DIRECTORATE OF INTELLIGENCE
Intelligence Memorandum
Economic Trends in Black Africa
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CONTENTS
Paq<
Economic Characteristics
A Prelude to Independence
Economic Performance During the
Employment, Productivity, and Urban
Unemployment
Continuing Dependence on Outside
Ex-French
Ex-United Kingdom Area
Portuguese
Monetary Policies and Problems
Attempts at Regional Integration
Export Markets
Country Performance
Countries Achieving Broad-Based
Development
Ivory
Countries Whose Growth Is Based
Exclusively on Foreign Enclave* .
Countries Affected by Political
Congo (Kinshasa)
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Countries Undertaking Overambitious
Development Programs
The Stagnant Countries
Outlook
ustrations
Figure 1. Black Africa (Map) . . - Frontispiece
Figure 2. Black Africa: MajorActivities (Map)
Figure 3. Black Africa: Major(Map)
Figurelack Africa: ExportsofChart)
Figure S. Black Africa: Average Annual Real Growth of Gross national Product in Selected Countries,
Chart)
Figure 6. Black Africa: Employment Trends in Selected Countries,
Chart) . .
Figure 7. Black Africa; Chart)
Figure 8. Black Africa: Major Foreign Aid Recipients and7
(Chart)
Figure 9. Africa: nd Regional(Map)
Black Africa: Chart)
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AGEtiCY Directorate of Intelligence9
INTELLIGENCE MEMORANDUM
Economic Trends in Black Africa
Sumnarv
The hopes of Black African governments for achieving rapid economic growth after independence have been largely unfulfilled, and the prospects for an improvement in economic performance over the next five years or so are not bright. The growth of the region's aggregate gross national product (GNP) 0su-aged someercent annuallyhe lowest aggregate and per capita rate of any region in the world. This slow growth reflects reduced, world demand for the raw materials that Africa* as well as the economic and social disruptions which occurred after independence. African countries do not have the administrators and technicians needed to operate and expand the modern sector of their economies or to control divisive political and ethnic problems such as tribalism. Some of the hardest blows to development came in tlie more promisingor example, the civil war in Wigeria, the general disaster in the Congo (Kinshasa), bankruptcy in Ghana, and the black-white confrontation between Rhodesia and Zambia. ew countries, such as Kenya and the Ivory Coast, have achieved satisfactory economic growth and development, but in most countries output has barely kept pace with population growth.
Africa's economic growth rate ins would have been even "lower except for substantial outside
* The term Africa as used in this memorandumArab North Africaoroooo, Algeria, Tunisia, Libya, and the OARnd South Africa. Included are the nearby islands of Madagascar, Reunion, Mauritius, Seychelles, Comoros, Sao Tome and Principe, and the Cape Verde Islands.
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Note: This memorandum was produced solely by CIA. It was prepared by the Office of Economic Research and was coordinated with the Office of Current Intelligence.
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help. In spite of the exodus of Europeans from some countries, thousands of expatriates remain to fill almostercent of Black Africa's high-level manpower positions and to keep businessand government services functioning. Foreign aid provides the funds for almost all of the economic development undertaken and is used in many countries merely to maintain the existing low level of modern economic activity. er capita basis, Africaeceived SO percent more foreign aid than tha average of all less developed regions. The few African countries thatercent or higher growth rate did so either because of large foreign investments in mineral exploitation, as in Mauritania and Gabon, or because of the presence throughout the econony of large numbers of non-African businessmen, as in Kenya.
The role of Africans in the modern sector has changed little during the past decade. Sales by African farmers have increased only at about the same rate as population, and more than four-fifths of all Africans are still producing just enough food to meet their own consumption needs. The number of* Africans employed by foreign-owned plantations and mining enterprises actually has decreasedven though output has increased. These enterprises have substantially increased worker productivity by using advanced equipment and techniques. Theloss has been partially offset, however, by an increase in African employment in government,trade, and the small manufacturing sector.
African countries have avoided some problems that plague other less developed Countries. Most grow enough basic foods to meet both rural and urban needs. Although urban populations have expanded nearlythere are few of the crowded shanty towns or the mounting groups of unemployed that are common in many countries in Asia and Latin America. Exceptew countries, such as Ghana and Guinea, African states have not spent beyond their slender resources, thus avoiding the inflation and debtproblems of many developing countries. By and large, government policies have had loss of an adverse impact on economic performance than has the lack of skilled manpower required to operate aand run an economy.
A continued slow rate of growth and development is the best that can be expected in Africa during
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the next half decade or so. The conditions required to draw substantial numbers of Africans into the cash economy and thus achieve rapid broad-basedwill be lacking. There is unlikely toharp rise in the world demand for African-grown agricultural products, andew countrios will have the leadership or political conditions that wouldarge influx of foreignrowth rateercent annually or higher can be expected only in Kenya, the Ivory Coast, and Rhodesiawhere there are large white and Asiannd in Liberia, Guinea, Angola, Nigeria, and Mauritania where, because ofillion dollars of recent or scheduled investment for exploiting minerals,will increase substantially. Among the mineral producers, however, there will be little broad-based development in the near future. The investment will occur primarily in the foreign-owned enclaves, and the large tax revenues received from minerals will mostly be spent in enhancing infrastructure, which, however necessary, will not have much immediate effect on production.
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Economic Characteristics*
similarities amongntities are striking. All are poor the bulk of the population works theprimitive means, producing only enough fooda bare subsistence living. Theof modern economic activity of this region
illion people is less than that of Argentina, whose population is only aboutercent of Africa's.
Cash income is mainly derived from supplying raw materials and foods to the developed world. African countries have little economic contact with one another, and their own markets are very limited. Accordingly, sales abroad are the main determinants of the size and rate of growth of their economies outside the subsistence sector. The majority of overseas exports are from foreign-owned and operated plantations and mines using unskilled and semiskilled African labor with white managers and technicians. The copper companies in Zambia and Congo (Kinshasa) are examples ofdsrn enclaves. Additional exports are gathered in small lots fromanners who sell some of their output to pay school taxes or buy inexpensive consumer goods. ew countries, significant numbers of African farmers, whose individual sales rarely exceed several hundred dollars annually, devote most of their efforts to cash crops. These countrieshe Ivory Coast, Senegal, Ghana, and Ugandahave made the most progress in broad-based development. Their exports per capita, after excluding those of the foreign enclaves, rangeear, while those of other countries fallear (see
In order to develop, Africa must draw into the modern cash-oriented economy those who nowrimitive rural existence. Africa hasthe smallest and most rudir>entary cash economy in the world and is the least able to develop rapidly through its own means. It lags far behind Asia, Latin America, and the Middle East in theof domestic expertise to manage and operate
a modern economy. The difference isoreigners representercent of the high-level manpower in Africa andercent in the rest of the less developed world.
See Figuresnd Appendix Table 1.
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4. Despite its low level of development, Africa is spared some serious problems that other lessareas face. With few exceptions, African countries dp not have the agonizing overpopulation problems that force many Asian governments to direct considerable resources and energies to achieving self-;sufficiency in food production. In Africa, food output is generally adequate to supply the rural area and the growing requirements of thereat deal of the cultivable land is still not used because of low population densities in many regions, so that output could be increasedeven without improving the primitive production techniques. Moreover, there are almost none of the economic and social problems createdand-owning elite such as those in Latin America and parts of Asia,
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with the result that therereater potential for farmer initiative in Africa.
5. At Africa's stage of development, economic growth can be achievedonsequence of increased exports either of African-grown agricultural products or of foreign-owned enclaves. The impact of these two potential forms of growth, however, is strikingly different. In the case of higher sales of African-grown products, thereroad participation in the growth process, and development obstacles can berelatively easily because of the ability and willingness of African farmers to increase cash cropping,arket for their products. there is little strain on the government's financial and manpower resources. On the other hand, enclave exports have little direct effect on most of the country's population outside the enclave, and the government has difficulty in fostering development with the revenues from those exports because of the limited skilled manpower resources available. Skill bottlenecks inhibit efforts to develop new lines of economic activity and to expand the size and scope
of government administration with reasonableiency.
A Prelude to Independence
The last decade of the colonial era, thes,eriod of dramatic economic growth (see Regional gross domestic product in real terms increasedercent annually, probably the highest growth rate among less developed regions except for Middle East oil producers. This growth was fueled by the booming postwar demand in the industrial countries for many tropical food itoms and industrial raw materials. The volume of African exports of copper and peanuts, for example, doubled during the decade. In addition, coffeetripled as consumers switched fron brewed coffee to newly developed instants, which use the cheaper Robusta grades produced mainly in Africa.
Growth was not uniform throughout the region, however. The Rhodesian Federation, the Belgian Congo, Gabon, and Kenya grow at aroundercent per year, largely becauseignificant infusion of skills and capital from Europe. Since mostand investors believed durings that political and economic control would remain with
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figure
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BLACK AFRICA: Average Annual Real Growth of Gross National Product in Selected
ver
IGIAN CONGO GABON KENYA
rkodmia matvon
COAK MAURITANIA
IXor Oaclmo
t-nfi-OMlsp-.wi i
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conmPntiai.
tho metropole, thay established in the colonies modern economic sectors which were small-scaleof those in their home countries. Besides expanding agriculture and mining, they developed transport and other infrastructure to support these now endeavors and established numerous manufacturing and other businesses co supply the needs of the growing European communities. African participation in these economies was limited mainly to unskilled wage employment, except in the Belgian Congo, where there were numerous African semiskilled workers and cash croppers.
8. Good but not spectacular growth took place the Gold Coastigeria, Uganda, Tanganyika, Senegal, and the Ivory Coast. Here theercent annuallyas largely due to increased sales of African-grown products. The demand for these commodities was sufficient both to increase the output of regular producers and to rapidly draw many new participants into cash cropping. Because of their much longer experience in producing formarkets, Africans in these countries are more responsive than elsewhere to shifts in demand for heir products.
9. In other countriesuch as the landlocked French territories, Somalia, and Ethiopiaoutput barely kept pace with population growth. Theinfluence of contacts with Europeans was small in these countries because of isolation or the lack of exploitable natural resources. Consequently, they remain extremely backward, unable or unwilling to change their primitive traditional way of life and content merely to provide for bare necessities.
Economic Performance Durings
10. The advent or prospect of independence in thes brought withising tide of expectations. Many African leaders felt that the end of the colonial era would see their nations' economies expand rapidly and that standards of living equivalent to those of Western Europe would be within roach. Many economists and others in the developed world gave support to this optimism, arguing that growth in Africa would be rapid because the region is not encumbered with rigidities, such as uneven distribution of wealth, that affected other parts of the less developed world. Consequently, grandiose
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development programs were conceived and substantial increases in assistance were sought from both Western and Communist countries.
considerable increases ineconomic growth insdown aboutercentate that isamong less developed regions. The realexports increased onlyompared with anrise durings. Agriculturalbecause of the reduced growth of demandnations. The market forbecame saturated, and there vere no newcommodities to take its place. exports continued to increase raoidly. oilfields in Nigeria and iron ore"minesand Mauritania were among the importantto rising mineral exports.
Among sectors whose output is mainly consumed locally, manufacturing showed significant growth. New plants producing textiles, cigarettes, and many other types of nondurable consumer goods sprang up all over the region. Most consumer goods and nearlv all capital goods and components are stillowever, and local demand is very small. Thesector still accounts formall share of total output.
Growth has been hampered not only by the limitations in export demand and the small size of the domestic markets but also by the transition to independence. The new governments replacedcivil servantsaster rate than adequately trained Africans became available. Thisprocess adversely affected efficiency of administration not only in the general governments but also in many publicly owned utilities, transport corporations, andmore importantlyheextension services which are of decisive importance in increasing African agricultural Foreign investors hesitate to commit new
funds because of the postcolonial upheavals and uncertainties over the new governments1 economic policies.
newly independent governments haveunable or unwilling to suppress political and
problems that had baen contained by theregimes. Thu emergence of tribal hostilities has had an adverse economic impact in Nigeria and the Congo (Kinshasa). Rhodesia and Zambia suffer from the conflict between the new black-ruled states and the remaining white-dominated ones. The United Nations' sanctions imposed against Rhodesia slowed that country's growth rate, and Zambia's hasty efforts to break its deeply embedded ties with Rhodesia caused major disruptions in the Zambian economy.
Only the Ivory Coast and Kenya experienced major upsurges in economic activity alongide distribution of the gains. These reflected the high degree of political stability achieved under Presidents Kouphouet-Boigny and Kenyatta, respectively, and the large European communities that were given considerable freedom to engage in business activities. The Europeans not only increased the output of their own enterprises but also helped tha Africans to boost their agricultural production by providing technical assistance and by using their marketing expertise to dispose of the increasing amounts of African-grown produce on world markets.
Four countriesiberia, Gabon, Mauritania, and Nigeriagrew because of increased mineral and plantation output, but there has bean little diffusion Of the ne,,f income throughout the population. Most of the new projects used highly modern productionwhich require only small inputs of unskilled local labor and domestically produced goods. The governments have been able to increase expenditures because of the higher revenues from mineral exports, but there has bean little spreading of economic growth. Most new outlays are spent on improving education, health, and infrastructure, which will only gradually bring increased African participation in the modern economy.
Near stagnation characterizes the remaining countries Some, like Angola, Mozambique, and Tanzania, have been able to grow at rates slightly exceeding population increases; but for the others, output just about kept up. The numerous small ex-French African territories, the two ex-Belgian areas of Burundi and Rwanda, and Somalia remain dependent
on aid from Western Europe even to maintain their pitifully small monetary sectors. Senegal and Uganda,
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where relatively large portions of the Africansell some cash crops, have been better able to maintain themselves without foreign financial assistance, but progress is slow because of their inability to increase exports of traditional African-grown products.
The enthusiasm of the independence era was dulled by the failure of most countries to develop rapidly. The elaborate development plans, which had been adopted with great fanfare, were either shelved or largely ignored. Many leaders lost interest in coping with economic problems and had their hands full just trying to remain in office. ew, such as Presidents Ukrumah of Ghana and Toure of Guinea, steadfastly attempted to achieve hlysian goals. Even with substantial foreign aid, the results in these countries were administrative and financial chaos and economic stagnation.
In most countries, despite low growth rates, there have been steady improvements in education and the availability of transport and electric power. African governments have spent most of thedevelopment funds on these improvements, although such outlays will have little effect on African cash production for some time. They are constrained in spending more funds directly on increasing production ln industry because of the scarcity of skilledand, in agriculture, because of limited internal and external markets.
Lrployment. Productivity, and Urban unemployment
in the monetary sector hasup with even the slow pace of economic growthlast decade. African statistics, althoughsuggest that the total number of wageearners probably has dropped. Byequipment for their operations, mineshave increased production whilereducing the number of employees. trends in selected African countries,
see Figure 6.
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AFRICA
Employment* Trends in Selected
OF WAGE
ANO SALARY LABOR FORCE
RHODESIA
.CONGO CKINSHASA)
KENYA NIGERIA
DOWN SINCE 0 DOWN CONSIDERABLY DOWN SLIGHTLY UP SLIGHTLY
Cj GHANAZAMBIA
I
CAMEROON
- TANZANIA ri ANGOLA
ETHIOPIAVORY COAST
Si
MALAGASY REPUBLIC MALAWI
MAURITIUS MOZAMBIQUE SENEGAL SIERRA LEONE SUDAN
UGANDA
WAGE AND SALARY7 ESTIMATED
DOWN2 PEAK DOWNP
SLIGHTLY SINCE DOWN MODERATELY NOT AVAILABLE
DOWN MODERATELY UNTIL UP SLIGHTLY SINCE NOT AVAILABLEERCENT PER
YEAR DOWN MODERATELY DOWN UNTIL
SLIGHTLY SINCE DOWN CONSIDERABLY NOT AVAILABLE ABOUT THE SAME UP SLIGHTLY NOT AVAILABLE ABOUT THE SAME
in employment in manufacturinghave partially offset declinesenclaves. Manufacturers also have adoptedmethods, but the sector'shas required additional manpower. gains in the public sector, especiallyhave been accompanied by reductions
in efficiency because each expatriate hasumber of less trained Africans. The African civil servant is, however, usually paid less than the expatriate.
gains in the vast ruralbeen minimal. Some African farmers havetheir outputonsequence of contactservices, which provide seed, credit,and marketing services. Increasedhas been mainly the result of moremore land. For trends in agriculturalsee Figure 7.
23. As elsewhere in the world, African cities have been growing faster than the rural population. The increasing urban-rural pay differential, the prestige of livingity, and larger numbers of graduating students and dropouts all contributed to the urban migration. Some new urban dwellers have found clerical positions in the civil service or jobs in the new manufacturing establishments, but most have remained unemployed or underemployed. Rather than return to the rural areas, they prefer to remain unemployed city dwellers seeking jobs while earning some income as petty traders or from occasional wage labor. Many survive by living with employed relatives who are obliged by custom to help support their less fortunate kin.
24. Urban unemployment has worsened over the last decade but still is much less extensive than in the urban shanty towns of Asia and Latin America. African cities are comparatively small;ewopulation above one million. Lven the larger cities are sprawling, with adequate living space and room for gardens whichong way in feeding urban dwellers. The immediate urban hinterlands also are drawing African farmers who provide traditional food' for the cities.
Continuing Dependence on Outside Assistance*
25. There has been little improvement in the new countries' ability to run their own modern sectors; foreign managers and technical experts stillrucial role. The efforts of Ghana and Guinea to run their own economic affairs led to chaos. ew other countries have attempted to nationalize large foreign-owned enterprises but soon found they lacked the expertise to operate them and that in manyit is difficult to find replacementelsewhere. Most ended up by inviting the same firms back under one guise or another to keep the enterprises functioning.
26. The need for foreign funds has increased During the colonial period, much of the public investment of seven major countries was financed from government revenues, but now only threeambia, the Ivory Coast, and Gabonare in
* See Figure 8.
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thi3 position. Several other states, including Ghana and Sudan, were temporarily able to live offbuilt-up foreign exchange reserves. designed to tap domestic savings are There are still only rudimentary money markets in Lagos and Nairobioderately developed one in Salisbury.
27. Almost all the additional capital inflow has been in the form of public foreign assistance which doubled0rom an annual level0 million4 billion. hole, Africa receivesercent more foreign aid per capita than the average for all Free World less developedS6 At least two-thirds of the foreign assistance is used to maintain school, health, and other service facilities. argeof the additional foreign aid since independence has been used to overcome new problems arising since independence. oreuarter of the total increase (annual increments0rillion dollars, has been spent to prevent an even worse disaster in the Congo, and more recently, additional sums have been required to straighten out the economic mess in Ghana created by Nkrumah.
28. The inflow of private capital, which can be only roughly estimated because of inadequate statistics, has remained about constant, at0 million per year. Private investments in minerals rose; other private investment declined. Excepting the Ivory Coast, the newly independent countries have been unable or unwilling to sell bonds on thoprivate capitalethod that was often employed by the colonial governments of the Belgian Congo, Kenya, and the Rhodesian Federation to raise development funds.
29. Although economic relations with the rest of the world are essential to Africa, the reverse ia not true. Trade with Africa accounts for only 3of world trade, and, if necessary,elatively short time most African exports could be bought from other continents. Africa has practically no economic significance for the United States, and even those Western European countries that have the closest economic ties with Africa could take the loss of these markets and supplies without much break in their economic progress.
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Ex-French Area*
30. Among the newly independent countries, the ex-French territories retain the closest economic links with the metropole. France insulates its ex-colonies, now called the Afro-Malagasyrom many economic and financial problems bythe full convertibility of the Afro-Malagasy currencies into French francs, by providing sheltered markets for exports, and by furnishing0 million annually in financial and technicalmainly as grants. In return, through formal and informal means, the French have securedmarkets for their products in the Afro-Malagasy States, and private French interests dominate most local enterprises. Furthermore, France protects itself from possible African mismanagement bya degree of fiscal and monetary control. serve as directors on all the region's central banks, and French advisers usually have strongon government budget and development decisions.
France and the Afro-Malagasyfrom their present arrangements. Thepoor countriesargeconomic sectors only because of the The French, for their part, havetrade opportunities relatively free from Moreover, the net cost to the Frenchpayments of its large aid expenditures is offset
by exports to its ex-colonies and the sizable earnings of French citizens working in Africa.
portion of the French support of theStates has been shifted to theCommunity (EEC) in recent years. Insupplied aboutercent of the aid tobut6 this share had droppednd the EEC portion had risen to about 25 French price subsidies and tariffAfro-Malagasy export products have beenfavor of less extensive common EECsubsidies. In the commercial sphere, however,
See Figure 9.
44 The Afro-Malagasy States include Cameroon, the Central African Republic, Chad, Congoahomey, Gabon, the Ivory Coast, taa Malagasy Republic, Mali, Mauritania, Niger, Senegal, Togo, and Upper
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few non-French firms have encroached upon France's domination, and France has retainedpercent share of the Afro-Malagasy import market.
Ex-United Kingdom Area
In comparison to the Afro-Malagasy States, the ex-British territories are quite independent in making economic and financial decisions. Although most remain in the sterling area, their financial ties to the United Kingdom have become progressively weaker. African sterling countries have been selling sterling for several years to diversify their foreign exchange holdings, and many have imposed restrictions on capital movements to other sterling bloc members. Although they receive British tariff concessions and subsidies, most African sterling countries do not grant preferential treatment to UK goods.
British firms and banks still control most business activity, and in most cases the United Kingdom remains the major trading partner. The UK's economic and financial stake in Africa is diminishing, however, as Western European, US, and Japanesemake considerable inroads. The UK share of its ex-colonies' imports dropped fromoercent6 In Rhodesia and Nigeria, where in each case the British have more0 million investment, major politicalhave adversely affected UK economic interests.
The United Kingdom is less generous than France in aiding former African colonies. 0ear in aid to its former colonies amounts to less thaner capita compared with S6 per capita for Paris. Like the French, the Britishonsiderable portion of their aid to the poorer ex-colonial countries: UK aid to Malawi
and Botswana, for example, is used to maintain their modern economic sectors. Aboutercent of the aid has been spent in Kenya to finance the transfer of the numerous white-owned farms to black ownership. Former British colonies also have received sizable aid from the United States, the International Bank for Reconstruction and Development (IBRD) and its affiliates,esser extentGermany, Italy, numerous smaller Western European countries, and Communist China. esult, London nowless thanercent of tho aid these countries receive.
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Portuguese Area
exercises tight control overand monetary affairs of its colonies,and Portuguese Guinea. Thebusiness within the territories andinterests by restricting non-Portuguese In order to speed up economic development,
the Portuguese government in recent years has relaxed these controls andteadily increasing flow of foreign capital into its colonies, in most cases, however, the ownership and/or the majority voting rights have been retained by Portuguese. Lisbon supplies almost all foreign public aidillion annually, or abouter capitato its African colonies.
Other
(Kinshasa) generally remains theof Belgian business interests. Part ofextensive Belgian business community hasto protect what is left of its holdings,private investment from any source has been While formal monetary links havethe Belgian central bank and thebanks still provide most of thefinancial services. The United Statesmost of the post- dependence aid,financing balance-of-payments deficits. aid is still considerable, primarilyassistance to keep public services.
38. Countries elsewhere.have independentexcept Liberia, which uses the dollar as its official currency and does noteparatebank. The US private investment in0 millionis the largest private US stake in Africa, and the US government supplies most of the aid funds. In Ethiopia the United States is the main source of aid, but the Italians are more important commercially. In neighboring Somalia the Italians are important in both commerce and aid. Somalia's only major exportananass given protection in the Italian market. Although Guinea and Mali left the franc zone in thes, Mali has partially returned. Both countries have received relatively large amounts of aid fromcountries, but US firms are the principal
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owners of the major commercial enterprise in Guinea,0 million Fria bauxite mine and alumina works.
Monetary Policies and Problems
African countries have avoidedinstability characteristic of countrieslater stage of economic development,Latin America. There has been littlespending has been kept under control;has been within reasonable limits;exchange reserves by and large have fiscal and monetary policies incountries are guided by Europeans who continue
to occupy high positions in both the treasuries and the central banks. Moreover, most of the new regimes have continued on their own the prudent moneypolicies typical of most colonial governments. There are good reasons for this conditionhe money economy in most African countries is too small and the production base too narrow to provide much opportunity to stimulate development through monetary expansion.
those few countries that deviatedmonecary and fiscalali, andesser extent Sierra Leoneincreased government spendinginflation, declines in the free marketthe national currencies, and sharp declinesexchange reserves. At the same time,was nil or negligible, partly becauseof imported goods as foreign exchangedwindled. In addition, these countriesso heavily abroad that they soon foundunable to repay their debts and were forced
to reschedule or default on payments. Mali'sof debt repayments, for example, considerably
exceeds its export earnings.
Attempts at Regional Integration
economic integration amonghas been widely supported sinceAfricans and by outsiders seeking solutionscontinent's problems, many existinghave actually been broken and nounions have been formed. The UNfor Africa, following the lead of sister
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on other continents, formed subregional groupings and held numerous conferences on the ways and means of promoting economic cooperation and establishing free trade and payment areas. Its officials attempted to convince the governments of the member states that the small size of each national marketevere limitation to industrialization.
inherited some of the world'sunions, but many of these havein former UK colonies. teadyof regional institutions in East Uganda, and Tanzania egan when thewas abandoned6 and variouswere placed on the formerly free flow ofand capital. ewwas signedhich at laastdisintegration, little new cooperation is
yet apparent. The Rhodesianolitical and economic union, broke up at the end; since5 all but one of the common services have been disbanded, mainly because of the politicalbetween Rhodesia and Zambia. Most ex-French states have continued toommon currency, and. the Equatorial States (UDEAC) have common external tariffs- These connections, however, are designed primarily to retain French control over monetary policy and have not resulted in much economicamong the member states.
nationalismrincipalthe development of intra-African While African leaders continue to payto closer cooperation, they act innarrow self-interest. Each desires to havesymbols of economic progress, such as oiland textile mills. Thus similarhave been built in many nations,mall national market and many unablean efficient operating size. Thishas already been partially responsibledecline of intra-African trade by5 Even at its peakhowever, these exports accounted for lesspercent of all African exports.
Export Markets*
in exports ofproducts, the key to broad-based
See Figures nd nd Appendix Table 2.
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development, have been small because of the slow growth in world demand. Consumer expenditures for most of these commodities in industrial countries have been risinguch lower rate than aggregate income. Income in other less developed regions is still too low to permit substantial imports of African products, and many of the poorer nations of Asia, Latin America, and the Kear East produce the same commodities grown in Africa. Competition from synthetic materials has depressed African exports of cotton, sisal, and rubber. Peanuts are beginning to suffer from competition with other oilseeds, such as soybeans, whichigher percentage ofnow in greater demand than the oil content.
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Exportsew minor proaucts such as tea,and hides and skins have increased rapidly, but their total value is small.
exports of thehave suffered from the loss of Frenchand subsidies. During thesearned anillionthis special treatmentubstantialfor countries like Senegal, whosecrop, peanuts, was sold atorld market prices Host ofpreferences and subsidies have been phased
out and replaced with considerably less favorable EEC ones. Most of the remaining subsidies are slated to end Some additional preferences andbenefits may result when the agreements between the EEC and its associated African statesut any gains are likely to fall short of the previous French benefits.
countries have tried to boostexports by introducing newndhas committed several hundred million dollars
to this end. Progress has been disappointing, ma'ir.ly because almost all tropical products face saturated markets. Moreover, the international commodity agreements, through output quota systems for specific products, freeze the ptv-portion of the market presently held by each producing country.
sharp contrast to most agriculturaland oil exports have been risingshare in total exports increased from about
ercent to aboutercent during the last decade. The trend is continuing because new mineralamounting toillion dollars, are now being undertaken or are soon scheduled to get under way. Most of the money is being spent in countries that already have seen considerable expansion of mineral output, such as Nigeria, Liberia, Mauritania, Rhodesia, and Guinea, but one new country also is nowajor mineral producer. In5 million is being spent to increase petroleum output and open up new iron ore mines. For existino major private foreign investment projects and those' being undertaken, see
growth in demand for some Africandue mainly to their competitive advantage. As
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BLACK AFRICA: Major Private Foreign Investment'
ORE
Stotss
COPPftf SAO United Kingdom, France
lan
BAUXITE ANO0 United States. Franc
MANGANESE
rance. United Stole! CRUDE OIL
O** Belgium (na liona Iidd fay the Congo)
S50 mted Slotei
COPPtf?
South Africa, Uniled Stow
'A
sources of supply of basic minerals such as iron ore and bauxite are being depleted elsewhere, exploitation of the richer African deposits is West African crude oil has the advantage of low sulfur content, which causes less airthan oilsumber of the world's major producing countries.
Some traditional African minerals such as copper and diamonds do notompetitivethat would allow them to enlarge their share of the world market. Moreover, world demand for such minerals is not growing rapidly. Technological improvements are reducing input requirements ofraw materials per unit of manufacturing outputfor example, the new thinwall copper tubing has considerably reduced copper requirements. There is strong competition from certain manmade materials. Industrial diamonds have been hurt by synthetic diamonds, and many metals face competition from plastics.
50. Changes in world market prices for Africa's agricultural and mineral exports have had little impact on the economies of most African countries in recent years. The decline from the unusually high prices after World War II and during the Koreanhad been completednd since then prices have been relatively stable. Short-term declines have been handled relatively easily, even by those countries that are highly dependent on one commodity. They have temporarily drawn down their foreign exchange holdings and/or adjusted their level of imports to export receipts.
Country Performance
Coast
51. The Ivory Coast'spercent growth rate since independence0 has been made possible by large injections of French personnel and money. The number of resident Frenchmen increased fromond new private investment averagedear. In large measure this increased French presence reflects the political stability provided by President Houphouet-Boigny. Rapid growth has occurred in this
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r
country despite the slowdown in world demand for many of its products. The Ivory Coast was able to significantly increase its world market share of several agricultural products because its foreign-run semipublic companies have marketed them aggressively, thus permitting the output of small-scale African producers to grow along with the production from foreign-owned plantations. Increased government revenues from economic expansion created large budget surpluses which were applied toschemes to boost production still further.
Kenya
52. Economic growth in Kenya has averagedercent annually Although agriculture and manufacturing increased, tourism led all sectors and is fast becoming the country's foremost earner of foreign exchange. Kenya is the only African country where tourism has reached significantamountingillion Kenyatta has given the country stability by holding in check the rivalry between the country's two main tribes and bylack-white onfrontationradual shift of the white-dominated cash agriculture to African ownership. Large amounts of aid from the United Kingdom to pay white settlers for their farms have helped bring about this peaceful transfer. In spite ofspurts of emigration, of the large pre-independence non-African community have remained because they were allowed relative freedom in the operation of their businesses.
hose Growth Js Based Exclusively on Foreign Enclaves
53. Mauritania, Gabon, and Liberia are small countries whose growth has been almost entirely due to expanded output of foreign enclaves. For example, Mauritania, withillion people and land that is almost all desert, had chronic trade deficits and was supported by foreign aid until the opening of its iron ore mine Since then, Mauritania hasrowth rate of aboutercent perrade surplus,onsiderablein its overall balance-of-payments position. It has been able to reduce its dependence on foreign aid because government revenues from mining now
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finance both operating expenditures and some economic development.ew Mauritanians, however* have prospered by employment in the new enterprises, and the majority of the populace are still poor nomads or subsistence farmers. The growth of enclaves in Gabon and Liberia has brought results similar to those in Mauritania.
Countries Affected by Political Strife Congo (Kinshasa)
Congo was by far the most seriousAfrica's post-independence upheavals. Ininherited one of the most advancedAfrica,ell-developed transportand other infrastructurehrivingsector. The economy, however,on moreelgianand teachers. The seven years offollowing independence caused thethe majority of theubstantialin the infrastructure,harp dropcrop production, especially amongthe country nowodicum ofeconomy is stagnant because it has lostforcearge foreign community eagerand grow.
Nigeria
has had its prospects dampenedby the tribal hatreds that causedcivil war. This most populoushas benefited since independence inmorealf-billion dollar investmentproduction,arge part of thegrowth rateercent annually wasto the emerging oil industry. revenues from oil wereand were climbing rapidly. The civilstarted inesulted in about adecline in exports, mainly because ofof petroleum, palm, and other exportthe productive Eastern Region (Biafra). alsoecline in the efficiency ofand ccru.unications throughout thebecause the Ibos who staffed theseslaughtered or fled in terror back to Biafra.
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whan the civil war ends, the Fedural government will have great difficulty in reintegrating the Biafrans into the Nigerian economy.
Countries Undertaking Overambitious Devclopfr.ent Programs
Ghana
56. Among those countriesGhana, Guinea, and Malithat have attempted to complete unrealistic development programs, Ghana has the best resources. Itarger share of its population in thc cash economyboutercentthan any other Black African country and one of the highest literacy rates. It also had at the time of independence7 more0 million in foreign exchange. But even these resources were inadequate to handle the ambitious development program that Nkrumahupon. Economic development projects were poorly planned and unprofitable. In addition, much of the money went into ostentatious public buildings. Government services became progressively chaotic, and economic growth declined until5 it hadstopped. Meanwhile, Nkrumah used up the foreign exchange reserves and borrowed heavilyand the government soon found that it wasto meet its repayment commitments. Since the overthrow of Nkrumah6 the new government has made some progress in correcting these problems, but it has been hampered by the large repayment obligations on foreign debt and numerous unproductive and costly white elephants inherited from theregime.
Zambia
57. Since independence in, Zambian economic growth has averagedercent annually, but output of basic commodities has not increased appreciably. The growth has been almost entirely due to vastly increased government spending on roads, schools, and other infrastructure paid for by soaring revenues resulting from high copper prices. There has been little or no progress in increasing the country's agricultural and mineral production,because of the extreme scarcity of skilled manpower. Transport and supply problems stemming from the UN trade boycott against Rhodesia also dampened Zambia's economic progress because of its heavy reliance on Rhodesia.
CONMPENTIAL
The Stagnant Countries
is typical of the numerouscountries whose economies barely keep upgrowth. Like most of thesereceives relatively large amountser capita versusor the region as
a whole over the past several years. Part of this assistance is used to keep Somalia's very limited modern economy functioning and the government budget in balance, but the major portion is used to improve infrastructure and to establish new productive Aid has failed to improve outputbecause of the acute lack of physical and human resources to make effective use of it. there are few if any commercial agricultural products that could be grown to compete in world markets. Italian-owned banana plantations whose output makes up half of Somalia's meager exports exist only because of guaranteed markets in Italy at higher than world prices.
Outlook
fundamental economic structurelittle during the past two decades andabout the same in at least the next The population will still be mostlysubsistence activities, and the small modern
will lack sufficient skilled personnel to
run and staff additional modern enterprises. The requirements for rapid broad-based development are likely to be the same as those in the past: arge expansion in exports of African-grownigh degree of political security,elatively large foreign participation in the economy.
apid expansion in exports of African-grown
products has been the greatest stimulus toindigenous development in severalthe next half decade, however, thesenot likely to increase at more than 2because of sluggish world demand for There isossibilityharp
decline in the region's main agricultural exportcoffee. If consumer preference develops for new freese-dried instant coffee, which requires high-quality Arabica coffee produced mainly in Latin America, the market for regular instants using African Robustas would decline. Kenya and Ethiopia, the only
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African Arabica producers, would benofit from this trend, but the much bigger Robustangola, the Ivory Coast, and Ugandaould suffer substantial losses.
The combination of political stability and large foreign communities that has been instrumental in the development of Kenya and the Ivory Coast is unlikely to occur in other black -ruled African Although many others also have natural resources for development,ew will be able to create the proper climate essential to foreign private investment.
The majority of African countries will have to be content with modest progress at best. Although several countries will earn development funds from mineral exports, most will rely on foreign aid. But major aid donorsFrance, the United Kingdom, and the United Stateshave been reducing their Other large donors, such as Germany, Italy, the EEC, and the IBRD, may do little more than keep the aid levels froa falling. Among the Communist countries, China's aid is likely to riseas that country follows through on its commitment to build the Tanzania-Zambia railroad.
But even this costly project would add only about
5 percent to the present level of total aid receipts.
development process will be slow even
in those countries receiving large funds from foreign aid or mineral revenues. Because of the limitedmarkets available,mall portion of government development spending can profitably be used to increase African agricultural production. Most outlays will be for projects which onlyaffect African productionroads, schools,
and agricultural extension servicesand which can only bring about gradual development.
64. igh rate of economic growth5 toercent annuallynd broad-based development is likely in black-ruled Kenya and Ivory Coast and should occur in white-ruled Rhodesia once the UN sanctions have been ended. If the new Lisbonfurther relaxes its restrictions on non-Portuguese investments, the Portuguese territories
could alsoigh rate of economic
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Growth ratesercent annually will almost certainly take place in those few countries with rapidly expanding mineral exports, especially Mauritania, Guinea, Liberia, and Nigeria. Prospects are fairly good for new investments in copper and diamonds in Botswana and in uranium in Niger. New investments planned over the next few years in Zambia and Congoowever, will increase revenue from copper only moderately. Tho supply of thisy be greater than world demand for severalnd prices are likely to decline. copper revenues will continue to supply thef foreign exchange and government revenues in both Zambia and Congo (Kinshasa).
In most African countries, economic growth will remainear. In some countriesanzania, Uganda, Ghana, and Sudanxpansion of the indigenous cash economy may take placeomewhat faster pace than the annual population growth ofear because of improvements brought about by development spending. Those countries which are poorest in commercially exploitable natural resources will at best grow at about the same race as population
A number of African countries probably will experience political instability at one time or another in the next few years; this would almost certainly reduce their rates of economic growth. Some of the leaders who have fostered development seem likely to be out of office in the next few years. Their replacements may not be able to exert effective control over such divisive factors as deep-seated tribal animosities. In some countries the danger persists that economic factors such as falling exports and reduced foreign aid may cause leaders
to become xenophobic and force the departure of those foreigners who are essential to operate the modern economy.
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