. 70- 50 Total Disbursements 1,114 1,427 2,401 4,094 3,059 3,626 2 3650 II. Loans -O.*E o*/ 1,0*/ oo*120 I 0 ST dbursements - n.a. 450- 280 n 223 227 285 FRa Disbursements - n.733 - - III. Grand Total :- Total Disbursements 1,114 1,427 2,851 4,374 4,015 3,853 2193 1/ Excluding French technical, cultural and military assistance, estimated at CFAF 1.3 billion in 1965 and cFAF .9 billion in 1966. 2/ Of which Food for Peace alone is CFAF 3,553 million. */ Estimate. Sources: a) FED: TConjoncture Guest Africaine" No. 1,39, April 1967 by BCEAO. b) FAC andi CCCE: CCCE "Rapport d'Activit6s 1966" and BCEAO above. c) USA: "US Overseas Loans and Grants" by UAID and BCEAO above. d) Others: BCEAO above. Table 24: SECTORAL BREAIDOIN OF INEST1ENT AID BY FED AD FAC, 1960-1965 ( iUion CFAF) Agriculture, etc. 1,633 Ineral Prospection 63 later and Services 888 Infrastructure, including transport 5,287 (of which Port of Cotonou) (4,594) Telecommunications 119 Public Health 710 Education 280 Rural and Regional Development 109 Totm Planning 214 Other 273 Total 9,575 Source: Annuaire Statistique 1965, op. cit. pp. 144/5. Detail may not add because of rounding. Table 25: ESTIMATED DEBT OUTSTANDING AS OF MARCH 1, 1967 GOVERNYENT AD GOVERNMET GTARANTEED (Million CFAF) 1. Central Government Debt vis-a-vis France a) Consolidated long-term debt 2,631 b) Non-consolidated debt 2,90 (i) Treasury Advances 1,073 (ii) Postal Cbecking Account 1,835 5,539 2. Long-term Debt to Germany (SNABDA - Palm kernel mill) 749 3. Supplier Credit, Italy (SODAK - Kenaf Factory) 1,879 4. Unconsolidated Debt vis-a-vis Ivory Coast 250 5. Long-term Debt of Local Authorities (France) 120 6. Long-term Debt of Banque Dahomienne de Developpement (BDD), vis-a-vis France 474 7. Estimated unpaid bills (external) 200 8. Estimated unpaid bills (domestic) 1,600 Total (incomplete, estimated) 10,811 Sources: a) Nos.1-7 Central Bank (BCEAO) b) No.8 Caisse Autonome d'Amortissement Table 25A: DAHOMEY - EXTERNAL PUBLIC DEBT OUTSTANDING AS OF DECEMBTER 31, 1967 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Debt outstandlng December 31 1967 Source Disbursed Including only undisbursed TOTAL EXTERNAL PUBLIC DEBT 37,533 ho,866 Total privately held debt 7,751 9,90 Publicly-issued bonds 7T5 Ii Suppliers' 70O Fi_2 France 13 13 Italy 7,591 8,529 Financial Institutions - Italy L2- 126 Privately-placed bonds 101 101 Loans from governments 29,782 30,961 France 2,8 27,21F Germany 2,80 2,850 Senegal 44 44 United States - 850 /1 Debt with an original or extended maturity of one year or more. Statistical Services Tivision Economics Department October 3 1968 Table 25B: DAHOMEY - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMIBER 31, 1967 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 1 DEBT OUTST (BEGIN OF PERIOD) PAYMENTS DURING PERIOD INCLUDING AMORTI* YEAR UNDIS$URSED ZATIObN INTEHEST TOTAL TOTAL EXTERNAL PUBLIC DEBT- 1968 26j888 2#149 532' 26b1. 1969 24,738 3,097 709 3,807 1970 2i,641. 3#042: 59 s Si i971 16s599 2,99i 369 1972 15,609 2,862: 247 34i9 197.3 12,746 '923: 180 1102 1974 1i'824 Si2 .159 97i 1975 11,011. 734 14o 6 1976 10,277. 711 12: 1977 9,566 $99 1i8 1978 6s967 554 107 1979 8,413 340 96 436 1980 8,073 312 92 404 981 776i: 35 69 1982 7,447 38 5403 Note: Includes service on all debts listed in Table 1 prepared October 31, 1968, except for the follbwing for which repayment terms are not available: Suppliers (Italy) $ 938,000 Privately Placed. Bonds 101,000 Loans from Governments (France) 2,042,000 $3,0810 and the following -for which repayment terms are not yet fixed: Debt to French Post Office $ 7,361,000 Debt to French Treasury: 3,537 000 $10, 898000 Table 26: CREDITS OF TI, BäNKING SYSTEH TO TIE ECONOIiY 1960 1961 1962 1963 1964 1965 1966 Short-term 2,085 2,172 2,777 3,379 3,664 3,310 3,218 of 7hich. rediscounted Vjith BCAO n.a. n.a. n.a. 71130 1,050 005 694 Le dium-te2 rm 376 484 5925 425 317 of wuhich: rediscounte,d w-ith BCMO n.a. n.a. n.a. 150 200 96 50 Long -te rm 665 5h9 619 732 3L of -hich: rediscounted with BC¯ZAO n.a. n.a. n.a. - - Total 2,750 3,180 3,1.8 4,812 ,008 L,h?7 h,219 of which rediscounted with BC-A0 700 820 6'2 930 1,250 901 744 1cDurcc: a) International Financial Statistics (IFS) b) Annuaire Statistique 1965 op.cit. c) BCEAO "Statistiques Ouest Africaines" 1/ Table 27: 2ZCTORAL DISTRIBUTION OF CREDITS BY THE DAHOMEAN DEVEOPMENT B:NK 1965-1966 (22 months) (Million CFAF) Construction Small A,priculture Construction Katerial Equipmnt Equipment Commerce Automobiles Total Short-term 81.7 1. - 2.2 2.7 29.0 0.1 3L3.2 Iedium-term 1.2 102.0 bl.2 20.7 06 - 17 . 183.2 Long-term 23.1 43.9 - 1i0.6 - - - 207.6 Total 106.0 17.h 61.2 163.5 3.2 255.0 17.7 731t.0 1/ January 1965 thru October 1966. Source: Direction de la 'tatistique Bulletin de Statistique,h/30 Janvier 1967, Cotonou. Table 28: EXTERNAL TRADE (Official Figures) Value (Million CRAF) Quantity ('000 Tons) Trade Covering Im2rts Exports Balance Rate Imports Exports 1950 2,137 2,233 + 96 104% 64.0 75.2 1951 3,600 2,800 - 800 78% 1952 3,774 1,941 - 1,833 51% n.a. n.a. 1953 2,874 2,606 - 268 91% n.a. n.a. 1954 4,000 2,500 - 1,500 63% 1955 4,200 2,700 - 1,500 65% 1956 3,696 2,676 - 1,020 73% 119.7 85.4 1957 4,269 2,447 - 1,822 57% 122.0 75.4 1958 4,329 3,371 - 958 78% 122.0 96.8 1959 4,334 2,833 - 1,501 65% 119.0 74.1 1960 7,642 4,513 - 3,129 59% 191.9 107.8 1961 6,275 3,579 - 2,696 57% 157.6 93.5 1962 6,627 2,699 - 3,928 41% 159.5 75.0 1963 8,249 3,155 - 5,094 38% 180.1 83.3 1964 7,762 3,254 - 4,508 42% 171.3 89.8 1965 8,491 3,367 - 5,124 40% 180.3 82.4 1966 8,370 2,585 - 5,785 31% n.a. 59.3 Sources: a) Notes et Etudes Documentaires No. 3307, July 8, 1966. b) Cinq AnKes de Commerce Exterieur du Dahomey. c) 1966: IFS XX 19 September 1967 and IMF. Table 29: MAIN EXPORTS (Official Figures) (7 Mo.) (7. Mo.) 1960 1961 1962 1963 1964 1965 1965 1966 1. Value (in Million CFAF) Palm kernels 2,177 1,358 1,155 1,632 1,748 599 535 180 Palm oil 807 522 468 470 656 1,726 886 758 Groundnuts 681 550 194 286 151 96 77 107 Coffee 124 275 243 127 153 109 70 87 Cotton 150 182 45 16 123 155 59 206 Sheanuts 16 59 55 24 106 101 45 44 Fish, seafood 213 217 129 44 13 8 4 9 Copra 41 55 39 58 77 90 63 66 Tobacco 74 63 61 57 44 38 31 53 Others 230 268 310 293 183 415 l/ 250 l/ 375 l/ Total 4,513 3,579 2,699 3.155 3,254 3,367 2,020 1 2. Volume ('000) Palm kernels 61.3 48.5 13.9 50.6 56.2 16.7 5.2 1.6 Palm oil 16.0 11.1 9.3 9.3 12.7 29.9 17:3 2/16.2 Groundnuts 15. 12.5 4.3 6.6 1.0 2.3 1.8 3.1 Coffee 0.9 2.1 1.7 1.0 1.1 0.9 0.5 1.0 Cotton (fibre) 1.1 1.3 0.7 1.1 1.1 1.3 0.5 1.7 Sheanuts 0.8 2.9 2.6 1.0 7.1 5.0 1.7 2.8 Fish, seafood 2/ 2.4 2.7 1.5 0.5 0.1 0.1 0.0 0.1 Copra 0.7 0.8 0.7 1.0 1.8 1.8 1.3 0.9 Tobacco 0.6 0.5 0.5 9.4 0.3. 0.1 0.4 Others 8.6 11.1 9.8 11.5 5.1 21.2- 12.0 - 15.6 Total 107.8 93.5 75.0 83.3 89.8 82.1 50.1 16.1 3. Total Value of Agricultural Exports In Million CFAF 1,323 3,337 2,414 2,882 3,079 3,161 n.a. nea. In % of Total Exports 96% 93% 90% 91% 95% 941% 1/ Mostly palm kernel cakes (16,200 tons, CFAF 131 million, in 1965) 2/ Total exports including unrecorded, estimated in 19641 at 7,000 tons or CFAF 500 inillior 2/ Including palm kernel oil. For details see following table. Source: a) Notes et Etudes Documentaires No13307, July 8, 1966 b) Direction de la,Statistique, Cinq Ann&ee de ommerce Exte'rieur du Dahomey, Cotonou. c) Bulletin de Statistique 4/39 January 1967. Table 30: EXPORTS OF iIkIN äGRICULTURAL PIODUCTS (Official figures, '000 tons) 1955 1956 1957 19[5 1959 1960 1961 1962 1963 1964 1965 1966 Palm kernels 50.6 49.9 43.6 60.0 50.4 61.3 48.5 43.9 50.6 56.2 16.7 7.7 Palm oil 16.4 16.2 9.u 12.2 12.9 16.0 11.1. 9.3 9.3 12.7 13.3 11.4 Palm kernel oil - - - - - - - - - - 16.7 18.0 Oil cake - - - - - - - - - - 16.2 18.0 Total Oil Palm Product-- 67.0 66.1 53.4 72.2 63.3 77.3 59.( 53.2 59.9 2'.9 62.9 55.1 Groundnuts 11.0 12.0 14.2 15.6 2.1 15.L 12.5 4.3 6.6 4.0 2.3 Coffee 0.9 1.3 1.0 0.5 1.h 0.8 2.1 1.7 1.0 1.1 0.9 0.3 Cotton 0.6 0.5 0.4 0.7 0.' 1.1 1.3 0.7 1. 1.1 1.3 Shcanuts 3.7 1.2 1.2 2.3 4.5 O.J 2.9 2.6 1.0 7.h 5.0 Source: Ministere des Finances et des Affaires Economiques: Aspects Economiques 1966. Table 31: PRODUCTION AND EXPORTS OF GROUNDNUTS (Moving 3-Year Averages) (In '000 Tons) 1958 1959 1960 1961 1962 1963 1964 1965 Production 25.1 26.9 29.2 26.9 25.6 26.5 27.7 27.2 Export 11.5 11.7 10.5 10.7 7.8 5.0 4.3 3.4 Local Consumption 13.6 15.2 18.7 16.2 17.8 21.5 23.4 23.8 Per capita consump- tion (kilos) 8.0 9.9 Sources: a) IBRD "The Economy of Dahomey" October 1964. b) Ministere des Finances et des Affaires Economiques Aspects Economiques 1966 Table 32: EXPORT PRICES (CFA Francs per kilogram) 1960 1961 1962 1963 1964 1965 1966 ( 7 mo.) Palm kernels 35.5 28.0 26.3 32.3 31.1 35.8 39.1 Palm oil 50.4 47.0 50.3 50.5 51.7 55.9 43.0 Palm kernel oil - - - - - 59.0 49.0 Groundnuts 44.2 44.0 45.1 43.3 37.8 41.7 34.5 Coffee 137.8 131.0 142.9 127.0 139.1 121.1 87.0 Cotton 136.4 140.o 64.3 117.2 111.8 119.2 121.2 Sheanuts 20.0 20.3 21.2 24.0 14.3 20.2 15.7 Fish, seafood 88.8 91.5 86.0 88.0 130.0 80.0 90.0 Copra 58.6 68.7 55.7 58.0 42.8 50.0 73.3 Tobacco 12.3 12.6 12.2 14.2 14.3 19.0 13.2 Indices (1960 = 100) Palm kernels 100.0 79.0 74.4 91.0 87.6 100.8 110.1 Palm oil 100.0 93.2 99.8 100.2 102.6 110.9 77.4 Groundnuts 100.0 99.5 102.0 97.9 85.5 94.3 78.1 Coffee 100.0 95.0 103.6 92.0 100.8 87.7 63.0 Cotton 100.0 102.7 47.1 86.0 81.9 87.4 88.8 Sheanuts 100.0 101.5 106.0 120.0 71.5 101.0 78.5 Fish, seafood 100.0 103.0 96.8 99.1 146.4 90.1 101.3 Copra 100.0 117.2 95.1 98.9 73.0 85.3 125.1 Tobacco 100.0 102.4 99.2 115.4 116.2 154.5 107.3 Total 100.0 90.0 87.3 95.8 93.8 101.1 95.5 Source: Mission's calculations, based on official exports statistics. N.B. As has been expressly stated to the mission, export values in foreign trade statistics are based on real prices and not on accounting prices (mercuriales) used by customs. Table 33: PRINCIPAL TRADING PARTNERS FOR EXPORTS OF PRINCIPAL COMMODITIES (Official Figures, in Tons) 1961 1962 1963 1964 1965 Palm kernels 48,480 43,900 50,560 56,160 16,740 France 43,710 36,180 36,000 43,440 12,150 Holland 3,160 6,120 11,670 5,660 3,780 Other EEC 100 200 1,850 6,640 720 Palm Oil 11,050 9,290 9,260 12,710 29,950 France 7,990 8,340 8,660 12,110 16,360 Other EEC - - - - 9,060 UDQA 2,660 650 440 340 1,270 Groundnuts 12,520 4,300 6,590 3,990 2,270 France 12,000 3,120 6,590 3,850. 580 Holland - - - - 710 Other EEC - 90 - - 540 Cotton 1,330 660 1,420 1,070 1,270 France 440 270 870 390 1,000 Other EEC 70 30 30 220 100 Senegal 820 360 200 - - United Kingdom - - 150 460 170 Coffee (Between 98c and 100% to France) Source: Cinq Anndes de Commerce Exterieur du Dahomey Table 34: COMODITY TRADE BALANCE BY AREAS (Million CFAF) (7 Mos) 1959 1960 1961 1962 1963 1964 1965 1966 Exports France 1,959 3,024 2,582 1,900 2,255 2,b2 1,845 1,182 Other EEC 1/ 89 443 106 180 44o 410 713 288 UDOA 2/ n.a. n.a. 569 308 239 102 186 174 Others n.a. n.a. 322 311 221 300 623 241 Total 2,833 4,513 3,579 2,699 3,155 3,254 3,367 1,885 Imports France 2,411 4,392 3,679 3,874 5,040 4,480 4,588 2,571 Other EEC 227 477 443 516 684 670 1,157 n.a. UDQA 2/ n.a. n.a. 812 859 723 614 653 403 Others n.a, n.a. 1,341 1,378 1,802 1,998 2,093 n.a. Total 4,334 7,642 6,275 6,627 8,249 7,762 8,1491 5,008 Balance France -452 -1,368 -1,097 -1,974 -2,785 -2,038 -2,743 -1,389 Other EEC -138 -34 -337 -336 -244 -260 -444 n.a. UDQA 2/ -243 -551 -484 -512 -467 -229 Others -109 -1,067 -1,581 -1,698 -1,470 n.a. Total -1,501 -3,129 -2,696 -3,928 -5,094 -4,508 -5,124 -3,123 1/ Excluding Italy 2/ Senegal, Mauritania, Ivory Coast, Togo, Niger Source:a)Cinqlim6es de Commerce Ext6rieur du Dahomey b)Notes et Etudes Documentaires No.3307, July 8, 1966 Table 35: IMPORTS OF PRINCIPAL COMMODITIES (Million CFAF) 7 Months 1959 1960 1961 1962 1963 1964 1965 1967 1966 Energy (Petroleum Products) 422 741 527 528 502 465 470 280 223 Raw Materials and Semi-finished Products 681 1,380 765 756 1,116 921 955 572 511 Metals 338 802 W06 357 652 520 503 288 234 Construction materials (incl.cement) 258 341 292 280 364 320 367 224 204 Fertilizer n.a. n.a. 2 17 3 20 33 27 48 Equipment Goods 1,010 1,312 1,240 1,014 1,187 883 1,041 614 644 Railway Equipment n.a. n.a. 196 50 83 5 13 12 24 Road transport equipment 547 464 462 392 490 344 419 256 213 Machinery 214 361 542 541 555 484 577 328 388 Foodstuffs and Beverages 922 1,372 1,186 1,531 1,691 1,695 1,720 959 1,127 Sugar 316 329 267 330 375 312 271 154 182 Rice 97 168 86 196 151 186 244 1W5 139 Wheat and wheat flour 57 73 183 185 174 174 165 101 131 Beverages 95 172 184 262 290 291 276 154 149 Canned food n.a. n.a. 52 109 158 172 183 102 133 Dairy Products 63 109 79 98 92 97 102 57 57 Finished Products for Consumption 1,300 2,837 2,557 2,798 3,753 3,798 4,305 2,607 2,503 Cotton fabric 226 479 688 805 1,290 1,425 1,712 999 1,022 Clothing n.a. n.a. 113 98 123 121 133 96 39 Pharmaceuticals and chemicals 182 374 321 377 477 498 608 395 382 Appliances and radios n.a. n.a. 71 125 93 124 130 67 83 Private Cars 232 274 238 192 263 250 300 180 160 Grand Total 4,335 7,642 6,275 6,627 8,249 7,762 8,491 5,032 5,008 Source: a) Cinq Ann4es de Commerce Ext;rieur du Dahomey b) Bulletin de Statistique 4/30 January 1967 c) Aspects Economiques 1966. Table 36: DISTRIBUTIOIT OF IliPORTS BY MåJOR CATEGORIL (Official Figures) Percentages 7 Honth- 1959 1960 i961 1962 1963 196h 196$ 1965 1966 7nergy 9.7 9.7 8.5 8.0 6.1 6.0 5.5 5.5 h.5 n- r 1aterials and Semi- , Finish2d Products 1/ 15.7 18.1 12.2 11.4 13.5 11.9 11.2 11.h 10.- -quipment Goods 23.3 17.2 19.7 15.2 lh.h 11.3 12.3 12.2 12.8 Foodsttuffs and Beverages 21.3 10.0 18.9 23.1 20.5 21.9 20.3 19.1 22.5 Finished Products for Consumption 30.0 37.0 4o.7 42.3 l5.5 48.3 50.7 51.8 50.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 .1/ Including construction materials. Remarks: Imports of Foodstuffs and Beverages are underestimated becaunc of the extensive smuggling of alcoholic beverages and sugar. Source: lässion calculation., baced on preceding table. Table 37: FIRST FOUR-YEAR PLAN 1962-1965:PIAN TARGETS AND PROBABLE ACHIEVEMENTS A. GDD at market prices 1/in 1965 (Billion CFAF) Plan Targets Mission Estimates 1961 prices (1963 prices) Low High Agriculture 23.9 23.9 20.5 Manufacturing 1.0 1.4 1.2 Power 0.2 0.2 0.2 Construction 3.9 5.2 2.8 Services 13.7 14.7 13.6 Total 42.7 45.4 38.3 B. Agricultural Production in 1965 ( '000 tons) Plan Targets Actual Rate of Achieve- Production ment Palm Kernels 56 53.3 95% Palm Oil 50 30.8 62% Groundnuts 38 29.0 76% Cotton 12 6.7 56% Tobacco 1.4 0.7 50% 1/ Excluding public administration Source: Plan du D'veloppement Economique et Social du Dahomey Vol.2 by SOGEP. (First Development Plan). Table 38: FIVE-YEAR DEVEWPMENT PLAN 1966-1970 Total Planned Investments Billion CFA Francs Plan Estimates Mission Estimates Public Private Total 7 Public Private Total Directly Productive Invest- ments Agriculture, livestock, forestry, fishing 10.2 0.4 10.6 30 10.2 0.4 10.6 Manufacturing 2.4 2.5 4.9 13 1.1 0.4 1.5 Tourism 0.1 - 0.1 1 0.1 - 0.1 Small installations for the processing of local agricultural products - 1.0 1.0 3 - 1.0 1.0 Total 12.7 3.9 16.6 47 11.4 1.8 13.2 Productive Infrastructure and Services Rural Water Supplies 1.6 - 1.6 5 1.6 - 1.6 Electric Power 0.3 0.3 0.6 2 0.8 0.3 1.1 Commerce and other services - 3.6 3.6 10 - 3.6 3.6 Transport infrastructure 6.2 - 6.2 17 6.2 - 6.2 Post and Telecommunications 0.4 0.4 1 0.4 0.4 Total 8.5 3.9 12.4 35 9.0 3.9 12.9 Social and Administrative Infrastructure and Studies Urban development 1.6 1.5 3.1 8 1.6 1.5 3.1 Education 1.2 0.2 1.4 4 1.2 0.2 1.4 Health 0.4 0.1 0.5 2 0.4 0.1 0.5 Administration 0.7 - 0.7 2 0.7 - 0.7 Studies and Surveys 0.6 - o.6 2 0.6 - 0.6 Total 4.5 1.8 6.3 18 4.5 1.8 6.3 Grand Total 25.7 9.6 35.3 100 24.9 7.5 32.4 Source: Five-Year Plan 1966-1970 Table 39, FIVE-YEAR D2VEL?OPENT PLAJ (Billion CFAF) The Financing of Planned Public Investments (1966-70) 1. Local public resources Plan Estimates Iission Estimates High-jay fund 1.3 National Investment Fund 1.0 - Public enterprises 1.3 1.3 Local authorities 0.6 0.6 Participation of local population 0.5 4.7 0.5 2.4 2. Foreign contribution a. Foreign Crants FED 5.5 4.5 FAC 5.5 5.5 UN family 1.2 1.0 US AID 1.5 1.5 Other donor countries 1.8 15.5 0.5 13.0 b. Foreign loans USA (PL. 880) 5 5.0 W1orld Bank Group 0.9 0.5 European Investment Bank 0.6 0.5 C.C.C.1. 2.5 0.5 FRG (Kreditanstalt) 0.5 0.5 Others (A.D.B., etc, 0.5 supplier credits) 0.5 5.0 20.5 1.0 8.5 21.5 Total Financing 25.2 23.9 Total Planned Investments 2-5.7 24.9 Source: a) Five-Year Plan 19(6-70. b) fiis- ion estimates. Table 40: ESTIMATED FO.EIGN FINANCING OF PLAN EXPENDITURES IN THE PUBLIC SECTOR (Yearly Averages in Million CFAF) Average 1966 - 1970 Average 1963 - 1966 Plan Estimate Mission Estimate Commitments Disbursements Disbursements Disbursements Grants- Loans Total Grants Loans Total Grants Loans Total Grants Loans Total EEC (FED and E.I.B.) 872 - 872 703 - 703 1,100 120 1,220 900 100 1,000 FAC 1,187 - 1,187 1,506 - 1,506 1,100 - 1,100 1,100 - 1,100 -CCE - (54)4/ (54)V - 5h4' 54V - 500 500 - 100 100 USA 700 315 1,0151/ 570 210 780 300 - 300 300 1,0006 1,300 FRG (incl. Kreditanstalt) 183 1832/ 2/ 183 1832/ 20 100 120 - 100 100 Other Bilateral and Multi- lateral Aid - - - - 340 100 h40 100 100 200 Supplier Credits - 470 470 250L 250L - - - - 200 200 UNDP n.a. - n.a. n.a. - n.a. 240 - 240 200 - 200 orld Bank Group - - - - - 180 180 - 100 100 2,759 1,022 3,781 2,779 697 3,476 3,100 1,000 4,100 2,600 1,700 4,300 L/ Excluding JFAFV 334 million, estimated to go to projects outside the Plan. Excluding OFAF 18 million, technical assistance, estimated to go to projects outside the Plan. Excluding CFAF 32 million, technical assistance, estimated to go to projects outside the Plan. Excluding CFAF 200 million, estimated to go to the private sector through BDD. Excluding CFAF 287 million, estimated to go to projects outside the Plan. Mostly PL 480. / Estimate. Source: a) Table 23 on Foreign Aid; b) Five-Year Plan 1966-1970. Table hl: FORECAST OF IUVESTMENTS IN MAiNUFACTURING (Million CFAF) 5-Year Plan Mission Estimates 1966-1970 1966-1970 Cement Factory 2,980 250 1/ Marble Factory 30 30 Brick Factory 3 3 SNAHDA extension and modernization 218 150 Groundnut mill 3 880 Cotton ginning mill 65 65 Integrated textile mill 1,500 - Small manufacturing industries 57 140 4,856 1,518 1/ Clinker Factory only Source: a) Five-Year Plan 1966-1970 b) Mission estimates Table 42: FIVE-YAR DEVELOPMENT PLAiN 1966-1970 PRIVATE INVESTMIENTS (Million :'FAF) Plan Estimates Mission Estimates Locally Financed Foreign Financed Total Total Agriculture: tools, small irrigation, fishing 300 100 400 400 Manufacturing: cement factory - l,h00 1,400 230 marble factory - 30 30 30 integrated textile mill - 1,000 1,000 small enterprises - 40 4O 140 - 2,470 2,470 400 IYirectly productive Services: small machines, etc. 0 - 1,000 1,000 Cornerce and Other Services: modern sector 3601/ 200 5601/ 560 traditional sector 500-' - 500 500 transport 2,50W - 2 501 2,500 3,3607/ 200 3,22 3,560 Electric power: capacity increase 300 - 300 300 Urban development: private housing 1500 - -120 1,500 -ducation: private schools 100 100 200 200 Health: private and mission hosoitals 50 50 100 100 Grand Total 6.6l/ 2,920 9,530 7 1' Of Thich CFAF 200 heavy maintenance and renewal. Including heavy maintenance and renewal. 2Of which heavy maintenance and renewal estimated by the Mission at CFAF 2.5 billion. Source: Five-Year Plan 1966-1970, sectoral chapters and page 368.