Full Citation

  • Title The Economy Prospers
  • Author By the Hon. F. S. Owen, M. P.
  • Publication Title Financial Times
  • Supplement Title Rhodesia: A Financial Times Survey
  • Collection The Financial Times
  • Date Monday,  Oct. 21, 1957
  • Issue Number 21,297
  • Page Number 6
  • Place of Publication London, England
  • Language English
  • Document Type Editorial
  • Publication Section Opinion and Editorial
  • Source Library The Financial Times Limited
  • Copyright Statement © The Financial Times Limited. All rights reserved.
THE ECONOMY PROSPERS By The Hon. F. S. OWEN, M.P. MINISTER OF COMMERCE AND INDUSTRY HE area of the three terri- tories which comprise the Federation-Northern Rho- desia, Southern Rhodesia and Nyasaland - is approximately half a million square miles, so that it is equivalent in size to France, Germany (East and West), Belgium, The Nether- lands, Switzerland and Great Britain (Northern Ireland and Channel Islands) combined. The population is estimated at 275,000 Europeans, 7,140,000 Africans and 32,000 of other races. The African population is more or less evenly divided between the three territories, but it is of particular significance that Nyasaland, the smallest (37,000 square miles), is the most densely inhabited with an African population of 2,630,000. Of the European population, 193,000 (or two-thirds) are in Southern Rhodesia, 73,000 in Northern Rhodesia, and 7,500 in Nyasaland. The general economic picture of the territories is one of diversified mining, agriculture and industrial development in Southern Rhodesia, a pre- dominantly mining economy in Northern Rhodesia, with agri- culture achieving increasing significance; while in Nyasaland the African population is at this stage almost entirely engaged in subsistence agriculture. METALS IMPORTANT 'HE export trade of the Federation is almost wholly dependent on raw materials. In 1956 metals represented over 70 per cent. of total exports, the greatest contributor being copper at a value of £114m., almost all of which was pro- duced in Northern Rhodesia, together with zinc, lead and cobalt from that territory. Other mineral exports of significance are asbestos and chrome ore from Southern Rhodesia. In the agriculture sector the main export commodities are unmanufactured tobacco pro- duced in all three countries, tea from Nyasaland, and ground- nuts produced throughout the Federation. The year 1956 saw the largest net immigration of Europeans in our history. After allowing for emigration the net figure was about 60 per cent. greater than that of 1955 and over three times that of 1954. In 1956 the net inflow of capital was approxi- mately three times that of 1955. It will readily be appreciated that this inflow of people and capital, although resulting in substantial increases in production, has placed strains on the Federal economy. A photograph taken from a corner of the sw'?mmi pool, Salisbury, two yers ago. The net national income has risen to a marked extent, although a substantial smaller increase was shown in 1956 as opposed to 1955, the figures being: £323m. in 1956, £302m. in 1955, and £260m. in 1954. The reason for this levelling off is the decline in the price of copper, to which must be ascribed the fact that an increase of 11 per cent. in the volume of the Federation's domestic pro- duction has given us an increase of less than 91 per cent. by value. It is important to remember that during the first quarter of 1956 copper prices were at their peak, and the trend for the re- mainder of that year and for 1957 reveals more drastic changes in the pattern. Despite this, the Federation maintained a favourable visible balance of trade which amounted, in 1956, to no less than £29m. RAW MATERIALS THE Federation is indeed fortunate in its resources of essential raw materials. The enormous copper - mining in- dustry overshadows all others and is still expanding despite price moves, but other base minerals are of extreme impor- tance. In addition to lead and zinc, nickel deposits are being developed, as are many rarer metals of value in the atomic field. Our coalfields are enormous, and to-day have a productive capacity in excess of domestic requirements, and the extent to which we can meet the demands of the export market is governed only by railway capacity. At the same time, the develop- ment of an iron and steel industry is proceeding apace, thanks to major British con- cerns having taken over the Rhodesian Iron and Steel Com- mission works established by the Southern Rhodesia Government. The Federation is self-sufficient in cement and many other building materials. Soft wood production is grow- ing in importance, and there are prospects not only of substantial supplies of building timber but a probability of pulp and paper manufacture. Agriculturally, the degree of self-sufficiency which has been achieved is illustrated by the fact that, while the value of total importations increased by 25 per cent. between 1954 and 1956, the value of foodstuffs imported has remained almost static. At the moment the Federation has an increasing surplus of maize, and it is clear that, with increasing production by the African, new outlets will have to be created not only through export but via industrial channels of processing and converting. The second most important (by value) of our export com- modities is tobacco, and the industry is well established, par- ticularly in Southern Rhodesia and Nyasaland. Other signiti- cant agricultural items are cotton and tea in Nyasaland, pulses and groundnuts, together with a useful trade in beef with the Belgian Congo. As the domestic market in- creases in importance, prin- cipally by raising the level of purchasing power of the African, we can expect the establishment of more industries utilising locally-produced raw materials. The textile industry is growing fast and should provide a market for Nyasaland's cotton, and for a production in Southern Rho- desia which has fallen off during recent years but should again come into its own. Another pointer to the future is the establishment of a ferro- chrome industry at Gwelo, which highlights the value of reducing minor ores in the Federation rather than exporting them in bulk. The enormous saving in transport costs. if our export of chrome ore (which in 1956 amounted to 510,000 tons) were substituted by export of the chrome salts or alloys, is self- evident. The value to the economy of the country becomes even more obvious when one notes from the trade statistics that our chrome has an export value of something over £10 per ion, while ferro-chrome is valued at roughly £130 per ton. BASIC SERVICES THE Government's role in these developments is to pro- vide basic services adequate for private enterprise to take advan- tage of the natural resources. It is here that the hydro-electric project at Kariba on the Zambesi River fits into the picture. Power should become available from this source as planned, iu 1960. The advance made by the international Bank for recon- struction and for payment to assist in the financing of this project was the biggest loan that the bank had made in its history. Negotiations for the financing of Kariba were conducted on the assumption that the cost of the first stage would amount tc £80m. The Federation is putting up from its own resources 41.1 per cent. of this amount; the U.K.'s contribution is 35 pe= A photgraph take from the sme po recently, dearly aowlag developmnt 7-9 I - L *ý ·---- ----~i ·rl :- 1 '· Purchasing power is increasing. Above is an interior view of the O.K. Bazaars store in Bulawayo. cent., and other sources are subscribing the balance of 23.3 per cent. RAIL TRAFFIC LOOKING at transportation, our railway system-- pur- chased from private enterprise by the State a few years prior to Federation-which went through a very difficult time after the war, when equipment was virtually unobtainable and traffic offering was increasing daily, is now meeting practically all the demands made upon it. Until last year coal supplies to industry and power stations had to be carefully allocated because of the difficulty in meeting move- ment demands on the railway, but the carrying capacity has now so much increased that these difficulties have dis- appeared. It will still be neces- sary, however, to spend large sums of money on the improve- ment of the railway facilities, and this is one of the major items figuring in the Federal Govern- ment's development programme. It is planned to spend £39m. in the next four years on railways. It is a noteworthy feature of the current situation when rapid development is imposing some pressure on available resoyrces and Government has found it necessary to introduce credit restraints, that import controls have not been resorted to as a means of controlling ex- cessive strains on the economy. The Federal Government has preferred instead to concentrate on increasing available resources by, for example, applying funds on a priority basis to railway development, and by selective immigration and, so far from having restricted importations, has relaxed control during the course of the past year. In 1957 import controls have been further relaxed, restrictions on non-sterling/non-dollar goods are almost entirely eliminated, and a large range ol products has been placed on an open general licence for importation from the dollar area free of controls, while controls on sterling imports are non-existent. The continued high level of immigration and investment de- mands extreme care in financial and economic administration and, provided such care is exercised, full value will be derived from the increase in the Federation's resources repre- sented by the additions to the population of skilled workers and to investment African housing has been con- structed so far predominantly by municipalities and, through them, home ownership schemes for Africans are now being developed. This is giving rise to a complete change in outlook, as the African, through house ownership, is becoming more stable and is being absorbed permanently into the labour force, with a consequent step- ping up of his purchasing power. EXPORT OUTLETS TN conclusion, I can say that the point has been reached when we in the Federation feel that we have goods to offer in external markets other than the traditional one in the Union of South Africa. The country 'generally feels that it is incum- bent on her to maintain the lead in industrial development which she now has among the Central and East African countries. With our ties to the Common- wealth, and to Britain in par- ticular, we do not, however, regard ourselves as standing outside the European scene, where such interesting develop. ments are now taking place through the creation of a Euro- pean Free Trade Area. The Federation feels that its future can be vitally affected by developments of that kind and is studying the prospects with regard to its own industrial potential, the need for markets for agricultural production and the pattern of trade relations which is likely to develop from present world ttinking.