RESTRICTED

FILE COPY Report No. AF35

Public Disclosure Authorized This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accurocy 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 The report may not be published nor may it be quoted as representing their views.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 Public Disclosure Authorized

CURRENT ECONOMIC POSITION

AND PROSPECTS

OF

KENYA, AND UGANDA Public Disclosure Authorized

September 13, 1965 Public Disclosure Authorized

Africa Department CURRENCY EQUIVALENTS

100 EA Cents = 1 EA Shilling = U.S. $0. 14 20 EA Shillings = E 1 Sterling = U. S. $2. 80 , 1 Million Sterling U. S. $2. 8 Million U.S. $1 = 7. 15 EA Shillings U.S. $1 million = l 357, 143 TABLE OF CONTENTS

PAGE NEMORANDUM

Introduction...... 1

Background...... 1

Recent EconomicTrends...... e...... ,..... 2

Prospects for Exports and Total Output .... N... 4

Prospects for , Savings and Capital Inflow ..... 7....7

Inplications for Balance of Payments, External and Creditworthiness...... 8

Annex I: The

Production

External Trade and Paynents

Prospects

Annex II: The Economy of Tanzania

Production

Domestic Finance

Balance of Payments

Prospects

Annex III: The

Production

Balance of Payments

Prospects

Statistical Appendix ,I2CRAhDUiM OI THE ECONOTIC POSITION AIND PROSPECTS OF ;LNYi. - TAtZLiUIf. . UG;.:DA

Introduction

1. This memorandum presents a consolidated view of economic prospects in the three East African countries of Kenya, Tanzania and Uganda. It also updates the economic reports on the three countries issued in the course of the last eighteen months (Kenya - AF-26a of July 10, 1964; Tanzania - AF-13a of November 26, 1963; Uganda - AF-27a of November 5, 1964).

Background

2. The twenty-six million people of East have an average in- come of about $75, ranging from about $90 in Xenya to some $70 in Tanzania. The bulk of the labor force in each of the three countries is occupied in subsistence agriculture, which contributes about 26% to total GDP. Commercial agriculture, consisting mainly of four export crops, ac- counts for another 24d of GDP. The four main export crops are , , and tea; together these account for between 65% and 70% of the export receipts of' the region. I4anufacturing, largely concentrated in Kenya, construction and public utilities have contributed about 10% of GDP over the past decade. Most industrial firms are-subsidiaries of over- seas enterprises. It the end of 1963, the total non-African population was 510,000 consisting of 430,000 Asians and 80,000 Europeans.

3. The three countries of East Africa became independent between 1961 and 1963. They are all members of the Commonwealth. Tanzania and Kenya have presidential forms of government based on single party systems. Uganda has a ministerial and multiparty form of government, led by the Prime I'iinister, with an indirectly elected President, who acts as Head of State. Each of the three countries has its own distinct political at- mosphere.

Is. Tanzania (then ) was the first of the three to become independent in December 1961. This was accomplished peacefully, under the leadership of President (then Prime Minister) Myerere, without any particular problems of racial or tribal strife. A series of events in early 1964, beginning with revolution on and ending with the union of Tanganyika and Zanzibar to form present-day Tanzania, led to internal problems, not without racial and ideological overtones, which have not yet been fully resolved. A complete union has not yet been ef- fected but many of the related political and administrative uncertainties appear to be clearing slowly. Uganda inherited a burden of unresolved constitutional and tribal problems when it became independent in October 1962. These complex problems, which unavoidab'y took precedence over financial and economic matters, have been handled effectively under the leadership of Prime Minister Obote. The government now appears to have -2- substantial popular support and has gone far toward improving the poli- tical climate of the country, which has recentl.r permitted noticeably greater concentration on problenms of development. Kenya became inde- pendent in December 1963. Pre-independence fears that Kenya would revert to intertribal warfare and racial into'erance have not materializedv Relations between tribes and races are increasingly cooperative. The Central Govermnent of the country under the leadershiP of President Kenyatta, has effectively limited the threat of tribal regionalism. The former opposition party, KADU, the party of regional autonomy based on tribal loyalties, has been absorbed by the single nationa.l party, KA21U, and the political situation has been remarkably stable, All three Easu African countries have consistentlyr followed an external policy that could be called "non-aligned". Each has established political trade and aid contacts with Eastern as well as Western nations.

5. East African Federation, the earnest hope of many East African nationalists before independence, has not been realized0 Arriving at independence at di.°ferent dates, adopting sometimes divergent economic policies and finding themselves in competition within a common market for the region's cconc.ic benefits, tho three countvries havc not so 1ar found- federation pran .cablc. -Zachco-artrj in turn, concen-ratcd on nation.:l ad- vantage because fecdera_-, on could 7!0it bc t'c.d.cvc:(. Thni.r dif.farences indeed tend to thlreaten the coei-,ed exi:tcnce o1 t;ho iziporxant econom,ic 'and other institutions that slave served. the three countries in ccnrion for decades. The East African common market has underg.e:ne scrious strains, which were probably only temporarily relieved by the KamDala Trade Agreer.ent of 1964. The continued existence of t-he cormion market, at least for industrial products, is now in conslderab'e doubt. In June 1965, the three Govern- ments announced their decisions to establish separate central banks and to issue separate nationa'l currencies, replacing the East African Currency Board and the East African shilling. As yet, the developments in regard to currency and common market- have not seroiously affect_o. the East African Common Services Organization (EACSO), which encompasses the common railways and ports adaiinstration, the common posts and telecommunica- tions administration, and directs the collection of inlarnd revenues and customs duties. There remains a considerable fund of mutual good-will between the three countries which makes it unlikely that their associa- tion cannot continue in a mo-e modest frameworkc consistent with national aspirations and based on strong practical advantage in a number of specific instances.

Recent Economic Trends

6. In 1963 and L964 real income growth in all three East African countries went up substantially because of increased export prices for coffee and sisal. With these commodities leading the way, average ex- port prices rose by 10% annually over the two-year period, as contrasted with a steady decline averaging 3% annually, between 1954 and 1962. At the same time, the growth of export volume accelerated to an average rate of 9%as conmpared with one of under It% in the preceding four years. -3-

The latter jump reflects in part the sharp recovery of Ugandan cotton ex- ports, which were very low in 1962 because of bad growing weather. With variations in cotton exports smoothed out, export volume growth has been fairly steady at 5% for the past six years. This achievement is largely the result of the sizeable investmlents in export crops wade in the second half of the 1950fs,, which continued in recent years though on a somewhat reduced scale.

7. The volume of activity in the non-e.port monetary sector has ap- parently expanded at a significantly slower rate than export volures since 1957, mainly because of a decline in investm.ent. Growth in subsis- tence agriculture is also estimated to have been growing at a slower rate - perhaps around 3% annually or just about the same as population growth. Thus total growth of GDP in constant prices has probably averaged no more than 4% annually since 1958, and, variations in w^eather aside, this has been fairly steady throughout the period. Total real incomes, on the other hand, probably grew by only about 3% a year between 1958 and 1962, but with the improved terms of trade, have gone up by more than 6% annually in the past two years,

8. In the latter half of the 1950's; investnent reached high levels in all three countries, averaging over 690 million or 17% of GDP in 1955-57-. About two-thirds of this was in the private sector with commercial agricul- ture of inportarce in all territories, and with manufacturing and housing investment of particular importance in Kenya. Since that period, total investment dropped steadily relative to GDP, until 1963 when the ratio reached 10.5%. However, in 1964, there was a significant recovery to about 12%.

9. Public investment held fairly -steady between 1956 and 1961, at around ;34 million, then dropped to L29 million in 1963 but grew sharply in 1964 to 136 million as all three countries get new public development plans under way. In the private sector, investment fell from a peak of about h56 million in 1956-to a low of ;41 million in 1961, but has growrn steadily since, reaching &54 million in 1964.

10. The slackenirg off investment activity was reflected in a slow growth of imports between 1957-58 and 1963. In that period, the average growth was only 1% annually in volume terms and 2% in value. With the recovery of- investment in 1964., imports grew by 7%. Nevertheless, the sharp rise of ex- ports in the past two years has led to a-decline in the sizeable current balance of payments deficit: averaging L21 milli.n in 1960-62, to virtually nil in 1963 and 1964.

llo The recent fall in the balance of payments deficit and the rise of investment implies a sharp increase in savings during the past two years. On a domestic basis (i.e. before deducting investment income payments), the savings rate rached a low of 9% in 1962, as compared with :13% in 1960, but recovered to 12% in 1963 and 14% in 1964.

12. While private savings still account for the largest share of total savings, public savings have risen at quite a hea.lthy rate in the past two years Current public expenditures rose at a slower rate than GDP from :960 t trc'h -4-

1963, and then jumped by 7% in 1964, bringing the total in that year back to the 12¶ ratio of GDP which it had reached in 1960. Revenues, on the other hand, rose considerably faster than the national product, averaging 8% annually for 1960-64. The net result was an increase in public savings (including the surpluses of state enterprises) from L3 million in 1960 to b28 million in 1964.

13. The estimates for private savings (which are derived as a residual) indicate a sharp fall between 1960 and 1962 and an equally strong recovery between 1962 and 196l4, bringing the total to p89 million or 13% of private disposable income in the latter year. The recent in- crease is undoubtedly due mainly to the sharp rise in export incomes. There has, however, been a substantial amount of private capital transfer out of the area in recent years. There have been, for example, large sales of farm land to the Government of K'enya by European settlers, only part of which has been reinvested in East Africa. M4oreover, it is likely that the Europeans and Asians leaving East Africa have taken substantial sums of capital out with them. Net emigration of these groups totaled- 17,000 in 1961-63, reversing the positive immigration trend which had persisted up through 1960.

14,, Trends in bank credit and the money supply have closely followed movements in real output in recent years, and domestic prices have been quite stable. Bank credit to the government (including loans by the Currency Board) has risen in the past four years by L30 million, but government deposits have risen by the same arount. Credit to the private sector has risen by just about 30% in the same period, with most of the rise taking place in the past two years. Time and savings deposits have risen by over 50%, and at the end of 1964 amounted to L33 million or over half as much as demand deposits. The money supply which rose hardly at all between 1960 and 1962 went up by 10% annually in the next two years, so that the total corresponded to 21% of GDP by 1964, the same as in 1960.

15. Gross public capital inflows averaging L30 million annually in the past five years, have been significantly more than the current ex- ternal deficit. However, net private capital outflow rose in 1963 and 1964 to about L25 million annually, so that foreign exchange reserves fell slightly over the period. Nevertheless, as of mid-1964, these still stood at L127 (market value), including ;20 million of sinking funds. This corresponds to nine months' imports at the 1964 rate, or eight months if sinking funds are excluded.

Prospects for Exports and Total Output

16, On the basis of past and those likely to be carried out in the next few years, the volume of output for export should continue to rise at a fairly healthy rate during the next five or six years - bet- ween 4-5% annually from the record 1964 level. However, export prices for coffee and sisal have already dropped considerably beLow the high levels prevailing last year and are likely to remain considerably lower than they were in 1964. ioreover, important marketing uncertainties exist in the case of coffee. 17. Kenrya and UTganda 'will probably be able to produce fifty percent more arabica coffee by 1968 than they did in li6. Uganda's 'arge robusta coffee crop is likely to rise only moderately in the next five years, but in total the export capability of East Africa should rise from the 200,000 tons level achieved in the past two years to over 250,000 tons by 1968 and perhaps 270,000Itons or more by 1970. However, the combined quota for the three countries urnder the Coffee Agree-ment is currently only 175,C00 tons, Thus, volune prospects depend greatly on whether East Africa can obtain inc-reases in its quota, and on the extent of non-quota exports. Although a reduction in the quota to 170,000 for thne 1965 export season is possible, it seemns reasonable to assume an expansion of 2.5% after that in line with world consunption. Kenya may have a case for a more rapid expansion of its quota, since the trees planted prior to Keny-a's adherence to the agreement will lead to a doubling of its production potential by 1963 or 1970. However, tihere are a number of othler countries in the sane nosition, and it would seem unwise to coumt on any specia'l increase for Kenya. Thus, we assuie a quota of 200,00 tons for East Africa by 1970. Assuming non quota exports remain at recent level of 30,000 tons, total exports might be 230,300 in that years Prices are projected to fall by 13% between 1964 and 1970 and another 55 by tlhe early 1970's. On these assumptions, the value of coffee exports tovuld be valued at =58 million in 1970, as compared with -62 million in 2961' and an estimated ;52 in 1965. Ugandan coffee is likely to suffer more than the others fran the price drop, so that its export proceeds are projected at only L30 million in 1970, as compared with ;35 million in 106!4.

18. Under the impact of a sharp price increase, the value of sisal exports from Tanzania and Kenya rose bY 50% in 1963 to L30 milion and remained at nearly that level in 19 6 4. Hov",ever, prices inave dropped below the 1962 level. Export volumes which have risen only slightly in recenc years are not expected to rise much in the future. Thus expoort values are projected at only 2l nillion in 1968 and 122 million in 1970.

19. By contrast, the outlook for cotton is quite promising, parti- cularly in Tanzania vwhere developrent programs now under way are expected to lead to an increase of 8% per year in the next 5 to 6 years. Kenya, which has ju1st started as a producer, also has good prospects, and at least moderate expansion is expected in Uganda, currently the largest producer. An increasing amount of production will be used dcrnestically for thle rapidly excpanding textile industry, but the exporu surplus is still likely to rise from 110,000 tons in 1963-6h to about 10D,OCO by 1968 and 160,OO by 1970. A slight downward drift in prices is expected so that export value is projected at L32 million by 1968 and b37 million by 1970 as against an average of =26 million in 1963 and 1964.

20, Total East African tea production has almost doubled since 1958, showina an annual increase of about 12% with only minor fluctuat-ions. In 1964, 28 thousand tons were exported, of' w'hilch Kenya produced over 600. The potential for expanded tea production is very good in all three countries on the basis of substantial investments already made and planned, Exports of tea should rise to about 40,000 tons by 1070, an average annual -6- rate of about 10%e The largest gains wil:L probably be made in Tanzania, where only one-half of the existing tea plants have yet reached the producing stace. Average prices for East African tea have been fairly stable over the last decade, hitting a high in 1961, then falling slightly through 1963 with a small rise in 1964. Prices are expected to drift doTm about 5% below those of 1964 by 1970. Thius, on1balance, export receipts from tea which came to 110 million in 1964 are expected. to rise to U14 million by 1970.

21. All other merchandise exports rose from !37 million in 1958 to L514 million in 1964. The main items are , , rmeat products, hides and skins, pyrethrum and nuts. Rather arbitrarily, we project these to rise to L70 million by 1970. In total, then, maer- chandise exports, excluding re-exports, might rise by about 15% in the next six rears over the record 1964 level". This is the net result of a projected average 35% volume increase and an average price decline of about 1%. As compared with the 196I-62 average, export values would be 635 higher in 1970, resulting from a 6. average increase in price, and a 50 increase in volume over that base period. Hlowever, it should be emphasized that an expansion in the volume of activity at suchl rates will depend to a very considerable extent on the maintenance or improve- ment of cultivation practices, and on a strengthening of supporting infra-structure, especially in transportationo

22. The main identifiable external invisible earnings of East Africa consist of earnings from U.K. forces stationed in Kenya. These amounted to about 110 million annually in 1961-63 and perhaps L8 million in 1964. Th,ey are expected to fall further. llowever, tourist earnings, which are still quite low (perhaps '14-5 rmiillion at present) are expected to rise quite rapidly, and should offset most of the drop in earnings from the U.Tr. forces0

23. in -the main non-export sectors, prospects for aroi-rth will depend heavily on the rate of irvestment, and on the future of the East African regional economic cooperation. Construction activity, of course, wdill be most directly affected by investment and should expand rather sharply if investment -rows to the extent which seems feasible - i.e. an increase of 60/] over the 1964 level by 1970. The extent of regional economi-c cooperation and integration wrill have an important bearing on the rate and efficiency with uhich productions for the home marIket can grow. This will be true to some extent for agriculture, but will be particular2y important in the case of manufacturing. As indicated earlier, the common currency system is about to be replaced by three separate systems, and the common market arrangements have been subject to considerable strain. Neverthe'ess, it may well be possible to maintain a limited degree of free trade and to continue to reach agreements on regional sharing of specific industrial projects. On this basis, the long run outlookL for industrial growth in East Africa can be considered quite favorable.

24. On the other hand, a factor of great importarnce in industrial development will obviously be the availability of entrepreneuarial skills and private capital. As noted, there have been considerable -7- emigration of non-Africans in the past three years, and large scale private capital outflow. It seems unlikely that there will be any general upsurge in manufacturing investment or activity until the political climate in the area improves to the point where private investors have considerably more confidence in the future than they do today. Nevertheless, at least a moderate continued expansion seems possible in this sector over the next few years, withi the possibility of more rapid growrth after that, if the political climate improves.

25. On balance, a moderate acceleration of the growth rate in the non- export sectors should be possible over the next six years. Tentatively, an increase in the rate from about 3% in 1957-63 to 4% in 1963-70 seems within the bounds of plausibility. But with a slight drop likely in the growth of export volume, the overall growth rate is likely to be only moderately above the 1957-63 level. Real income growth should follow roughly the same trend as real output since export prices in 1970 are projected at nearly the same level as in 1963 (and in 1957-58). However, this projection is contingent on the assumptiorL of a continued expansion of investment.

Prospects for Investment, Savings and Capital Inflow

26. All three governments have plans for very large increases of public investment over the next five years, ranging from a projected doubling in the case of Kenya, a tripling in Uganda and a quadrupling in the case of Tanzania. We are not in a position to provide a detailed assessment of these investment plans at present, either in terms of priorities, or of their implementation prospects. However, they do seem very ambitious on the basis of past performance. Nevertheless, enough is known about some of the major projects and programs to conclude tentatively that an approxi- mate doubling in public investment might be achieved on a reasanably ef- ficient basis by 1970. Thus, it is possible that public investment might reach b7O million by 1970.

27. The future of private investment will dlepend heavily on the degree of confidence in the future which government policies and general condi- tions in the region can create. Taking a cautiously optimistic view on these points, we might project a 50% increase in private investment between 1964 and 1970. Thus, total investment would be projected at L150 million by 1970, as compared with the L80 million average of the past three years.

28. All three governments are projecting at least moderate increases in public savings over the next five years. However, the pressures for con- tinued expansion of current expenditures will remain strong and in most cases well justified by the need to improve public services - particularly in agr-- cultural extension, road maintenance and education. Thus, it seems likely that government consumption will tend to rise relative to GNP - from around 12% in 1964 to perhaps 13% by 1970. Given a major effort to increase taxes and to increase the surplus of public corporations, it should be possible for total revenues to go up samewhat more rapidly --from the 15% ratio of 1964 to perhaps 17% by 1970. However, this would still leave the bulk of invest- ment to be financed from private savings and foreign capital inflow. -8-

29. It is likely that the domestic private savings rate will fall in the next year or two to a rate well below the :L25 average reached in 1963-64. These were years when export incomes went up quite suddenly, and it may be expected that the consequent increases in consumer demand will make themselves felt fully only in the next year or twro. M4oreover, with the continuing departure of Europeans, and a levelling off of export income, the main sources of private savings will tend to shrink at least for a while.

Implications for Balance of Payments, External Debt and Creditworth-iness

30. Trends in investment and savings such as indicated above imply a rather sharm increase in imports over the next several years. Imports of capital goods, which have accounted for 4O% of total investment in the recent past, can be expected to contirnue to rise rougihly in line with inves-tment. Imports of raw materials and supplies for the domestic manufacturing and construction industries should also tend to pick up at least moderately over past rates of growth. Finally, a temporary upsurge in imports of consumer goods seems likely to follows the recent sharp ex- pansion of personal incomes. In total, an impDrt growth rate of around 6% seems prohable between 19 6 4 and 1970. This would bring the ratio of imports to GDP from the low of 22% recorded in 1963-64 back to the 1958-61 average of about 24/ by 1970. The ratio would, however, still remain well below the 28% reach.ed in the 1955-57 period. Together with the slow-dowm in export growtlh presently foreseen, and a r-se in net investment income payments, this would lead to the re-emergence of a current deficit by 1970 in the order of L50 million, as compared with a current balance of zero in 1964, It is likely that some net private capital outflow wrill continue to take place in the next few years, but assuming the investment climate improves, it should be possible to secure a moderate amount of net inflow in later years but hardly more than L10-20 million annually. Thus, there would still be need for substantial net public inflow - perhaps in tae order of 135 million by 1970.

31. Gross public inflow would, however, have to be significantly higher than this because of the sharply increased amortization payments on existing external public debt due in the next six years. This debt now totals over r222 million, an amount equal to 115% of export earnings in 1964 and to nearly one-third of 196h GDP. EACSO holds about 28% of this debt, Kenya about 37%, Tanzania 19% and Uganda 16%e. Interest on this debt (which is included in the current deficits as proiected above) will decline slowxly from about L9 million in 1965-68 to around L7 million in 1971-73. Howiever, anortizat4on charges w1i1 jump from about LS million in 1965 to L13 million in 1968 and a peak of 1_7 million in 1969, declining to an average of about ILl million in 1970-73. Thus, at the peak, total service on existing debt will amount to about 13p o1 1964 export earnings, while the average service ratio for 1968-70 would be nearly 11%, of projected external earnings, declining to about 8% in 1971-73. -9-

320 Wlithl the exchlange reserves currently ecquivalent to eight months imports, East Africa could, if necessary, meet sonme of its capital require- ments by a modest draw-down of these resources 4, lowever, any sizeable use of reserves would seem unwise, in view of the pro-ected growth of imports (by 1970, the present reserve level would equial only five months imports), and in view of the vulnerability of exports to sharp year to year variations in wjeather conditions and prices.

33. On this basis, gross public capital recquirements wouLld rise from the ;31 million annual average of the past four years to an average of Th4 m. for the next five years. As a ratio of GDP, these gross totals would rise only sligntly - from around 4.0% of GD? recentLy to albout 5% in the early 1970's. However, these totals take no account of additional debt service on new capital inflow.

34. For the period 1965-68 alone, this element is not likely to be of great importance, assuroing that mediuum term financing is kept to small amounts. About -20 million of the capital inflow projected for 1965-68 consists of the undisbursed portion of existing debt. ;-bre importa-nt, grace periods on new loans made in the period will practically all extend into 1969-72. But, tihe problem of additional debt service could growT to very large proportions by thle mird-197O's, un'less a sizeable part of capital inflow over the next decade is providecd on easy terras, In thie past four years, nearly half of gross capital inflow has been in the form of grants from the . It seems inevitable that the share of outright grants wrill fall significantly in the future. However, an increase of credits on IDA t-erms may be possible. A total of $29 million of IDA credits has already been extended and another Q38 million is under active consideration. $28 million of U.S. Government and German loans have been made on similar terms and further assistance of this type should be forthcoming.

35, However, in view of its moderately favorable grolr..th prospects, and the decline in service on existing debt in the early 1970's, cast Africa does have some margin of creditworthiness for borrowing on ccn- ventional terms. It is hard to quantify this miargin, but it would be not unreasonalble to suppose that the area could conitinue to carry debt service corresponding to around 12% or 13% of export earnings (or 3% of GDP) during the 19 70ts, i.e. about L30 million on the average. Deducting average service on existing debt of about L14 million (1971-78) iwould leave an average of L16 million for service on new conventional loans in this period, Assuming the average term and grace periods are kept relatively long, this would permit East Africa to borrow a significant portion of its capital requirements on conventional terms, at least over the next five years.

36. Considerirg the three countries separately, their capacity to service additional debt is rather similar, althlough Kenya and Tanzania probably have sonmwhat more scope in this respect than Uganda. -10-

37. Kenya's total debt, including a notional one-third of the EACSO debt, is the largest both in absolute terms aind in relationship to GNP arnd external receipts. However, Kenya's higher per capita incorme and - its more diversified economy provide the basis for a higher debt serviC7- ing capacity. This advantage is reflected in Kenya's surplus in intra- territorial trade with the other two countries. In 1964, this surplus amounted to 130 million including the surplus in invisible transactions or the equivalent of 60% of Kenya's extra-territorial exports. - Thus, while the ratio of service on existing debt to projected -extra-territorial exports will average about 16% in 1968-70 and 8%a in 1971-78, these ratios become 11% and 5% respectively when the present inter-territorial surplus is added to exports. (This measure of debt service capacity becomes par- ticularly relevant when it is recalled that intra-territorial trade will be "rexternalized"l as soon as the present common currency is replaced by three separate systems). While it is unlikely that Kenya's surplus with the other two countries will grow, particularly because of the restric- tions being imposed by Tanzania, it is likely to remain substantial for some time. Finally, it should be noted that Kenya's proposects for expanding exports and total GlP are reasonably favorable.

38. Although Tanzania has a slightly higher absolute debt than Uganda (including a notional one-third of the EACSO debt in each case), the ser- vice burden will probably be lower for the next fifteen years because of more favorable repayment terms, and better export prospects. Average service on existing debt averages only 6% of projected exports for 1969- 71 and 5% in 1971-78. However, if Tanzania's deficit in its trade with Kenya is deducted from projected exports, the!se ratios would rise to about 9% and 7% respectively. But even starti ng from this base, Tanzania can afford to service some additional debt because its growth prospects, like Kenyars, are comparatively favorable.

39. The ratio of Ugandats service-payments on existing debt to pro- jected exports is about 12%J for 1962-71 and 7% in 1971-78. As Uganda's present deficit in intra-teritorial trade is quite small, the ratios would be only slightly higher if this were deducted from projected exports. However, because of Uganda's heavy dependence on coffee ep-orts and the projected price decline in coffee, its total exports are unlikely to be appreciably higher in 1970 than they were in 1964. As a result, total real income growth will in all probability be significantly s'lower than in Kenya and Tanzania for some time. Thus, wihile Uganda can service moderate additional amounts of conventional debt, its capacity seems somewhat more limited than that of the other two territories. TBE ECOI OI! OF MIJNYA

Production 1. Real output in Kenya is provisionally estimated to have increased by about *45 in 1963 and. 5% in 1961X. This compares with an average rate of increase in the previous three years of about 2.$5. The increased rate of growth during the last two years is mainly attributable to the riairte- nance and, in scr,e inportant cases, ex;pansion of agricultural production. Despite basic charges in the ownership and management of large areas of Trixec& farming, substantial increases were achieved in the volume of prin- cipal exports. However, recently there has been a drop in production of domestic food crop, principally , which is a source of some ccncern. Industrial production has continued to expand slowly, but mainly in certain sectors, notably those processing agricultural products and some of those producing goods entering into intra-territorial trade. In recent years the effects of the uncertainrties and loss of confidence were reflected in urnused capacity, a continuing fall in the volurte of new construction and a persistently low level of new investment, In 196b, however, there were signs of a noticeable improvement in the investrment climate and an increase in investment, particuar.Ly in non-resideritial building and com,nercial machinery and equipment. This was probably due in part to the Kampala Agreement on trade between the three East African countries which appears to have provided a basis for at least a smal improvement of activity and to have removed, temiporarily at least, some of the possible handicaps tc the development of intra-regional trad.e. Although the tripartite agree- ment between the labor unions, private employers and the governrent under which the unions agreed to abstain from striking came to an erd early this year) the additional employment achieved under this agreement appears to have been naintained and, so far, no serious labor unrest has taken place. Supplies of electric power appear to have been adequate and whilst road transport remins inadequate to the needs of the country, and particularly for agriculture, railway and port capacities appear to provide no irmaediatc bottlenecks. There is, however, need for moderrization if rail and port capacities are to keep pace with the needs of the Xenya econony itself arnd the overseas transit trade handled on behalf of neighboring countries.

2. Kerwa has managed its budgetary policies in a reasonably effective- manner in recent years. After a drop during the emergency reriod of 1958-60, central goverimuent revenue has increased Laster +thanrational income by 6$ annually thraugh 1964. The growth of current public expenditure an goods ard services has, on the other hand, been held to a mruch lower rate - less thazC:2% annually in the same period. As a result, the current balance be- fore financial charges and transfers changed from a deficit position in 1960 to a moderate surplus by 1964/65. There was in this period a substan- tial increase in payments of interest on public debt (from ;265 million to 134.4 million) and ari eveen larger increase in payments for compensation arid repatriation of nor-African staff. however, e good part of the latter has been met by grants rade by the U.K. specifical2y for this purpose. ExcJlu- dirg payments covered by such grants, the over-all current deficit (beXore- amortization) fell fron a peak of about hTao :ilflion in 1960/61 to etarcc mately zero in 7965/6. At the sane ,ae Kerrya'u autonomonis vcrize:: agencies have inanaged to produce moderat'ely rising ope:cating surpluves. -ii-

3. As recorded in the national income estimates-, total public - investmenyt in Kenya fell from an average of about b14 million in 1960-62 - to only blO million in 1963-64. However, the central governmentls develop- ment expenditures as showin in ther budget rose from an average of M1O million in the earlier period to one of T15 million in the latterQ Part of the e-- planation for this difference may be that a good deal of the increase in - goverrnment development outlays consist of land purchases for its resettle- ment schemes and other expenditures not considered as fixed capital formationr, It is also likely that some of the outlays on fixed capital included in the government accounts for the past year or tiio rill not be recorded as actual capital formation until 1965, because of tine lags. In any case, there is little doubt that public fixed capital formation will increase significantly over the next year or tlJo.

4. By far the greatest part of public development outlays has been financed by foreign grants and loans. These have risen from about 18 million annually in 1960-62 to an average of over 1l15 million in the past two years. Amortization- payments on public external debt have risen from 1O.7 million in 1960 to Bl.4 million in 1964.

External Trade and Payments

5. Kenyats balance of payments on current account has continued to improve over the last four years. This has been due to a slowdown in the growth of imports from outside East Africa and a sharp increase each year in the value of exports outside East Africa. These two trends have together resulted in a reduction- of the adverse balancer of trade with countries out-. side East Africa from 130 million in 1960 to 1,23 million in 1964. Trade with East Africa on the other hand has-been remarkably buoyant -with exports increasing in each year, rising from L13.8 million in 1960 to i26 million in 1964. Inports from Uganda and Tanzania have also increased but to a much lesser extent. As a result an increase in the balance of trade with East African countries has enabled Kenya to achieve a substantial reduction - in the-adverse balance of trade with all countries. In 1964 this was record- ed at 19 million compared with a peak of ;23 million in 1960. In the same way a large and increasing surplus of invisible earnings from the provision of transportation and commercial and banking services to the other East African countries further offset the remaining overall-adverse balance of trade to give a current-deficit which has fallen-from ML9 million in 1960 to ,9million in 1962, ;413 million in 1963 and L3.3 million in 1964. Th4s favorable development is a consequence of the slowing down in growth of recent years, a marked fall in the level of investment and windfall gains from favorable cormodity prices in 1963 and !964. The balance of capital transactions has followed a somewh&t simdlar trend in the -last four years, the net inflow dropping from some M14 million in 1961 to 2.5. million in 1964. This unfavorable developmnent conceals the rapid growth in official capital receipts, offset by growing debt service payments and, mnuch -iorn -iii-

important, a net outflow of private-capital which increased-from a position of virtual balance in 1960-61 to a net outflow of L15 million in 1964. The overall result has been that Kenya, which increased its net -assets in 1961 and 19629,-depleted its net foreign exchanae reserves by bl.2 million in 1963 and L20 1 million in 1964. Prospects

6. Providing the government continues to follow present policies, the - prospects for future stability and a favorable climate for econoziic develop- ment are moderately promising. There are some difficult problems facing the country: In domestic agriculture, furthser administrative inprovenments wil1 be necessary to ensure a satisfactory growth rate. In industrial develop- mLent, growth may continue to be slow for a while because of the need to adjust to restrictions on trade within East Africa. On the other hands the outlock is good for substantial. further increases in the volume of'cxport crops, which sihculd more than offset the price declines foreseen. In genera3 the present economic policies of the goverfnmeint and adherence to realistic development priorities provide a good foundation for achieving an accelerated growth rate in the future. Even allowing for the fact that the adverse economic factors mentioned above are likely to prevent the growth of domestic exports rising at more than 3-33 per annum, in real terms is expected to grow at about 5% per annum. The improvement in real income is, however, likely to be only a littleW above 4%, due to the expected deterioration of export prices. ANNEX II

THE ECONOIfY OF TANZANIA

Production

1. Since 1960 Tanzania's economy has undergone sharp variations in activity with a fall in production in 1961-62 due to adverse weather conditions and major political uncertainties. Conditions improved in the second half of 1962 and a recovery continued through 1963 and 1964 when real GDP rose by about 5% annually. A maJor contribution care from increased production of export cash crops such as sisal, cotton and coffee, but also from improved export prices. IManufacturing, trcmsportation and commerce also showed substantial advances, whilst per capita inccrie in the period 1960-62 actiually fell

2. Agriculture remains the mainstay of the econony, contributin- 85p of exports and 60% of GDP. The mining industry has contributed little more than 3% of GDP but accounts for about 15% of exports. Output of diamonds is estimated at about ;5-6 million per year but, apart from this, mining production of , , lead and copper, , etc. is not significant. Despite its rapid growth over the last 10 years, marnu.facturing accounts for only 5% of GDP and is concentrated on the production of a variety of light consumer goods and semi-manufacture in competition with.h imports and a much larger sector concerned with the processing of agri- cultural products for exports. Productive capacity has continued to ex- pand slightly in both sectors of industry. At the same time the govern- ment's efforts to attract new industries, including the effects of tlhe Kampala Agreement on the relocation of certain plants and the allocation of kcey East African industries, are beginning to meet with scme successo in the last two years investments have been made or cormitments entered into for new plants producing aluminum products, steel goods, boLtles, etc, ihilst official investment and large scale private investment will be largely dependent on foreign capital, progress in the local private sector will depend on the mobilization of local Asian capital, which generally remains shy of industrial investments.

3. Despite recent increases in capacity, the continuation of present growth rates of consumption will require substantial further e;parision in electricity supply. The road system, complementing the railway network, appears to be inadequate and very vulnerable to bad weather conditions.

Domestic Finance

4. The central governmentts current budget has been closely balanced, with the surpluses and deficits within 5% of cuarent expenditure and with a cumulative net surplus of L1.5 million over the last seven years. Subsidies from U.K. have been received only to a limited extent. The budget for 1964-65 was presented as an instrument of economic policy through wjhich the government sought to implement the measures prescribed in the new development plan. Expenditures at L32.6 million represented an increase of more than Z million over the previous year, accouwted for by the cost of implementing development projects, increase in debt service -ii -

and in education costs and a large increase in defence and internal security costs. Recurrent revenue was estimated to rise above the level for 1963-64 by about 13 million at existing levels of taxation, leaving a budget gap of L2.5 million to be met by a large number of inc2'eases in the rates of taxation. Since the budget, hiowever, the fall in sisal prices has wiped out approximately ll.5-2 million of prospective revenae whilst supplementary provision has been made for further expenditure of L0.5 million on defence, and the possibility of a deficit; of about ,2.5 million for the year as a wh;ole led to a stop-gap budget in April 1965 and emergencyr measures to bridge the gap.

5. Full details of the budget for 1965-66 are not yet available. However, it has been reported that the budge' proposals include sweepirng tax changes including increases in import duties and in the prices of beer, petrol and radio licenses and a new 5% development levy as a prior charge on incomes of specified categories of people with a montihly income of above kL1o

6. Due to difficulties experienced in the change of status and in- denendence, economic development so far has been modest. Execution of the three-year plan was slower than expected and actual investment fell short of the original target by about 155o Production growth on the other hand was well in line with the plan during its last two years, mainly as a result of favorable weather conditions and strong export de.mand. The new five-year development plan 1964-65 - 1968/69 is more comprehensive in scope and is intended to provide the basis for an ambitious transforma- tion of the economy by 1980. The plan aims at achieving a rate of annual economic growth close to 7$ by encouraging tradit:ional agriculture and import substitution to be followed by heavy investment in new, large scale agricultural enterprises based on irrigation and flood control. Private enterprise is accorded a dominant role in manufacturing and private foreign capital will be encouraged to play an active part. The plan envisages total investment over five rears of 2!246 million or nearly 150 million per year compared with b25 million, the average rate of irnvestment in the period 1960-63. About half of the requisite finance is expected to be obtained from domestic resources, mainly through re-investment of profits in the private sector. For the balance, reliance is placed on external aid amounting to about 620 million per year. W;lhilst the agri- cultural production target appears to be reasonable, the possibility of executing other investment projects and finding both the domestic and external resources required to finance a plan of uhis magnitude must be open to doubt.

Balance of Payments

7. Tanzania has an unfavorable balance of invisible transactions and an adverse balance of trade with other countries in East Africa. Despite the favorable balance of trade with countries outside East Africa, the current balance of payments over the five years 1958-62 has been adverse, except in 1960, with an average deficit of about ;24 million per year. Tn 1963 there was a favorable balance of current account of L2.4 nillion whicl -iii-

rose to I3.3 million in 1964. Apart from changes in sterling assets, reflecting variations in exports, and their effects on gov'ernment revenue, Tanzania has enjoyed a steady increase in receipts from official capital from some L2.5 million in 1958 to over 17 miUion in 1963 and about Lo million in 1964. Debt repayments has, howyever, increased from _co4 million in 1953 to S.4 mil2ion in 1963, reflecting a regular annual inflow of loan capital each year0 Private capital transactions appear to have varied with a substantial outflow of quite significant proportions just before and after independence and again in 1964.

Prospects

B. Economic growth will depend to a large extent on the growth in domestic exprts, which is forecast at 4LS over the next five years, and by the success of development plans for import substitution and the creation of new industries and the more long term proposals for large scale agricultural irrigation and flood control. This in turn will depend to a very large extent on the availability of foreign capital and on the government's success in mobilizing domestic capital, particularly of toe Asian capital. Although the investment and production targets may appear rather ambitious, given continued moderation in its domestic policies, it should be possible for Tanzania to raise most of the capital required from abroad to ensure the successful achievement of a grow-rth rate in real income of about 4-5 per year over the next five years. ANENX III

TIE ECOFOiWY OF UGANDA

Production

1. Uganda's real income is estimated to have increased by sor,e 'OS in 1963 and a further 85 in 1964, followzing eigilt years during wlhch the rate of growth barely equaled the growth in population. The increase in the last two years has been alnrost entirely in agriculture and in the handling of agricultural products for export, rith some increase in manufacturing activity. Exports have increased by about 3,% in volume and 65% in value due mainly to increases in volume and unexpected temporary increases in the prices of the principal export, coffee, by the re-eme.Lence of cotton exports at 1evels more in line with the economy's potential followqin- a severe drop in output in 1962, and by increased production and exports of copper in lilne with the recently recorded increase in the size of proven deposits.

20 The increase in manufacturing activity was largely due to the ex- pansion of output of textiles which have hitherto received favorable treatment as an East African industry. Investment increased in 1963, and is estimated to have increased also in 1964, to levels higher than have been reached in the last 8 years. This has been due in part to increases in development expenditure in 1963-64 and again in 196)4-65 and to some increased interest in manufacturing investment by the private sector whichl received further impetus after the Kampala Agreement was reached in T:ay 1964.

3. The export sector plays a dominant role in determining the level of activity of the economy and within the export sector coffee accounts for nearly 50, of total earnings and some 2 O, of total gross domestic product. The economy is essentially pastoral and rural and its main need is for a rapid diversification of agricultural output away from the present heavy reliance on coffee. The government has made relative'y little progress in the expansion of other crops and its coffee price policies, which have resulted in farmers benefitting to the full from the windfall prices enjoyed over the last two years, have had an adverse effect on the production of cotton in areas where these two commodities are close substitutes.

4. The Uganda Government has traditionally enjoyed a current budget surplus, with rare exceptions, until 1961-62 when there was a deficit of TX2.7 million. Since then revenue has increased due to increases in export duties, and in the common taxation increases shared with the other East African countries. Expenditure also has continued to increase at a moderate rate of 5% per year until 1964/65 when the main impact of post- independence expenses seems to have been felt. Thne main increases in the estimates for 1964-65 were for social services and defence. The current budget showed a small surplus in 1962-63, which increased to over i4 million in 1963-64, falling somewhat to about L2.1 million in i964-65. -ii-

5. However, the current account surplus of the government does not reflect in full the government's fiscal position. A large element of receipts from export duties is paid by the coffee and cotton marketing boards. Due to the maintenance of unrealistically high prcducer prices, determined by the- government, the two boards have incurred deficits, varying between ,2-5 million per year, uhich have seriously reduced the reserves of the marketing boards.- This year the board has purchased the whole of the current coffee -crop - which is larger than Uganda's quota under the Coffee Agreement - at prices higher than the world market.

6-. Capital expenditure under the- governmlentts development plan was - E4.G million in 1961-62 and in 1962-63, increased by almost 50% in 1963-64 t-o ;6.6 million and is estimated to increase by almost 100% in 1964-65 to U12.0 million. These outlays on capital works have been financed in large part from external sources, but to some extent from the running down of government's remaining reserves, now at a low level. E;.ternal aid totaled L3.6 million in 1961-62, one-third of which was-in the form of grants. The total has increased to 14.8 million in 1964-65 of which only one fiftiT in the form of grants. The main increase has, therefore, been in loan re- ceipts which have had a corresponding impact on publie-debt service charge-s. These have increased from U1.3 million in 1961-62 to ;2.3 million in 1964-65.

7. The present development plan provides for government expenditure of the order of L37 million for the period of 1961-62 to 1965-66. Actual expenditure to date is still well below the rate necessary to achieve the target envisaged and much of the program will need to be carried, over into- the second development plan, now in preparation. The second program envi- sages total public and private investment of tile order of 1230 million over five years, compared with an estimated annual rate of investment of B27.0 million in 1964. This would involve a rate of investment of about 18% of GDP by 1970 and a growth rate of a little over 4% per annium in output of the total monetary sector between now and 1970. Whilst these targets might have been considered reasonable or not unduly ambitious for an - economy which had already established momentum, they appear to be some- what high for one which has yet to establish a basic equilibrium in the- budgetary field and must increase its effectiveness not only in develop- ment planning and execution but also in maintaining the standard of current, government services.

Balance of Payments

8. Uganda has a substantial deficit on invisible account which more than offsets a favorable balance of trade. On current account, the balance of payments has deteriorated steadily since 1958 to a peak deficit -iii- of Ul2 million 'n 1962; this fell to a deficit o -14.2 million in 1963 and L2 million in 1964, largely as a result of the sharp gain from exports without any corresponding increase in imnports0 Capital inflow on official account has fluctuated frcm year to year, reflecting in the main the extent to whici the government has drawn on its sterling assets, parti- cul2rly in 1953, 1960 and 19Q62. Apart from th:is, there has been a steady inflow of grants and loans, mainly from the U.K. wjhich has tended to decrease slightly from the peakc reached in ].061, amounting to L8.9 million, to ;6.5 million in 1963 and to :5.8 million in 1964. On the other hand, there has been a large outflow of private capital.

Prospects

9. Uganda's economic performance has been adequate, although somc;-.iht less than full concentration on developnent' ani adequate staff mig.ht have brought about. There is,already evidence of an encouraging increase in domestic investment in the past two years as a resuit of the efforts of the -overnment to establish domestic harmony and cooperation between the various racial and tribal divisions. With greater energy on formulatir,g appiopriate economic policies and mobilizing domestic rezources efficiently, there are possibilities that Uganda could main-tain a rate of growtrh of real outnut, say, of around 4% per year. However, real incomes are likelr to grow at a slower rate because of the decline forecast in coffee prices. Indeed, the value of exports in 1970 is not likely to exceed the 1964 level. This will intensify Uganda's re'liance on foreign external aid. For its future prosperity, Ugan(da needs primarily to develop a more diversified agriculture, given the limitations of co'fee development and thae limited potent-al for industrial expansion, in view of probable limitation of markets in Kenya and Tanzania. 3 uccesful long-term expansion of agriculture depends mainly on the pursuit o:, appropriate policies such as prcducer prices, land tenure and agricultural extension services. Statistical Appendix

The tables in this appendix are based, unless otherwise stated, on the following sources:

1. East African Economic and Statistical Review

2. (i) Kenya Statistical Abstract (ii) Kenya:Economic Survey (iii) Kenya Statistical Digest

3. (i) Tanganyika Statistical Abstract (ii) Tanganyika Budget Survey h. Uganda Government Statistical Abstract

5. International Financial Statistics

6. IDRD Statistics Division

In addition, information was received frorn:

7. East African Statistical Department, Nairobi

8. Kenya MNinistry of Economic Planning and Development (Statistics Division)

9. Tanzania Directorate of Development Planning

10. Uganda 'Tnistry of Planning and Community Development (Statistics Division).

The figures for Tanzania refer only to the territory of Tanganyika. List of Tables

l. External Public Debt Outstanding Irncbludirig Undisbursed as of June 30, 1964 with Iajor Reported Additions July 1 - December 31, 1964.,

2a. Estimated Contractual Service Pay3ments on External Public Debt Outstanding Including Undisbursed as of June 30, i.964 with Yajor Reported Additions July 1 - December 31, 1964. 2b. Effect of Proposed Bank Loan on Estimated Contractual Service Payments on External Public Debt.

3a. Gross Domestic Product at Factor Cost in Currertt Prices by Industrial Origin and Country, and Gross lIational Product, 1960-196t4.

3b. Gross Domestic Product at Market Prices by Expenditure and by Country, 1960-1964.

4. Gross Fixed Capital Formation, l960-1964,

5. Price-s and Quantities of Exports and. Imports, and Terms of Trade, l957-1964.

6a. East Africa Exports by Country and Major Conmmodities, 1958, 1961, 1965, 1970.

6b. East Africa Plajor Exports by Volume, Price, Value and Country, 1958, 1961, 1965, 1970.

7. Retained Imports by End Use, 1960-1963.

8. Interterritorial Trade, 1960-1964.

9. East African Monetary System: East African Currency Board and the Commerclal Banks, 1959-1964. lOe East African Coiamercial Banks.

11. Balance of Payments, 196o-1964.

12. Foreign Exchange Reserves. Table 1

EXTERWAL PUBLIC DEBT OUTSTANDIHG INCIUDING UMDISBURSED ASF2 J.E 30,1961 WITH MAJOR REPORTED ADDITIONS JULY 1 - DECF14BER 31, 1964

DEBT REPAYABLE, FOREIGN CURRENCY (In thousands of U.S. dollar equivalents)

EACSO Kenya Tanzania Uganda Total

Publicly-issued bonds 122,573 73,895 28,888 30,503 255,859

Privately-placed debt 672 8,761 7,338 - 16,771

IBRD loans 16,987 13,669 - 8,258 38,914

IDA credits - 7,300 18,600 - 25,900

U.K. loans 35,967 109,234 50,465 45,029 240,695

U.S. AID loans - 2,200 12,606 4,800 19,606

Other Government loans - 1,374 - 9,052 23,426

Total 176,199 229,433 117,897 97,642 621,171

Total (in I) 62,928 81,940 42,106 34,872 221,847

1/ Net of accumulated sinking funds as of December 31, 1964 as follows:

EACSO $18,095,862

Kenya 22,806,000

Tanzania 7,999,928

Uganda 8,5079,79

Total $57,409,769

2/ Guaranteed by United Kingdom.

Source: IBRD Statistics Division. Iabela -

Estimated Contractual Service Payments on External Pub].ic Debt Outstanding Including Undisbursed as of June 30 1964 with Pajor Reported Additions July I-Dece'riDer 31, 1964 Debt Repayable - Fore-ign Currency

(In millions of U.S. Dollar Equivalent)

EAiCSO Kenya Tanzania Uganda Total Amort. Int. Total Amort. Int. Total Amort. Int. Total Amort. Int, Total Amort. Int. Tctal 1965 4.0 9.0 13.0 4.8 9.2 l,o 1.6 2.8 4.4 2.2 4.6 6.8 12.6 25.6 38.2 1966 4.2 8,8 13.0 6.8 9.3 16.1 1.6 2.8 4.4 2.4 4.6 7.0 15,0 25.5 40o.5 1967 4.3 8.8 132n 6.0 9.3 15.3 1.0 2.8 3.8 2.8 4.7 7.5 14,1 25.6 39.7 1963 25.7 8.1 33,8 6.8 9.3 16,1 1.0 2.8 3.8 3.8 4.6 804 37.3 24.8 62.1 1969 18,9 714 26.3 7.1 9.0 16.1 1.3 2.8 4.1 21.5 4.1 25.6 48.8 23.3 72.1 1970 13.4 6.4 19.8 16.8 8.7 25,5 1.5 2.8 4.3 3.5 3.4 6.9 35.2 21,3 56,5 1971 15.8 5.4 21,2 6.9 8.3 15.2 1,7 2.8 4.5 3.7 3e3 7.0 28.1 19e8 47.9 1972 4.3 4.9 9,2 6.4 7.6 ]4.0 10.1 2.4 12.5 3.4 3.1 6.5 24.2 18.0 42.2 1973 4,4 4.7 9.1 6.6 7.4 14.0 7.8 2.1 9.9 10.8 3.0 13.8 29.6 17.2 46.8 1974 8,5 4.4 12.9 8.6 7,1 15.7 2,2 1.7 3.9 3.3 2,3 5.6 22.6 15.5 38,1 1975 2.2 4.1 6.3 7.2 6.7 13,9 2.4 1.6 4.0 3.4 2.2 5.6 15.4 114.6 29.8 1976 10.4 4,0 14.4 9.3 6,5 15.8 2,5 1,5 4.0 3.5 2.0 5.5 25.7 14.0 39',7 1977 1.9 3.4 5.3 6.6 7.0 13,6 2.6 1,5 4.1 3.6 1,9 5.5 14.7 13.8 286.5 1978 2,0 3.3 5.3 30e1 4.6 3b.7 2.7 1.4 401 3.7 17 5.4 38.5 11,0 49.5

Source: IBRD, Statistics Division. Table 2b

EFFECT OF PROPOSED BADEK IOL-01O STIHATED COINTRACTUAL SERVICE PAYI-MTS' Qjl EXTERNAL PUBLIC DEBT (In millions of U.S. Dollar Equivalent) EACSO East Africa (incl. EACSO)

Amort. Int. Total Amort. Int. Total

1965 4.1 11.0 15.1 12.7 27.6 40.4

1966 L,.2 10.9 15.1 15.0 27.6 42.6 g 1967 4.3 10.9 15.2 114.1 27.7 41.8

1968 25.7 10.2 35.9 37.3 26.9 64.2 1969 18.9 9.5 28.L4 48.8 25.4 74.2

1970 L3 .4 8.5 21.9 35.2 23.4 58.6

1971 :L5.7 7.5 23.2 28.0 21.9 49.9 1972 4.7 7.0 11.7 244.6 20.1 44.8 1973 5.2 6.8 12.0 30.14 19.3 19.7 1974 9.4 6.4 15.8 23.51 17.5 41.0 1975 3.1 6.1 9.2 16.L 16.6 32.6

1976 11.4 5.9 17.3 26.7 15.9 42.6 1977 3.0 5.3 8.3 15. 8 15.7 31.4 1978 3.1 5.1 8.2 39.6 12.8 52.5

/ Proposed Bank loan of $38 million to the East African Common Services Organization for the use of the East African Railwrays and Harbors. The effects of the proposed Bank loan to EACSO for the use of the East African Post and Telegraph is not taken into account in this table.

/ The East African Airways Corporation has recently negotiated a loan of about L 12.5 million to cover the purchase of 3 super VC-10 aircraft. It is e.pected that total debt-servicing charges on this loan will add about $5.1 million to East Africa's debt-servicing obligations every year between 1966 and 1972 inclusive.

Source: IBRD, Statistics Division. Table 3a (East Africa)

Gross Domestic Product at Factor Cost in Currcnt Prices by Industrial Origin, 196O-I-h

(£.million)

1960 1961 1962 1963 19641) IIonetary Econory 408.8 414.3 426.7 476.7 512.7

Agricultured) 116.8 111.8 110.6 i4l.1 160.3 Livestock 23.3 22.7 23.1 2L4.0 23.5 Forestry, fishing, hunting 6.0 5r9 6.7 7.0 5.8 Iining and quarrying 8.5 8.7 8.5 8.1 8.8 ianufacturing 33.1 36.0 37.1 39.7 42,2 Electricity and water 5.9 6.4 7.6 8.0 8.4 Construction 16.4 17.2 16.9 15.0 17.0 Commerce 6h.3 66.2 70.1 77.8 82.7 Transport and communication 35.2 35.7 37.6 ti.5 43.3 Government 42.5 46.5 50.2 52.4 4.5 Other services (incl.rent)3) 56.0 57.3 58.7 63.3 66.4

Non-Nionetaryr Economy 153.2 l6004 186. 190.7 197.1 Gross Domestic Product at Factor Cost 562.5 574.8 613.6 668.6 711.8 Indirect Tax-s minus Subsidiesi 37.2 40.5 48.8 50.1 54.2

Gross Domestic Product at 1i4arket Prices 599.7 615.3 662.4 718.7 767.0

(jet Investment Income - 12.7 - 11.0 - 12.2 - 14.3 - 19.6

G'ross National Product at l.arket Prices 587.0 604.3 650.2 707.4 747.4

Nlotes: 1) Estimated by N,1ission. 2) Including crop processing. 3) Including banking, insurance, real estate. T able 3a (Kenya)

Gross Domestic Product at Factor Cost in Current Prices by Industrial Origin, 96-196_

(£ million)

1960 1961 1962 1963 19,6 Ii:onetary Economy 175.3 176.8 180.9 193.4 207.1 Agriculture 29.4 28.3 2865 33.1 38.2 Livestock 9.2 9.0 9.6 9.4 9h4 Forestry 0.8 0.9 1.0 o.8 09 Fishing and hunting 0.5 0.5 0.8 0.0 1,0 Mining and quarrying 1.1 0.9 o.8 0.9 0.9 Manuf'acturing 21.6 22.7 23.0 24h4 25.8 Construction 7.9 7.8 6.8 4.9 5.0 Electricity and water 2.8 2.8 3.3 3.6 3.8 Transport and storage 20.3 21.2 22.3 24.8 26.8 Commerce 29.0 29.6 30.1 31.9 33.4 Government 24.9 27.0 28.1 29.7 31.1 Other services (incl. rents) 27.7 26.2 26.6 29.0 30.7 i4on-Mo)netary Economy 50.2 47.9 63.2 66.7 68 6 Gross Domestic Product at Factor Cost 225.5 224.7 244.1 260.1 275.7 Indirect Taxes minus Subsidies 17.5 19.3 22.9 20.9 23.2

Gross Domestic Product at Market Prices 243.0 244.0 267.0 281.0 299.0

Mqet Investment Income - 9.0 - 8.0 - 8.0 - 8.0 - 12.0 Gross National Product at larket Prices 234.0 236.0 259.0 273.0 287.0 Table 3a (Tanzania)

Gross Domestic Product at Factor Cost in Current Prices by Industrial Oririn, 1960-196

(£milli.011)

1960 1961 1962 1963 lo64 i1onetary Economy 122.7 126.3 137.9 154.6 164.3 Agriculture 42J3 38.7 42.6 53.9 5701 Livestock 5.8 5.6 5.4 5.6 5.4 Forestry and fishing 2.4 2.5 2.5 2.9 2.9 NIining and quarrying 5.2 5.5 5.1 4.4 5.i I-Ianufacturing 5.5 7.0 7.9 8.4 9.0 Electricity and water 1.2 1.4 1.5 1.6 1.7 Construction 4.6 5.8 6.2 6.6 8.4 Commerce 20.9 22.1 25.5 27.6 29.4 Transport and communication 8.7 8.6 9.5 9.8 10.3 Government 11.1 12.9 1h.8 15.5 16.1 Other services (incl. rents) 15.0 16o2 16.9 18.3 19.2

Non-Monetary Econcmy 62.4 67.3 74.6 76.7 78.0 Agriculture 48.5 54.1 60.9 62.2 63.3 Livestock 12.0 11.3 11.7 12.4 12.6 F'orestry and fishing 1.9 1.9 2.0 2.1 2.1 Gross Domestic Product at Factor Cost 185.1 193u6 21265 231.3 24h.3 Indirect Taxes minus Subsidies 10.9 11.4 145 15.7 16.7

T'ross Domestic Product at MXarket Prices 196.0 205.0 227.0 247.0 261r0 Net Investment Income - 3.0 3.0 - 3.0 4.0 - 4.0

Crross National Product at Market Prices 193.0 202.0 224.0 243.0 257.0 Table 3a (Uganda)

Gross Domestic Product at Factor Cost in Cuerent Prices by Industrial Origin, 19601964-

(L million)

1960 ] 961 1962 1963 19614 Est. Est. :Ionetary Economy 110. 8 111.2 107e>9 128.7 11.3 Agriculture 41.2 4o.6 35.9 48.3 58.8 Crop processing 3.9 4.2 3.6 5.8 6.2 Livestock 8.3 8.1 8.1 9.0 8.7 Forestry and fishing 2.3 2.0 2.4 2.4 1.0 lMining and quarrying 2.2 2.3 2.6 2.8 2.3 Manufacturing 6.0 6.3 6.2 6.9 7.4 Electricity 1.9 2.2 2.5 2.8 2.9 Construction 3.9 3.6 3.9 3.5 3.6 Cormerce 14.4 14.5 14.5 18.3 19.9 Transport and communication 6.2 5.9 5.8 5.9 6.2 Government 6.5 6.6 7.3 7.2 7.3 Other services (incl rents) 13.9 14.9 15.2 16.0 16.5 lNon-Monetary Econciny 41.3 45.2 48.7 47.3 50.5 Agriculture 36.h 39.8 42.6 4o,7 42.2 Forestry and fishing 4.9 5.4 6.1 6.6 8.3 Gross Domestic Product at Factor Cost 152.1 156A4 156.7 176.0 190.8 Indirect Taxes minus Subsidies 8.9 9.6 22.3 13.0 lb.2

Gross Domestic Product at Market Prices 161.0 166.0 169.0 189.0 206.0 Wlet Investment Income - 1.0 - 1.0 - 2.0 - 3.0 - 4.o Crross National Product at Market Prices 160.0 165.0 167.0 186.0 202.0 Table 3b (East Africa)

Gross Domestic Product at I4arket Price by Expenditure, 1960-196h,

(C nillion)

1960 1961 1962 1963 1964

Gross Domestic Product 600 615 663 717 766

Domestic Exports 155 148 155 191 222 ,Rest of YIonetary Sector 292 337 321 335 348 Non-Milonetary Sector 153 160 187 -191 196 Import Surplus on goods and services 8 a 8 - 11 -17

Disposable Resources 608 623 677 706 7h6

Investrent 83 77 75 75 90

Pablic 33 36 32 23 36 Private 50 hi1 43 47 54

Consumption 525 546 602 631 656

Public 77 82 85 88 93 Private h48 4,l 517 543 563

D)omestic Savings" 75 659 61 86 107

Public 3 10 13 2 Private 72 66 51 68 83

Government Revenue 75 79 90 98 109

Operating Surplus of State Enterprize 4.7 5.9 5.0 7.4 7.8

EACSO 5.8 6.1 -5.4 6.5 6.3 Other -1.1 -0.2 -0.4 0.9 1.5

Percentage of Gross Domestic Product

Investment 14 :L3 11 10 12 Domestic Savings 13 L1 9 12 1i Government Revenue 12 13 14 14 14

1/ Gross Domestic Product at market price was estimated on the basis of available Gross Domestic Product at factor cost data. ./ To obtain national savings, net payments of investment income need to be deducted from this series of domestic savings. They are as follows: 1960 1961 1962 1963 1964 13 11 51, l-' 209 Table 3b (KerrTa)

Gross Domestic Product at M4arket Price 1960-1964 (; million)

1960 1961 1962 1963 1964

Gross Domestic Product 243 244 267 281 299

Domestic Export 50 51 55 64 73 Rest of 1Monetary Sector 143 145 149 150 157 Non-Mlonetary Sector 50 48 63 67 69

Import Surplus +11 -2 +1 -5 -9

Disposable Resources 254 242 268 276 290

Investment (gross fixed) 41 32 33 29 32

Public 14 15 13 10 10 Private 27 17 20 19 22

Consumption 213 210 235- 247 258

Public 36 37 37 38 38 Private 177 173 198 209 220

Domestic Savings 30 34 32 34 41

Public -3 -2 3 58 Private 33 36 29 29 33

Governr.ent Revenue 30 32 37 39 42

Operating Surplus of State Enterprise 300 3.3 3.3 3.7 3.7 E.A.C.S.0. 1.9 2.1 1.9 2.2 2.1 Cther 1.1 1.2 1.4 1.5 1..6

Percentage of GDP Investment 17 13 12 10 11 Domestic Savings 12 .14 12 12 13 Government Revenue 12 13 14 14 24

Sources: Kenya Statistical Abstract 1964 Economic Survey !?64, 1965 Table 3b (Tanzania)

Gross Domestic Product at Ialriet Prices_bZ3Expnditurl 196O-196 h

1/ 1960 1961 1962 1963 1964-

Gross Domestic Product 196 m5 227 247 261

Domestic Exports 57 51 55 67 75 Restr of Monetary Sector 77 87 97 103 108 Non-Honetary Sector 62 67 75 77 78

Inport Surplus -5 4 4 -6 -7 Disposable Resources 191 209 231 241 254

Investment 23 27 24 25 31

Public 8 11 9 8 '2 Private 15 16 15 17 ;9

Consumption 168 :182 207 216 223

Public 21 24 26 27 29 Private 147 :L58 181 189 19)4

Do:mestic Savings 28 23 20 31 38

Public 6 6 8 8 9 Private 22 17 12 23 29

Government Revenue 25 28 32 33 35

Operating Surpluses of State Enterprise 2.0 1L.9 1.6 2.2 3,J E,A.C.S.O. 2.0 :L.9 1.6 2.1 2.1 Other - - - 0.1 1.0

Percentages of MP

Investment 12 13 11 10 12 Domestic Savings 14 11 9 13 15 Government Revenue 13 14 14 13 13

17 Estimated Table 3b _Uganda)

Gross Domestic Product at MIrket Prices br Expenditure, 1960-1964 (> million)

1960 3.961 1962 1.963 196h41/

Grtoss Domestic Product 161 166 169 189 206

Domestic Exports 48 46 45 60 74 Rest of Monetary Sector 72 75 75 82 83 Non-Monetary Sector 41 45 49 47 49

Import Surplus 2 6 10 1 -1 Disposable Resources 163 172 179 190 205

Investment 19 18 18 21 27

Public 11 10 10 10 14 Private 8 8 8 11 13

Consumption 144 154 161 169 178

Public 20 21 22 23 26 Private 124 133 139 146 152

Domestic Savings 17 12 8 20 23

Public - -1 -1 7 Private 17 11 7 15 21

Government Revenue 20 19 21 26 32

0Oerating Surpluses of State Enterprize 0 1 0 2 1

EACSO -1.9 -2.1 1.9 2.2 -2e1 Other -2.2 -1.4 -1.8 -0.7 -1ol

Percentage of GDP

Investment 12 11 11 11 13 Domestic Savings 11 7 5 11 14 Government Revenue 12 11 12 14 16

1/ Estimated Table L

rGROSS FIXED CAPITAL FOiUaTIOII (L million) 1960 1961 1962 1963 2.1964

Building and Construction 47.5 L5.h 43.S 394.

Plant and Equipment 18.3 21.3 19.O 20.4 *

Transport Equipment 17.5 9.8 12.4 14.8 Total 83.3 76.5 75.2 74.6 90.0

Public 33,:L 35.5 32.1 28.6 36.0 Private 50.'2 h1.0 43.1 L6.o 5L.o

These figures are siiple aggregates of terr-itorial figures for gross capital formation which differ somewhlat in coverage. TanganyiUa fiii.res, unlike those for Uganda and Kenya, e;xclude private automobiles but include a small allowance for construction in the subsistence sector.

Sources: Tanganyika Statistical Abstract 1963 and Budget Siurvey 1961!-65; Kenya Statistical Abstract 196h; Uganda Statistical Abstrpc-. 1964 and Background to the Budget 196L/65. Tabie 5

Prices and Qu.antities of Exports and imports and Terms of Trade, 1957-63

(1954 100)

t I _

I Imports Exports _ t Terms of Year I I I ITrade Quantity I Price ' Value I Quantity I Price T V.Talue I

1957 116 103 120 132 87 115 8

1958 103 101 104 148 81 120 8o

1959 102 101 103 157 79 124 78

1960 108 1o5 114 173 78 135 74

1961 117 99 116 165 77 127 77

1962 117 97 113 170 76 129 78

1963 114 108 123 196 83 163 77

19614-g/ 120 110 132 201 91 18,3 8

1/ The terms of trade indices are the export price index as a percentage of the import price index, and hence an increase represents an improvement in the terms of -trade. j Estimated by mission. Source: East African Statistical Department: Economic and Statistical Review, December 1964. Table 6a

Eas' African Exports by Country and IaJor Colxmodities 1958, 1961-19655 1970 million) 1958 1961 1962 3963 1964 1965i) 970 Total East Africa 124.6 135.1 140.5 172.1 192.7 179.5 21L.4 of which: Coffee 38.8 31.4 37.4 45.0 61.9 51.9 58.1 Kenya T7Tlo o. 10.6 11.0 15..7 17;- Tanzania 7.6 6.8 6.6 6.8 11.1 10.6 10.9 Uganda 20.8 14.0 20.2 27.2 35-4 24.7 29.6 Cotton 25.8 24.1 16.1 25.4 26.4 27.8 38.3 Kenya 0.6304: ~57i ~575 5770.8 9.0 Tanzania 7.2 6.8 ,.4 10.7 9.9 10.9 16.9 Uganda 18.1 16.7 8.3 14.3 15.9 16.1 18.6 Sisal 12.6 18.2 26.3 30.2 27.9 19.4 21.6 Kenya 2.2 4 -T 7. 6. )4.1 12 Tanzania 10.4 13.9 22.0 22.7 21.9 15.3 17.1 Tea 4.9 6.9 8.9 9.3 9.9 10.7 13.8 Kenya 3.2 570.2 77 6.1 77.3 7.7 Tanzania 1.0 1.6 2.1 2.1 2.3 2.7 4.0 Uganda 0.7 1.3 1.6 1.5 2.5 1.7 2.1 Copper (Uganda only) 2.1 3.0 3.6 3.6 6.2 5.8 I2.'

Diamonds (Tanzania only) 7.7 ___ 4._7 __ _. 7 7.1

Total 88.6 89.4 87.7 118.4 139.1 121.4 1143.0

Percentage of Total Exports 71 66 62 69 72 67 67

Other (excl. re-exports) 27.3 33.1 35.0 39.9 41.9 h3.3 56.0 Kenya i-27 TT 1Z. 1T7 !i.7 19.0 21.9 Tanzania 11.5 1)4.0 1b.5 16.8 19.0 19.8 28.3 Uganda 3.4 L.0 3.6 4.3 14.2 ).5 5.8 Re-exports 7.0 10.4 12.7 11.7 9.7 1.0.5 15.8

Grand Total 124.6 135.1 140.5 :l72.1 192.7 179.5 21)4.4 Kenya 33 )43.1 461 52.)4 55. -T30 6 .o Tanzania 03.8 50.6 53.4 65.1 71.4 65.5 84.4 Uganda 46.5 41.)4 41.0 5)4.6 66.0 61.0 66.o

1) Estimated. Table 6b East Africa Major Exports by Volume, Pri.ce, Value and Couitry 195d, 1 1965, 197O 1/ 2/1 1958 1961 :L962 1963 1964 1965 1970

Coffee (L million) 38.8 31.14 37.4 45.0 61.9 51.9 58m1

Ulganda: Quantity ('000 long tons) 78.9 103.7 131,3 1L42.2 137.5 130.0 11L2.0 Price (L per ton) 26)4 135 153 191 253 190 208 Value (L million) 20.8 14.0 20.2 27.2 35.4 24.7 29.6

Kenya: Quantity ('000 long tons) 25.0 32.0 29.3 36.8 41.6 44.9 51.1 Price (L per ton) 416 322 361 300 370 370 344.5 Value (E million) 10.4 10.6 ,'.0.6 11.0 15.4 16.6 17.6

Tanganyika: Quan:tity (0000 long tons) 22.2 24,6 25.7 26,0 32.9 33.5 36.0 Price (L per ton) 341 275 256 263 336 317 302 Value (L million) 7.6 6.8 6.6 6.8 11.1 10.6 10.9

Cotton (L million) 25.8 24.1 16.1 25.14 26c.4 27.8 38.3

Uganda: Quantity (Tao0 long tons) 62.2 62.2 32.2 58.0 63.5 64.3 74.5 Price (L per ton) 262 269 256 247 250 250 250 Value (E rmillion) 18.1 16.7 8.3 14.3 15.9 16.1 18.6

Tanganyika: Quantity ('000 long tons) 32.1 29.7 32.6 47.8 44.5 48.8 75.1 Price (L per toln) 226 229 227 22Li 223 223 223 Value (E million) 7.2 6.8 7.14 10.7 9.9 10.9 16.7

Kenya: Quantity ('000 long tons) 2.2 2.5 1.8 1.9 3.0 4.0 15.C, Price (L per ton) 227 240 222 211 200 200 2Q0 Value (E million) 0.5 0.6 0.4 0.4 0.6 0.8 3.0

Sisal (E million) 12,6 18.2 26.3 30.2 27.9 19.4 21.6

Tang,anyika: Quantity ('000 long tons)198.0 200.9 219.o 214.4 203.9 216.1 2)42.2 Price (L per ton) 52.5 69.3 100O2 105.9 104.8 70.6 70.6 Value (IEmillion) 10.4 13.9 22.0 22.7 21.9 15.3 17.1

Kenya: Quantity ('000 long tons) 42J1 57.4 56.0 63.7 57.0 58.1 63.7 Price (L per ton) 52.3 73.2 76.8 117.7 305.3 70.6 70.6 Value (E million) 2.2 4.2 4.3 7.5 6.0 4.1 4.5

Tea (L million) 4.9 6,9 8.9 9.3i 9.9 10.7 13.0

Kenya Quantity ('000 long tons) 8.1 9.8 13.2 114.7 16.3 17.5 24.7 Price (L per ton) 395 408 394 388 371 361 313 Value (L million) 3.2 4.0 5.2 5.7 6.1 6.3 7.7

Tanganyika: Quantity ('000 long tons) 2.3 3,2 3.9 3.7 6.5 14.5 6.4 Price (L per ton) 304 1406 410 40h/ 38631 376 39J Value (E million) 0.7 1,3 1.6 1.5 2.5 1.7 2.1 Ugand.a: Quantity (1000 long tons) 3.5 3.8 5.1 5.3 6.6 7.9 13.5 Price (L per ton) 287 423 414 395 351 3142 297 Value 1.0 1.0 2.1 2.1 2.3 2.7 14,0 T7TEstimated. 2/ Projected 3/ ELstimated by rmjission. Table 7 East Africa Retained Imports by End Use, 1960-63

t I I 1960 1 1961 t 1962 1 1963 Category 'Valuet % of IValue' % of 'Value' Tof t Value'lT of ItOO01 grand IE£000' grand '£10001 grand I £VW000 grand I I total I ' total I I total I t tota2

Food, drink and Food 6,720 5.3 11,051 8.9 11,765 9.6 7,814 5.9 Drink 937 0.8 961 o.8 874 0.7 851 0.6 Tobacco 181 0.1 189 0.1 158 0,1 133 0.1 Total 7,839 6.2 12,200 9.8 12,797 10.4 8,798 6.6

Producers' materials Animal and vegetable materials 2,249 1.8 2,558 2.1 2,688 2.2 2,4462 1.9 Chemicals and fer- tilizers 6,081 4.8 6,124 4.9 6,402 5.2 7,051 553 Manufactured goods, excluding building materials 14,639 11.6 14,334 11.5 14,048 11.5 16,814 12.6 Manufactured goods, building materials only 9,363 7.5 8,386 6.7 7,547 6.1 8,171 6.1 Metaliferous ores and metal scrap 1/ -1,025 -0.8 -872 -0.7 -424 -0.3 17 - fuels, lubric- ants and related materials 8,525 6.8 7,537 6.0 6,948 5.7 7,768 5.8 Total 39,833 31.7 38,069 30.: 37,208 30.4 42,28) 31.7

ProduLcers' capital goods Industry 6,309 5.0 6,753 5.14 6,492 5.3 6,969 5.2 Commerce 919 0.7 912 0.7 754 o.6 1,003 0.8 Agriculture 6,838 5.4 6,926 5.6 5,126 4.2 7,433 5.o Transport equipment, and other 14,548 11,6 12,966 l1.14 13,382 10.9 11,62. 8.7 Total _ 2T El 22,7 27,556 22.1 25,7524 21.0 274g30 20.3 Spares and accessories Transport equipment 4,438 3,5 4,358 3.5 4,346 3.5 4,554 3.4 0-ther 1,980 1.6 1,813 1.5; 1,688 1.4 2,472 1.9 Total 6,419 5.1 6,171 5.C( 6X034 1.9 7, 2- Consumers' goods Durable 10,2814 8.2 7,964 6.14 9,086 714 11,401 8.6 Non-durable 27,422 21.8 27,107 21.7 26,030 21.2 30,010 2265 Total 37,706 30.0 3.1 35,116 26.6 141,110 31.17 Miscellaneous - Total 5,415 4.3 5,672 4.05 5,723 14.7 6,725 5,0 Grand Total 125,826 loO, 124,740 100.0 1225632 100.0 133,273 100.0 1/ Prior to 1963 "Metal Scrap" export was treated as Re-export. Since 1963 this haE been treated as Domestic export. Source: East African Statistical Department: Econornic and Statistical Review,Dect6L4 Ta-ble 8

Interterritori al Trade, 1960-196h

(£f Million) 1960 1961 _ 1962 19263 1964

Exports to K(enya Ugend& Teng. iKenyr Tlg-nda T-ng. T"en, -g nd' Trig. Keny Ugrrid- T^nng. :en,- Ug-ndc Tnng. from

Kenya - 6.2 7.6 - 7.0 8.9 - 7.3 10.0 - 9.1 Lo.h _ 12.6 13.3

IJganda 5.1 1.6 5.2 - .7 5.4 _ 1.7 6.2 - 2.0 7.2 - 2.1L

Tang .nyika 1.9 0,5 _ 1.8 0., 20 o 0.4 _ . 2. 1.0 -

Total in?rorts 7.0 6.7 2.2 7.0 7.4 10.6 1.4 7.7 11.7 9.1 °.9 12.4 11.3 13.6 15.7

Total a11 count-Itr ie s 22.9I? - 6.8 32e4 4o.6 Table g East African Monetary System East African Currency_Board and. the Commercial Banks

'000

Year as at 30th June Category 1959 1960 1961 1962 1963 1964

(i) Money Supply: 1. Cash Balances of the Commercial Banks Cash held in the tills 5,858 6,092 5,871 4,600 4,821 4,134 Balances with the E.A. Currency Board - - - 720 1,335 979 Total 5,858 6,092 5,871 5,320 6,'56 5,113 2. Money Supply Cash with public 513399 5443h6 53,302 53,l74 60,703 64,177 Demand Deposits 71,682 70,039 69,945 74,983 83,165 89,397 Total 123,081 124,385 123,247_28,157 143,868 153,574

3. Near Money Time Deposits 11,923 8,755 11,037 ll,884 14,066 14,866 Savings Deposits 12,602 13,139 12,561 14,122 17,629 195057 Total 24,525 21,894 23,598 26,006 31,695 33,923

(ii)Foreign Assets: UgK. Securities 32,714 29,251 29,842 29,759 30,837 28,039 Money at Call and Treasury Bills 22,802 25,715 26,414 26,644 33,655 35,237 Overseas Balances (Net) 19,167 -2,132 7,044 2,399 2,769 -6,1,47 Total 714683 52,834 63,300 58,802 67,261 _6,82,9

(wii) :Internal Credit Supply E.A. Securities 8,31-9 8,796 8,268 6,982 7,589 8,014 E.A. Treasury Bills - 3,051 2,824 5,040 3,155 3,833 Crop Finance Bills - - - - - Loans and Advances 1/ 61,846 76,948 68,606 77,092 90,789 106,306 Investments 4,042 3,210 3,174 6,283 5,803 7,301 Total 75,207 92,oo5 82,872 95,397 107,336 125,454

1/ 'Loans and Advances include bill discounted by the commercial banks. ,ablu 1

East llfri-can Cowniercial Banks 'ecluding ZanzibaT

1959-126L; (I: minlion) 1963 196i At 31st December 1959 1960 1961 1'62

Liabi lities 1. Depoaits 71.724 64.064 72.970 81.018 8b.735 9h.099 (a) Demand 77TF4 `5. t32 (i) Goverrnent 11.229 10.727 M,T'94L 27.002 58.991 59.117 (ii) Private 60.b95 53.337 5L.376 5b.016 32.652 3>.63O Time and Savinc 23.891 19.015 22.777 28.1L18 (b) 7 C19.)614 Government 799 3h L3. 30.356 32.666 (ii) Private 23.092 18,396 22.382 26.782 .16h 117 .386 139 .578 Total 95.617 83.079 95.h'77 109 2.1419 8.751 2.. Onverseas Liabilities 12.778 22.839 20.738 -

- - 3. Balances due to Banks in E.A. 27.818 31.761 - 9.825 13.616 10.823 16.'26 4. Other Liabilities 9.122 10.108 130.628 155 .143 Total Liabilit-ies 1145.335 1414.887 126.309 122.810 M: sets 7.081 6.298 7.509 1. Cash 6.630 7.1406 6.2146 6.171 228 280 2. Overseas Assets 214.8614 16.887 25.C?51 1.11 1.962 1.300 3. Treasury Bills E.A. - - -

L4. Bi ls discounted 3.986 .-343 1-775 (a) local 14.993 14.184 3.398 1.845 1.883 2.131 2.609 (b) Foreign 1.609 2.152

5. Loans and Advances excluding bills discounted 24.801 30.501 38.902 (a) Trade and Transport - - - 114.021 18.606 20.750 (b) Agriculture 11.777 13.680 12.970 15.155 114.807 16.313 (c) Industry 13.792 13.619 12.785 22.776 26.387 34.828 (d) Other 32.207 38.806 h2.663

6. Balances due from Banks in 14.686 5.373 6.1114 E.A. excluding T.B.'s 31.706 34.216 3.524 2.298 3.002 3.397 7. Investment in E.A. 3.789 2.623 3.623 18.5)41 17.11;46 19.179 3. Othler Assets 13.968 11.71 14.204 130.628 155.1453 Total Assets 1IL5.335 1141.887 126.309 122.810 Table 11

East Africa Estimated Balance of Payments, 1960-1964 C millon) 1960 1961 1962 1963 1964 Trade Outside East Africa Exports (incl. re-exports) 141.2 135.1 ]lO.5 172.1 192.7 Imports (net) 1l45.4 1141.7 145.9 154.8 166.0 Balance of Trade -L.2 -6.6 --5.4 +17.3 +26.7

Trade Trithin East Africa

Exports 22.8 2h.9 26.7 31.5 41.1 Imports 22,8 24.9 26.7 31.5 41.1

Invisibles Receipts (recorded) 40.4 44.4 4ffS9 53.8 5S.2 Payments 4h.1 45.3 54h7 60.4 61.3 Recorded 38.1 38e8 47.7 55.4 59.3 Net unrecorded 6.0 6.5 7.0 5.0 2.0 Balance of Invisibles -3.7 -0.9 -.8.8 -6.6 -7.1

Balance of Goods and Services -7.9 -7.5 -14.2 +10.7 +19.6

Recorded Investment Income

Receipts . .. .. 6.1 5.8 Pa~~

Public 4.7 5.2 6.4 6.8) ,4 Private ...... 13.6) 6` Net Investment Income -12.7 -11.0 -12.2 -14.3 -19.6

Current Balance of Payrents -20.6 -18.5 -26.4 -3.6 - Capital Mtovements (Balance) +2.6 +33.1 +23.5 +5.7 +16.7 Net Official 21.8 33.4 _0.9 26.9 20.7 Current grants .. 12.3 7.3 8.3 12.8 Capital grants ., 6.5 14.3 9.8 11.9 Loans .. 16.3 11.3 12.2 5.9 Debt Repayments .. 1.7 -2.0 -3.4 -909 Net Private -19.2 -0.3 -.7.4 -21.2 -26.t Recorded 13.4 2.7 4.3 3.8 Unrecorded -32.6 -3.0 -11.7 -25.0 * Monetar,; Movemients +18.0 -14.6 +2.9 -2.1 +5.6 Change in Government Sterling Assets (Increase:-) -0.4 -6.4 +9.9 -4.6 -5.5 Change in Banks' Foreign Balances (Increase:-) +20.4 -11.7 -2.7 +7.6 +7.4 Change in EACB Assets -2.0 +3.5 -4o3 -4.0 +4-7 Change of Accounts with int.Institutions - - - -1.1 -1.0 Table 12

East Africa Foreign Exchange Reserves As at 30th June, 1960-1961. (E million)

1960 1961 1962 1963 1964 Public Sector-/ 76.3 74.6 71.3 70.1 66.8 2

Governments 68.4. 67.8 65.5 63.6 61.0 2; Post Office Savings Banks 7.9 6.8 5.8 6.5 5X8 2/

Monetary Sector 52.9 63.3 60o9 69.6 60.3 Currency Board 55.0 5 e3 57.4 64.5 63.3

Commercial Banks - 2.1 7.0 2.4 2u8 - 6.4

Subscriptions to I.M.F. (net) - _.l 23 31 129.2 137.9 132e2 139.7 12701

1/ Investments at market value, including sinking funds and administrations, local authorities and statutory boards in the three territories, but excluding those of Zanzibar.

2/ Estimated by mission.