by Guy Arnold
Nearly ten years after the foundation of the ECA, in mid-December 1967, a Conference of African Planners was held in Addis Ababa; it was called to consider the effects of planning in Africa over the preceding years. Between 1960 and 1967 out of 40 independent African countries, including South Africa, 34 had launched development plans. The conference headings included: assessment of development potential, plan implementation, foreign aid, requirements of trained personnel, planning advisory services and the African Institute for Economic Development and Planning (IDEP). On aid the Conference had this to say: ‘Although foreign assistance was valuable in giving a push to the process of economic development, it could not be a substitute for local resources. African countries needed to aim at achieving national self-reliance, and avoid drawing up plans in which external assistance had a preponderant share.’ The African and Malagasy Common Organisation (OCAM) presented a paper to the Conference of African Planners on planning in French-speaking Africa: ‘The authors of the first national development plans of the African countries seem to have been victims of the illusion that it was enough to plan a slowly developing economy to give it the dynamism it lacked. To this illusion there was later added another, namely that financing of foreign origin would in all circumstances be a substitute for national efforts proper.’
Speaking at Geneva in July 1968, Robert Gardiner, the Executive Secretary of the ECA, reviewed the 1960s to that date.
In developing Africa, where the greatest number of the poorest and least-developed countries are to be found, growth has been slower than in other regions. African total output, measured in 1960 prices, grew by 3.4 per cent annually during the first six years of the decade; and income per head grew by about 1 per cent per annum over the same period. As a consequence the poverty and the harsh conditions which characterized much of the continent at the beginning of the decade were but slightly alleviated in the succeeding years.
The gap between Africa and elsewhere was widening. Gardiner said that the work of the ECA was a beginning, ‘a promotional and development effort to improve material well-being’.
An Economic Survey of Africa since 1950 published by the United Nations in 1962 suggested that there were two model types of economies in Africa into which most countries fitted. Model One was a country in which commercialization had been brought about chiefly by the transformation of part or parts of the traditional economy usually by peasant agricultural producers for export; where there was relatively little foreign investment in large-scale enterprises; and where the outflow of workers as wage earners from the traditional economy to the modern economy was relatively small. Model Two was a country in which the exchange economy had been brought about largely by foreign capital and enterprise, mainly in mining and by foreign settlement; it was a highly capitalized modern economy (in parts) and its techniques were advanced; the modern economy, and consequently the exchange economy, depended heavily on capital provided by non-Africans, and in most cases upon foreign capital; and there was a relatively large outflow of workers as wage-earners from the traditional economy to the modern economy while in the preceding 10 years there had been a sustained increase in real national incomes in most such countries. At the time of this survey per capita incomes varied between US$70 in Sierra Leone to US$346 in South Africa although strict comparisons were not possible because of the difficulty in measuring subsistence incomes.
By the mid-1960s the World Bank accounted for over half of all multilateral financing. ‘The World Bank, however, is in two respects a less than independent ideologically indifferent body. It is for all practical purposes a lending agency controlled by Organisation for Economic Co-operation and Development (OECD) members and it is committed to patterns of development that include large private sectors.’ Moreover, in the 1960s voting power gave the United States a third of the total vote while the United States, Britain, France and West Germany had a virtual majority.14 Addressing the Development Assistance Committee (DAC) of the OECD in Washington on 20 July 1966, the President of the World Bank, George D. Woods, said: ‘Today the average terms of assistance are harder than they were last year or the year before, and the prospects are disturbing. At the same time, more and more of the flow of finance is being counterbalanced by the debt service paid by the developing countries. Service on public and publicly guaranteed debt more than doubled between 1961 and 1965. More than half the inflow of development finance is now being offset by the return flow in the form of amortization, interest and dividends. Paradoxically, at the same time that the relative volume of aid has been dwindling, the capabilities of the developing countries have been growing.’ That last sentence, at least, appeared to demonstrate that aid had had some positive impact. The ‘soft’ arm of the World Bank, the International Development Association (IDA), had difficulty in obtaining its triennial replenishments since the rich nations, and especially the United States, were reluctant to provide finances that obtained such low returns. George Woods had asked for refinancing at the level of US$1,000 million a year for the period 1968–70 but obtained only US$400 million a year. The Economist commented:
It was obviously difficult for the US, in the present climate of opinion there and balance of payments troubles, to commit its 40 per cent share of the total, but it has been pretty uncompromising about the strings to be attached; it has managed in the end to get a delaying arrangement, whereby IDA will call upon the American contribution during the three years only for the amount needed to finance procurements in the US (eventually the amount deferred can be called up). This is against IDA principles and Britain, which gives 13 per cent of the total, has kicked up a hell of a fuss about it. On the other hand, the British are always fond of saying that they get back 30s. for every £1 they give to the IDA, which gives them no right to point the finger at other people.15
During 1968, when Robert McNamara succeeded George Woods as President of the World Bank, there was a growing sense of the need to reappraise aid. According to The Times, ‘Unless something is done urgently to shock the donor countries out of their growing cynicism and prevarication, the “have-nots” must inevitably lose patience and attempt to take the law into their own hands. A world so divided, not only economically, but also politically by a bottomless gulf of suspicion, incomprehension and bitterness, would be a world doomed to self-destruction.’16
Earlier in the decade the First UN Conference on Trade and Development (UNCTAD) had deliberated for three months in Geneva during 1964. While Britain had suggested a standstill on the imposition of new tariffs against the trade of less developed countries, and the IMF had proposed providing temporary assistance when a fall in the prices of exports from poor countries occurred, and France had suggested raising prices for primary products to reasonable levels, the United States had taken an altogether different line. George Ball, the US Under-Secretary of State, said that America would be prepared to help those who helped themselves. US officials explained that this was to prick the inflated hopes of some delegations and to separate reality from fantasy. The developing countries should create a better climate for private capital, as the private investor controls a large share of available resources and can supply more practical experience and technical knowledge than ‘officials’. By the time the Second UN Conference on Trade and Development was held in New Delhi in March 1968 the rich-poor divide had widened. When we examine these public arguments about aid and the relationship between aid donors and recipients it is possible to discern the entire pattern of growing cynicism and reluctance to expand the aid effort on the one hand and the equally disillusioned frustration and anger at an unequal world on the other. The parameters that would dominate the aid debate to the end of the century were laid down at this time.
INDUSTRIALIZATION, INVESTMENT AND THE TERMS OF TRADE
Education is constantly advanced as a prerequisite for rapid economic development and yet the British industrial revolution was accomplished on an extremely narrow base. This raises questions about education in Africa a
t this time. Is education in fact the key to an industrial-economic breakthrough? Or does it create individual expectations that lead its beneficiaries away from participating in growth for the nation only to seek positions for themselves? British capitalists who exported to the Empire never resolved the predicament that if they concentrated on colonial markets they had also to create modernized industrial systems in those colonies so as to expand their market resources. In fact, the British were reluctant to build genuine industrial complexes overseas and preferred instead to sell consumer goods and leave the industrial bases in Britain.
René Dumont (already quoted) foresaw all the difficulties that new African states would face when embarking upon industrialization. He suggested that they should begin with cotton goods, one of the largest items to be imported that it would be easiest to manufacture in Africa. However, beyond that he enumerated a list of problems: ‘Any new industry in Africa will have a difficult enough time getting established, and it is almost bound to fail without vigilant and effective support from the government. Customs protection on a national level, and later on the creation of an African Common Market, itself protected, will be virtually essential in order to overcome a whole series of handicaps: weakness in infrastructure, lack of African technicians, high transportation costs, high cost of spare parts, and the inevitably small factories to begin with.’17 Through the 1960s a number of countries were disproportionately dependent upon mining revenues from foreign-controlled companies: these included South Africa, Zambia, Angola, Swaziland, Congo (Katanga), where in each case most of the profitable value adding was done outside the continent. Mining accounted for the great bulk of Western investment in these and other countries and as a cynical Guinean remarked of the bauxite extraction from his country, all they were left with were the holes.
A new development during the decade was that of assembly manufacturing whereby all the component parts of a product were exported to Africa to be assembled by cheap labour and then returned to the metropolis of origin; this was sometimes promoted as a first step in establishing an industrial base; in fact it was a sham. The new African countries were being turned into satellite economies: they drew all their capital from abroad and only developed those branches of production whose output was entirely exported. Most of the capital imports came from one source and the bulk of exports went to one destination. An appraisal of Africa’s industrialization prospects in 1964 was not encouraging: ‘Many developing countries, particularly in Africa, are dangerously dependent on one or two export crops. Frequently the volume of exports is too small a proportion of the world output for the country to have any control over price. The terms of trade, too, always seem to be moving against primary producers.’ They produce more and prices fall so they are confined to inelasticity of supply. As a consequence they turn to industrialization.18 Industrialization for small countries would never be easy. As industries grow there is a parallel increased demand for imports so that industrialization does not mean a reduction of dependency on overseas countries. If new industries are tailored solely to the home market, demand is likely to be too small to sustain it. At a time when Europe was creating the EEC to ensure its ability to compete, it was difficult to envisage successful industrialization of individual African countries. The continent as a whole had a population of 250 million, on a par with that of the EEC plus Britain, but it was divided between 35 sovereign countries. Nigeria, with a population of 50 to 55 million, about the same size as that of Britain, could industrialize successfully, but Gabon with 500,000 could not do so. The development of African regional markets would make industrialization easier to sustain but the experiments with unions during the 1960s were not encouraging.
Over three quarters of the manufactured goods used in the continent are imported. Africa, however, is peripheral to the world economy: only a tenth of the world’s primary products originate in Africa, while Africa’s imports of manufactured products are little more than a twentieth of the world total.
In concrete terms, low productivity and lop-sided economic development have meant inadequate education, poor food, little medical attention, sub-standard housing, frequent illness and a low life-expectancy for the vast majority of Africans.19
None of this augured well for African industrialization and all these negative facts suggested the absolute necessity of tackling the task of industrialization on a continental basis.
There was, as Africa soon discovered, a big difference between obtaining new investment from their former colonial powers and being overrun with aid experts telling them how to manage their economies. The French had long been hesitant about investing in their African territories and on the continent were readier to invest in Nigeria and Congo (K) where they believed the biggest returns were to be made and ‘since independence, except in the Ivory Coast, their hesitation has hardened into extreme reserve’.20 On the other hand, in 1962 there were 25,345 French technical personnel working in Africa and more than 3,000 Africans were studying in France on bursaries. Writing in the Bulletin de L’Afrique Noire André Philip argued that methods of development lay between liberalism and planning, and agriculture and industry, and suggested that financial aid should be given for investment, taking the Marshall Plan in Europe as the model. The benefiting country must then make its own effort while external aid should always be used to overcome the inevitable bottlenecks.21 This advice was not followed. Comparisons between the British and French approaches to investment were often made at this time, more it would seem in a sense of rivalry between the two ex-colonial powers than in a search for the best way to help. ‘The Franc Area was… always much more tightly organized than the Sterling Area, which was created at approximately the same time, being in essence a monetary expression of the old French policy of binding colonies to the mother country in a closed economic system, whereby France guaranteed a market for their produce at higher-than-world prices, while they took her manufactured exports.’22 From the African point of view the principal value of the franc area was that it allowed France to provide substantial aid while absolving the African governments of the need to balance their budgets. In the long run it would prove debilitating to economic independence. Most of the French aid, in any case, was repatriated either by channelling their imports from the mother country, or by the French owned firms which still dominated the economic and commercial life of these countries.
Statistics for this period show the extent to which Africa had to progress before it could break free of the colonial economic heritage. Between 1960 and 1966 the growth rate in African exports was only 4 per cent compared to over 6 per cent for imports, while nearly four times as many consumer goods were imported into Africa as were produced there and a huge proportion of goods that could be made in Africa at that time were imported instead. In 1967 Africa’s share of world exports was only 5 per cent. Francophone dependence upon France as an export market was far too high: Senegal sent 86 per cent of its exports to France, Dahomey and Niger 71 per cent each; while imports from France were at a comparable level – Mauritania taking 68 per cent of all its imports from France, Ivory Coast 66 per cent, Senegal 63 per cent, Dahomey 62 per cent and most other Francophone countries in excess of 50 per cent. Britain’s ex-colonies were less dependent than those of France and exports to Britain in 1967 for selected countries were as follows: Ghana 13 per cent, Nigeria 37 per cent, Kenya 13 per cent, Uganda 14 per cent, Tanzania 25 per cent; imports from Britain were somewhat higher except for Nigeria: Ghana 25 per cent, Nigeria 32 per cent, Kenya 25 per cent, Uganda 27 per cent, Tanzania 24 per cent.
One of the most enlightened Western analyses of the impact upon Africa of the terms of trade came from Barclays Bank in 1962:
All the aid recently given underdeveloped countries has been neutralized by the changed terms of trade which have almost without interruption moved against the producers of primary commodities for nearly ten years. It is natural that the underdeveloped countries should have a feeling that assistance is of little
or no value if the benefits of aid are cancelled out in this way.
After examining the impact on various countries, the article concluded:
The immediate duty of the industrialized countries is twofold. First, they should remove the obstacles, which they have erected in the past rather than consider new forms of obstruction. Tariffs and internal taxes on primary commodities should be swept away at once; an immediate start should also be made on getting rid of tariffs and quotas on the processed goods and cheap manufactures produced in the underdeveloped countries. The second duty of the industrialized countries is to increase aid on a multilateral basis, possibly with some new form of price insurance or compensatory finance tied to the terms of trade of the borrowers.23