RESTRICTED RETLrN TO ReportN o. EA-99; FILE W ORT DSrK Public Disclosure Authorized This report was prepared for use within the Bank. F1-r ing it available to others, the Bank assumes no responsibility to them for the accuracy or completeness of the information contained herein. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized THE ECONOMIES OF THE GABON AND CONGO REPUBLICS Public Disclosure Authorized June 22, 1959 Public Disclosure Authorized Department of Operations Europe, Africa and Australasia CURRENCY EQUIVALENTS In this report franc CFA means franc Colonies Francaises d'Afrique. Par value US$1 a 247 francs CFA 1 franc CFA a 2 French francs * 0.4 U.S. cents 1 million frs. CFA a approximately US$4,000 1 billion frs. CFA a approximately US$4 million TABLE OF CONTENTS Page No. PART ONE: THE COIION FRA1.WORK 1 BASIC STATISTICS OF THE GABON 4 PART TWO: THE GABON ECONOMY I. INTRODUCTION 5 II. NATURAL RESOURCES AND THEIR EXPLOITATION 6 III. FOREIGN TRADE 9 IV. PUBLIC FINANCES 10 V. THE PROJECT AND ITS REPERCUSSIONS 12 VI. CONCLUSIONS AND CREDITWORTHINESS 13 BASIC STATISTICS OF THE CONGO 14 PART THREF: THE CONGO ECONOMY I. INTRODUCTION AND PHYSICAL DESCRIPTION 15 II. POLITICAL SITUATION 15 III. NATURAL RESOURCES AND THEIR DEVELOPMENT 16 IV. TRANSIT FUNCTION OF THE CONGO 19 V. MANPOWER PROBLEMS 20 VI. TRADE BALANCE 20 VII. PUBLIC FINANCES 21 VIII. CONCLUSIONS AND CREDITWORTHINESS 23 CHARTS 1. Gabon Exports of Okoume wood, Plywood and Veneer 2. Unit Price of Okoume wood from French Equatorial Africa 3 and h. Congo and Gabon Composition of Exports 5. Traffic of the Congo-Ocean Railway 6. Congo and Gabon Value of Exports 7. Cost of Living Indexes (France - Pointe Noire) STATISTICAL TABLES I. Structure of African Population II. Transport Infrastructure _III. Mining Production 17, Gabon Agricultural Export Products VO Congo Agricultural Production VI. External Trade VII, Gabon, Volume of Main Exports VIII. Gabon Destination of Foreign Trade in 1957 IX. Gabon Imports by Commodities in 1957 X. Congo Volume of Main Exports XI. FIDES Programs, First and Second Plan XII. Territorial Budgets, Revenues XIII. Territorial Budgets, Expenditures XIV. A.E.F. Money Supply MAPS 1. Population Density 2. Transport 3. Principal Economic Resources THE ECONOMIES OF THE REPUBLICS OF CONGO AND GABON PART I THE COMMON FRA1EORK Political Background - From Colony to Community 1. The first permanent settlement in what was to become French Equa- torial Africa (A.E.F.) dates from 1836. Over the next 50 years, French Administration was extended from the Gabon to the Middle Congo and during the closing years of the 19th century north to the region of Lake Tchad and up to the Libyan desert. Their boundaries settled at the conference table rather than on the ground, the patchwork pieces of Gabon, Middle Congo, Oubangui-Chari and Tchad were then grouped under a federal administration. Colonies under the Third Republic, they became Overseas Territories under the Fourth, within the French Union which the Brazzaville conference of 1944 had largely inspired. Their citizens became French citizens with rep- resentation in the French Parliament. African participation in local gov- ernment was substantially extended after 1956 and, subject to the overrid- ing supervision of the French Government, the more advanced territories politically attained a substantial degree of self-government. 2. Having voted in favor of the constitution of the Fifth Republic in the referendum of September 28, 1958, the Overseas Territories of Gabon and the Middle Congo elected to adhere to the French Community as autono- mous states on the same basis as the French Republic itself. As the Repub- lic of Cabon and the Republic of Congo, they have their own governments, their own legislative assemblies elected by direct universal suffrage and are entirely responsible for their own internal affairs. If the French Republic -is,. in fact, the predominant partner and provides the essential ad- ministrative and executive services for the Community, it has no longer any jurisdiction over other member states or over their relations with one an- other, 3. France and each of the other member States of the Community is en- tirely responrsible for its own internal affairs. The Community is respon- sible for matters of mutual interest, defined by the Constitution as defense, foreign policy, currency and common economic and financial policy. The President of the French Republic presi.des over and. represents the Community and thus serves as.the constitutional link between France and the other member States. The institutions of the Cormunity are an Executive Council, a Senate and a Court of Arbitration. The Executive Council, of which the President is Chairman, consists of the Prime Minister of each member State and the ministers- responsible for Coimmunity affairs, Certain of the latter. are at the same time ministers in the French Government; for example, the miHister responsible. for currency and common economic and financial affairs of tW Community is also the Minister of Finance and Economic Affairs of France. 4. The four rew republics of Equatorial Africa decided, largely on the insistence of the Gabon, not to maintain thefederation and nave so far agreed only to a more limited form of associauaon at the administrative level. They have decided to maintain a Customs Union and propose to set up an "Office du Transport" to own and manage the former federal railway, ports and telecom- munications system. Economic Background 5. Brazzaville, standing at the junction of the railway to Pointe Noire and the Congo river route to the territories of the north, served not only as federal capital but also as commercial and financial capital. The Middle Congo was the life line of the federation and its fortunes continue to be closely affected by those of its northern neighbors. The Gabon on the other hand is located away from this federal axis, has its own ports and is isolated from the Congo by dense forest. These factors go far to explain its reluctance to associate itself closely with the other three territories. 6. The dissolution of the federation has left unresolved a variety of problems, notably concerned with the public finances. A major task is the redistribution among the four republics of the revenues and expenditures of the former federal budget, The allocation of the federal debts is prov- ing a particularly delicate affair. The problem of redistribution cannot be rosclved without cooperation from France because the federal and terri- torial budgets together were in deficit (the Gabon budget being the only regular exception). No matter how former federal reveanues and expenditures are rcdistributed some at least of the former territories can be expected to look to France for help in balancing their ordinary budgets. In addition some important categories of expenditure in the federation were paid for directly by the French budget. These included the salaries of senior French officials and the judiciary and the costs of police, defense services, major aerocLrDmes, meteorological and telecommunication services. The total of all current expenditures financed by the French budget either directly or through the federal budget between 1947 and 1958 was of the order of $115 million, at the present rate of exchange. Public Investment 7. After the end of the second World War, France set up a Fund for the Economic and Social Development of the Overseas Territories (FIDES) to finance reconstruction and new investment programs much larger and more ex- tensive than the public works programs of the past. FIDES was initially conceived as a joint venture, to which France and the territories would both contribute and the territories were represented on its managing board. In face of the continued financial embarrassment of the territories, France pro- gressively increased her contribution from 55o to 90% of the total funds distributed by FIDES. Since many territories borrowed the whole of their contribution from the Caisse Centrale de la France d'Outre Mer, which in addition made development loans to private and semi-public borrowers in the Overseas Territories, France in fact financed in grants and loans a very large part and in some territories virtually the whole of their development programs. Between 1947 and 1958 FIDES disbursed the equivalent of some $200 million at the present rate of exchange in the four territories of A.E.F. The Caisse Centrale extended loans to private and semi-public borrowers of a further $53 million equivalent. During the first of the Four Year Invest- ment Program, two thirds of the funds were spent for "infrastructure", mainly to rehabilitate the transport system and to extend the road network; 15% was spent on agriculture and 17% on social services. In subsequent years there was a strong shift in emphasis away from infrastructure, reflecting in part the curtailment and revision of an over ambitious and unsuccessful road program, towards investment in agriculture, livestock and mineral development. 8. The changed political relations between the territories and metro- politan France raise the question of the future level and direction of French aid. France appears to be committed to maintain a substantial volume but is considering important changes in its administration. FIDES has been rechris- tened "Fonds d'Aide et de Cooperation". African republics are no longer represented on the board and it is likely that requests for aid will have to pass stricter economic standards than in the past. Trade and Paments 9. The four republics have the same currency. They belong to the franc area and are represented on its Monetary Comittee, Their local currency is the CFA franc, issued by the Eanque Centrale des Etats de l'Afrique Equatoriale, new bank of issue for the four republics of Equatorial Africa and the Cameroons.