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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. Its assets are entirely French francs, The CFA franc and the French franc are freely convertible with one another at a rate of 1 CFA franc to 2 French francs. Funds may be transferred without restriction within the franc area.

10. The Congo Basin treaties applied in the former federation and it is presumed that the Customs Union will continue to be administered on a non- preferential basis. Imports from outside the franc area are, however, limited by the availability of foreign exchange; on the average two thirds of the im- ports into Congo and Gabon come from France. Close trading ties, freedom of transfar and, in effect, a common currency mean that price movements in France exert a preponderent effect on local price levels. The new republics are, of course, no less dependent on France economically than the old territories. -14 - REPUBLIC OF GABON

BASIC STATISTICS

Area: 102,000 square miles

Population: total 408,000 (January 1, 1958) of which Europeans: 5,000 Density per square mile: 4 Rate of growth of population: stationary

Gross National Product at market prices 1956: frs. CFA 15,660 million

of which: 1) production in African households for own consumption 13%0 marketed 17% 2) production by enterprises for own consumption 1% marketed 61% 3) administration 5% 4) miscellaneous services 2%

100% 1956 per Capita money income of bulk of population: $20-30 equiv. (estimate)

Trade 1957 ExporLs: frs. CFA 6,261 million Imports: frs, CFA 7,340 million of wid ch: logs 614/ of wich: vehicles sawn timber and machinery 48% and plywood 19% id. raw materials 8% crude oil 8% metals and metal prod. 9% cocoa 4% foodstuffs 13% other 51% other 22%

100% 100%

Final Budget 1957: frs. CfA 1,770 mill7ion Main receipts % Main grousof expnditures %

direct taxation 30 debt service 1 indirect taxation 13 current expenditures 59 miscellaneous receipts 4 maintenance 8 contributions. subsidi-es 149 contributions.subsidies 15 miscellaneous contributione4 to capital budget 1 1000 surplus balance 3 frs. CA 1,926 million Estimated 1958 budget revenues: of which: estimated capital budget: 19% estimated surplus 1 % PART TWO

TIHI ECONOMY OF GABON

I. INTRODUCTION

1. Gabon is geographically and economically the most homogeneous of all the French Equatorial African republics. It has many natural resources, but nature and climate have created an environment hostile to man, for heavy Equa- torial rain forest covers 7/8 of the territory. Situated near the Equator the Gabon has high temperatures and all year round humidity. From Hay to September it is relatively dry, and there is heavy rain from January till May. At Libre- ville the averafe rainfall is more than 100 inches.

2. In the coastal area, the Ogooue river, which is navigable for 200 miles, and a network of smaller waterways provide adequate transportation. In- land the terrain is difficult: a low plateau and two mountain ranges cause many rapids, which make the rivers useless for any kind of heavy transport. The few roads which exist are nearly unusable by heavy traffic in the rainy season. square 3. With only 400,000 inhabitants, an average density of 4 per mile, the Galon is the least populated of the four republics. The population is concentrated along the rivers and roads and in the interior large areas are care and completely empty. The birthrate is low and notwithstanding medical imoroved social services the population still appears to be static. The Govern- the natural ment is -iving much attention to the problem and it is hoped that the more rate of increase will become positive in the future, especially among There is dynamic Pang tribe which make up about 1/3 of the total population. no unemployment and some areas suffer from a shortage of manpower. The shanty towns which so often mar African cities are unknown as there are initially no urban unemployed. The two largest cities, Libreville, the capital, and Port Gentil, the center of the oil and plywood industries, have only 20,000 and 16,000 inhabitants, respectively. different 4. There are more than 40 different ethnic groups speaking and having distinct cultures. Apart from the Fang tribe all the other languages other groups are rather small. Tribal boundaries are less sharply drawn than in African territories and political problems have not been magnified by tribal rivalries. The presence of the French Administration for over a century has of the two main perhaps had some unifying influence. For instance, the leaders parties are both Fangs and they exercise a large measure of political restraint. Gabonese There is also understanding and confidence in the relations between the and the French. The Gabon authorities recognize that they must rely to a large extent on French technical assistance in many fields including administration. have been 5. The political climate of the Gabon is calm and differences solved in a democratic way. There are two major parties: the Government party, and the Union the Bloc Democratique Gabonais led by prime minister Leon M'Ba, represent Democratique et Sociale Gabonaise under Jean Aubame, who used to are very simi- Gabon in the French Parliament. The programs of the major parties of program or lar and the parties themselves do not so much reflect differences .. 6 - doctrine as the influence and appeal of their various leaders. The majority of the Bloc Democratique Gabonais is limited to a few seats, and although the cabinet is drawn from a single party the position of the Government appears stable. Although the opposition would prefer early elections, none are sched- uled for the near future.

II. MATUJRL 1ZSOURCS AD THEIR XPLOITATION

6. Gross Domestic Product of the Gabon was estimated in 1956 at some $63 million equivalent which would indicate an average of $155 per capita. But such an average is misleading because two thirds of Gross Domestic Product originate in a small number of modern enterprises. In fact 9/10 of the popula- tion account for only 1/3 of the national product of which 60% represents sub- sistence farming. Average money income of African households is probably close to I$20-30 per head.

The Forests

7. The forests have hitherto provided at least three quarters of all ex- ports from Gabon. Present exploitation is confined to a relatively small area, (the so-called "first zone"), near the coast where the river system is navigable or permits floating of logs. M'ore than 90% of lumber exports are in the form of logs and the remainder in plywood and veneer. Most of the exported wood is okoume, a sofL uoodwhich is particularly suitable for plywood because of its excellent peeling qualities.

8. The industry has faced three difficulties, lack of manpower, the grad- ual exhaustion of the more accessible timber stands and falling real prices. These difficulties have been countered by intensive mechanization, heavy invest- ment in transport and better organization. The industry as a whole has succeeded in raising output by three times since 1938 while reducing its labor force by two thirds.

9. The timber stands of the first zone are being exhausted and operations become more costly as production moves into the second zone where haulage of logs requires heavy investment in roads and vehicles. The okoume reserves of the first zone are estimated at some 6 million tons while the reserves of the second amount to approximately 25 million tons. At the current rate of production re- serves should be sufficient for half a century.

10. However, as it takes 50 years for an okoume to attain the average size needed for peeling, the authorities have started on a large reforestation pro- gram. At N'Koulounga, north of Libreville, and elsewhere a large scale experi- ment is being carried out. Okoume forests are planted which, after 10 to 15 years, are expected to yield 100 tons of wood per hectare suitable for pulp pro- duction and after 50 years 70 to 80 full grown okoumes per hectare or 300 tons of wood of plywood quality. This latter figure may be compared with the present yield of wild okoume stands scattered in the mixed rain forest of 5 to 10 tons per hectare. If in the future industry could concentrate its operations on okoume plantations instead of wild stands, felling, cutting and transport costs could be greatly reduced. If these expectations were realized the Gabonese GABON: EXPORTS OF OKUME WOOD, PLYWOOD AND VENEER (THOUSANDS OF TONS) 600

YEARLY

500 500

400 400

300 ~OKUNME WOOD 0 300 300

20 0 020 0

100 100 10 PLYWOOD AND VENEER

0 -- 0 1936 1940 1945 1950 1955 1960

UNIT PRICE OF OKUME WOOD'FROM FRENCH EQUATORIAL AFRICA (AVERAGE VALUE - DOLLARS PER TON) 60 60 YEARLY 50 50

40 40

30 30

20 20

10 10

0 0 1936 1940 1945 1950 1955 1960

6/8/59 R1500 IBRO- Economic Staff - 7 - forest industry would be revolutionized. So far, 3,000 ha. have been planted and results, after 5 years, sugTest the feasibility of the project, but it is still rather early to be confident. If sufficient funds are available, the Government intends to plant 1,500 to 2,000 ha. each year, corresponding to an annual output (after 50 years) of half a million tons of okoume wood.

11. Before the Second World War the industry suffered from severe fluctua- tions in world demand and in 1944 the Office des Bois, a private cooperative of okoume producers was created in order to regulate the sale and export of okoume. With the exception of lumber companies owned by French or Gabonese plywood factories all okoume has to be sold to the Office des Bois which is the sole ex- porter for the Gabon. This organization grades, stocks, and sells the logs and performs various central functions for its members. In contrast with other types of lumber, okoume can only be stocked for a limited period without losing its special qalities and quickly diminishing in value. In periods of falling demand the Office therefore fixes production quotas to regulate supply and exerts some influence on prices.

12. The Gabon has a virtual monopoly as the natural okoume stands are practically limited to its territory. Prospects for okoume seem favorable as long as no better and cheaper product is substituted for plywood, for which demand is still growing. Okoume logs are in great demand, especially in France, Germany and the Netherlands, and its plywood has a good market in the United States and United Kingdom.1/The main problem at present is how to produce okoume in sufficient quantities at a competitive price. If the price of okoume were to rise too far other types of lumber would become competitive because of the possi- bility of substitution. The Office des Bois is consequently unable to do more than cushion the effects on producer's income, as in the 1952 slump.

13. Some 10% of the Gabon output of okoume is processed in the plywood plant of the Compagnie Francaise du Gabon (C.F.G.) in Port Gentil. The C.F.G. is a largTe factory, even by American standards and when first set up its capacity was much in excess of demand and marketing problems and substantial losses were encountered. In 1953 the company was reorganized and there have been important increases in productivity. Total investment in the C.F.G. amounted to frs. CFA 2.1 billion. In 1958 the plant turned out 22,000 tons of plywood with 1,500 workers, mostly Africans. Although the company still has some excess capacity overall results are satisfactory. Nearly half of its total output is exported to the United States and the United Kingdom. Total exports were over frs. CFA 1 billion in 1958 or 1/8 of the total exports of the Gabon. In 1958 a number of smaller sawmills exported some 8,000 tons of sawn timber, sleepers and poles.

Agriculture i4 Apart from experimental rubber and oil palm plantations owned by pri- vate interests in the Lambarene region, agriculture in the Gabon is primarily subsistence farming. Little more than one third of total agricultural production of African households is marketed with the result that the rural population has a low average money income. The main native foodcrops are manioc, peanuts and palm oil. Shifting cultivation with long fallow periods is still the rule. Cash crops are gradually becoming a sizable source of income to the rural population but they only account for about LC of total exports. Cocoa, which constitutes more than 85% of all agricultural exports, griws in the Woleu NfTem region close

SIn the CopMon Mrkhet the tariff on plywood -nd veneer is still subject to negotintion, ; - 8' -

to the Cameroons border. Small amounts of coffee are grown in the iekambo and Franceville-Mouila area, while rice cultivation was started near Tchib- anga with favorable results.

15. The efforts of the Government are primarily aimed at developing agricultural output in the least developed inland areas. The object is not so much to increase agricultural exports as to raise the income of the rural population. Gradually the program is showing results chiefly in cocoa and coffee During the last ten years as a result of investment financed by FIDE' 8 000 ha. have been brought under cocoa and 2,600 ha. under coffee. By 1962, cocoa production is expected to double and coffee output to increase four times.

16. Agricultural development is difficult and costly. Owing to the very extensive and primitive type of farming few villages have more than 100 inhabitants and are far from one another. The first task of the authorities is to regroup and concentrate some of the villages in order to set up small farmers' communities. These so called "paysannats" receive guidance and technical and material aid from the Government. The em-hasis is on stabili- zation of the population, soil improvement and conservation, crop rotation and the use of fertilizers. 1iot only is the growing of cash crops promoted but better food crops are also introduced to improve the nutritional value of the native diet.

Oil Industry

17. After 15 years of prospecting and the investment of some frs. CFA 12 billion oil was discovered in 1956 near Port Gentil by the Societe des Petroles d'A,E.F. (S.P.A.E.F.), 2/3 of which is owned by the French State. More wells were drilled and in 1958 450,000 t. worth frs. CFA 1.6 billion, that is 1/5 of total exports, were shipped from Cap Lopez, the oil terminal. S.P.A.E.F. is already the largest single employer in the Gabon with 2,500 Africans, most of whom have been trained by the Company. In 1959 output will be raised to 750,000 t. and in 1960 it is expected to exceed a million tons. Installations at Port Gentil are sufficient to handle 2 million tons of oil a year, that is 3 times the present rate of production. Proven reserves now amount to 10 million t. and drilling is actively pursued,

18. The S.P.A.E.F. concession covers a large area of potentially oil bearing formations and because its own resources were limited the S.P.A.E.F. concluded in 1958 agreements with Mobiloil and Royal Dutch-Shell. These two companies will conduct exploration and off shore drillings on a large part of the S.P.A.E.F. concession. Each company will share half the total ex- penditures and output with S.P.A.E.F.

Uranium

19. Uranium was discovered in 1956 at Mounana in the Franceville area, some 15 miles from Comilog at Moanda. The deposits will be exploited by the Compagnie des ines d'Uranium de Franceville, a mixed public and pri- vate company.

2/ Fund for Economic and Social Development of Overseas Territories. - 9 - The construction of a refinery plant with a capacity of 2,500 tons of con- centrated ore (containing 300 tons of uranium metal worth frs. CFA 1.5 bil- lion (at current prices) has been started. In view of the small volume of the production, which will start in 1961, and the high value of the product, transport will go by road until the completion of the Comilog railway.

Mekambo and Tchibanga Iron Ore Projects

20, Very large deposits of high grade iron ore estimated roughly at 1 billion tons have been discovered in the Mekambo area by a group in which Bethlehem Steel is a major participant. Since a 400 miles railway, much of it through difficult country, would be needed to evacuate the ore, the newly formed company which is considering the possibility of exploiting the deposits is basing ib s plans on an output of not less than 10 million tons a year. Studies are expected to continue for another 5 years and the mine could not be in production before 1970.

21. Close to the Atlantic, at Tehibanga, a very much smaller deposit of iron are has been discovered by the Bureau Tinier. Although proven re- serves are small (only 150 million tons) and the ore would have to be con- centrated before shipment, the location is favorable, since a short railway line of only 50 miles would link the afine with deepwater. The Bureau Pinier has envisaged the use of this deposit until Meke-mbo is ripe but, so far as is iowa, there are no definite plans for its exploitation.

III. FOREIGN TRADE

22. The Gabon has the highest export figure per capita of all A.E.F. Exports per capita in 1958 averaged frs. CFA 21,000 in the Gabon compared with an average frs. CFA 2,600 for the other three territories. The Gabon is also the only one of the four republics which has had a favorable trade balance for a number of years. Exports have increased satisfactorily and in 1958 they rose by a third to frs. CFA 8.4 billion while imports fell to frs. CFA 7.3 billion reflecting the levelling off of the investment program of the S.P.A.E.F. As a result the 1958 trade balance again showed a surplus of nearly one billion frs.CFA.

23. The import bill is closely related to the import of capital goods needed by the two major economic sectors, the oil and the forest industries. In fact the Gabon has the highest proportion of gross fixed capital forma- tion of A.E.F.; 39% of gross national product going into capital formation. This important investment effort is reflected in the total import figures which doubled in value since 1956. In 1957 there was a large deficit due to the sudden rise in imports largely caused and financed by S.P.A.E.F. Of total imports in 1957 worth frs. CFA 7.3 billion nearly 70% came from the franc area and 18% from the U.S.A., mainly heavy duty vehicles for the forest industry, tractors and drilling equipment for the oil industry.

24. In 1957 total exports amounted to frs. CFA 6.3 billion or some $25 million equivalent. A little more than half were shipped to the franc area, roughly a quarter to the other countries of the Common Market and the re- mainder to the sterling and dollar areas. There was a deficit with the franc COMPOSITION OF EXPORTS (BILLIONS OF CFA FRANCS) 3 3 CONGO TOTAL -*VENEER AND PLYWOOD

OTHER WOOD

OKUME WOOD ELECTRIC POWER MINERALS AGRICULTURAL PRODUCTS

1952 1953 1954 1955 1956 1957 1958

COMPOSITION OF EXPORTS (BILLIONS OF CFA FRANCS) 9 9 GABON

8 8

PETROLEUM 7 7 TOTAL 1... GOLD AND DIAMONDS

6 6 ::-VENEER AND PLYWOOD

55 OTHER WOOD

4 4

3 3

OKUME WOOD

AGRICULTURAL PRODUCTS 0 0 1952 1953 1954 1955 1956 1957 1958

6/8/59 R1502 IBRD- Economic Staff - :M 0.

area and substantial surpluses with all other areas. In 1957, when imports were high, the deficit with the franc area amounted to frs. CFA 1.7 billion while the surplus outside that area was frs. CFA 0.7 billion. Thus, the Gabon is a net contributor of foreign exchange to the franc area, especial- ly in dollars, German marks and sterling.

25. Within four years it is likely that the Gabon exports will double in value. Oil exports are expected to increase to frs. CFA 3,5 billion in 1960; exports of uranium and manganese will add another frs. CFA 5.6 billion by 1962. So that assuming no decline in timber exports the total should be of the order of frs, CFA 16 billion in 1963. In spite of increased imports induced by these higher export incomes, as well as by the investment pro- grams of Comilog and Uranium de Franceville, it is expected that the Gabon will normally continue to exhibit the export surpluses. that have character- ized earlier years, in part because foreign enterprises will presumably con- tinue to remit abroad some part of their earnings.

IV. PUBLIC FINANCES

26. The first budget of the Gabon as an independent state will be that for 1959. Comparisons of figures with earlier budgets are very difficult owing to the many changes which have occurred since 1956. It is clear, however, that for a number of years the Gabon has more than met its current expenditure. In this aspect Gabon stands out in contrast to the other territories of A.E.F. Since 1954 the current budget (budget de fonction- nement) of the Gabon has shown a surplus. At the same time Gabon has been able to increase its contribution from current revenues to its local capital budget (the "budget d'equipement", as distinct from the Gabon section of the FIDES program).

27. The 1958 budget,which incorporated all the changes resulting from the "Loi-Cadre", estimated revenues at CFA frs. 1,926 million, of which CFA frs. 419 million, or about 1/5, was a refund from the federal budget as the Gabonts share of import and export duties collected by the Federation. The direct subsidy from France was less than 2% of the total revenues. The Fed- eration has ceased to exist but a customs union is taking its place. The fu- ture level and distribution of import and export duties is not yet known. As long as the complex liquidation of the federal revenues and expenditures and the transfer of the services directly borne by the French budget has not yet been completed it is impossible to have a clearer picture.

28. In 1955 the surplus of the current budget amounted to frs. CFA 16 million; in 1958 it is expected to be close to frs. CFA 200 million. In this period budgetary receipts rose from frs. CFA 1.1 billion to frs. CFA 2.1 billion. The influence of the forest industry on the budget is very great since more than a quarter of receipts are directly derived from it. The oil industry contributed in 1957 some frs. CFA 700 million to the budget in import and export duties, turnover tax, mining fee, etc. (for further details, see statistical appendix). - 11 -

29, The Government intends to float an internal loan of some frs. CFA 600-700 million. It will be used for road construction, especially to open up forest regions of the second zone, and for Government buildings. The forest industry and insurance companies are expected to be the main subscribers to the loan.

Investments

30, Until recently the budgetary receipts of the Gabon were almost completely spent on current expenditure and only small sums could be devoted to capital expenditure. In those years the Gabon depended almost entirely on FIDES to finance capital investment. From 1947 to 1958 expenditures under the First and Second FIDES Plans amounted to nearly frs. CFA 8 billion. The FIDES Plans were, in fact, the capital budgets of the Gabon.

31. The FIDES program was established in the expectation that after public funds had financed the infrastructure of the Overseas Territories investment by private interests in the productive sector would follow. Again the Gabon is an exception in A.E.F. as it is one of the few territo- ries where private investment has in fact more than matched the public program. Private capital went mainly into 3 sectors; the forest industry, construction and mining.

32. Details of the Third FIDES Prograpave been published and credits for the first tranche are already allocated. The Gabon part of the Plan is expected to amount to frs. CFA 4,3 billion to be spread over 4 years. The Gabon Republic has also requested frs. CFA 308 million from FEDOM (Fonds de Developpement pour les Pays et Territoires d'outre Mer) the European Devel- opment Fund of the Common Market. One half of this would be spent in the social sector. The FEDOM request is closely related to, and is in fact an extension of, the FIDES Plan. Apart from social investment a large amount is to go into road construction to open up the second forest zone and link the cocoa producing area of the Woleu N'Tem with the port of Libreville. Some funds will also be devoted to an extension of the reforestation program.

External Debt

33. The direct external debt of the Gabon is at resent small. The 1958 debt service represented frs. CFA 28 million or ly,o of the current budget. As a result of the liquidation of the Federation the Gabon debt will be substantially higher and miaht be as much as 9-10% of the 1958 budget. Compared to the Gabon's export receipts it would represent only 2% of 1958 figures. All the Gabon debts are due to France.

1/ Future f1rarci-g would come within the scope of the Fonds d'Aide et de Cooperation. - 12 -

V. TE PROJECT AND ITS REPERCUSSIONS

34. The proposed Comilog project will exploit the rich and extensive manganese ore deposits near Moanda in the Gabon Republic with an initial output of 00,000 tons a year. The ore will be shipped to Pointe Noire, the main port of the Congo Republic, over a 73 Km. cableway and a 290 Km. railroad to link up with the existing Congo-Ocean railway. Total cost of the project has been estimated at some 589 million equivalent and the first shipment of ore is scheduled for mid 1962.

35. There is not expected to be a manpower problem at the exploitation stage even though the Mines d'Uranium will also be operating at Mounana only a short distance away. They will together require roughly 1,000 Africans and 150 Europeans. At the peak of the construction, more manpower will be needed but additions are not expected to exceed 500. So far the two com- panies have together recruited some 700 men without any particular problem. At least 25,000 men between 18-60 years live in the region where the two enterprises are located, which means that in the production stage both com- panies would employ only 4% of the active population of the area. It is unlikely that there would be any shortage of native food as a sufficient amount is grown locally.

36. The major problem is not so much to find enough unskilled workers as to recruit skilled labor. The general level of education is quite good as 66% of children of school age receive primary education but technical education and training is hardly developed. The general rule is that all large enterprises train their own staff. The results of the S.P.A.E.F. and C.F.G, h,v2-been very encouraging in this respect. Both Comilog and the C.M.U.F. /with their need for specialized skills have already started the technical training of their own personnel. The Government intends to estab- lish a second accelerated technical course which will provide basic technical training.

37. The budget will benefit directly from the establishment of Comilog in three ways. Firstly, during the construction period some revenue will be obtained from duties on imported capital goods. As the largest part of the investment will go into the railway line which is on Congolese territory, receipts from this source will only amount to one quarter of the total import duties paid by Comilog. Over three years the Gabonese share has been calcu- lated at frs. CFA 125 million or about frs. CFA 4O million a year. In addi- tion the overall increase in economic activity and the salaries and wages paid will also increase other imports. Secondly, at the production stage three "ad valorem" taxes will be collected which are directly related to the output of the mine. Comilog will pay an amount equal to 8% of the fob value of the ore, to cover mining fee, turnover tax and export duty. The mining fee and turnover tax are likely to accrue to the Gabon but it is still un- certain which territory will obtain the export duty amounting to 3%. Exclud- ing the export duty and assuming an output of 00,000 tons of manganese ore at a price fob Pointe Noire of frs. CFA 8,250 per ton, these taxes will yield

2/ Compagnie des mines d'Uranium de Franceville. - 13 -

frs. CFA 205 million a year. Receipts on profits tax will be low in the first years during which interest and depreciation are heaviest, but they will rise gradually to frs. CFA 350 million in the 11th year. Finally, duties on fuel and imports required for the operation of the mine will reach frs. CFA 40 million per year. Altogether, at an output of half a million tons, budget revenues will increase in 19 by some frs. CEA 250 million, and to some fra..CFA 600 million after eleven years. The estimated direct revenues in 1963 represent 135J of the 1958 budget. Indirect increases in revenues caused by the overall increase in economic activity are difficult to assess and have not been estimated..

VI. CONCLUSIONS AND C"EDITWORTHINESS

38. The Gabon Republic has been endowed with substantial natural resources but their exploitation so far has been largely confined to the forest industry. The economy shows a satisfacto2y rate of growth which should increase in the near future with the development of the oil industry and the prodctuion of uranium and manganese. The steady, though far less spectacular, progress in agriculture should grad,-lly raise the low incomes of the raral!. population. Economic p2ospects of the Gabon appear to be fa- vorable. 3o far the low population growth has not retarded economic growth but it has recessarily placed a premium on capital intensive production as the experieace of the timber industry has shown. It is therefore fortunate that the territory appears to possess important petroleum and other mineral resources.

39. The financial position of the Government is sound, and economic and financial policies have been well handled. The Republic aims to be financially independent and in the not too distant future this may be possible. For the time being the Gabon still relies on France for part of its capital expenditure. Although the problems posed by the liquidation of the Federation have not yet been settled, it seems probable that the addi- tional financial burden may not be too heavy., even including the substantial increase in the debt service,

4o. The proposed loan will contribute to the diversification of Gabonese exports. The project will stimulate economic activity in general while no harmful effects are expected, In the circumstances it makes good sense for the Gabon to accelerate its economic development and broaden its economy by attracting foreign productive investment. If the market expecta- tions for manganese are fulfilled, the project should produce enough foreign exchange to service the proposed Bank loan of $35 million.

4l. Although the Gabon appears able to support its present level of expenditures its economic development is nevertheless still highly dependent on a continued inflow of public and private capital as well as of entrepre- neurial and technical personnel from France. Assuming the continuance of the present economic relationship with France, however, the Gabon should, under most circumstances, have the capacity to honor her guarantee. - 14 -

REFUBLIC OF CONGO

BASIC STATISTICS

Area: 132,000 square miles

Population: total 765,000 (January 1, 1958) of which Europeans: 10,600 Density per square mile: nearly 6 Rate of growth of population: approximately 1.51

Gross National Product at market prices 1956: frs. CFA 24,850 million

of which: 1) production in African households for own consumption 25% marketed 20% 2) production by enterprises for own consumption 2% marketed 37% 3) administration 12% 4) miscellaneous services 4%

100%

1956 per Capita money income of the bulk of population: $35-h0 equiv.(estimate)

Trade 1957 Exports: frs. CFA 2,L19 million total: frs. CFA 10,312 million of unich: 1,037 in transit and re- logs 44% exported to other territories. timber and prod. 10% oilseeds 25% machinery and vehicles 31% minerals 6% oil products 7% power 1% textiles 8% misc. agric. prod. 6% metal products 8% other 7% foodstuffs 17% other 29%

Voted Budget 1957: frs. CIA 1,7m46 million Main receipts: Main expenditures:

direct taxation 50 debt service - indirect taxes 7 salarie wages 51 other receipts 6 supplies, maintenance 22 subsidies 37 refunds 12 subsidies, aid 7 contribution cap, budget 2 other 5 Final Budget 1957: frs. CFA 1,947 million surplus: frs: CPA 27 million or 1.5%

Budget estimates for 1958: frs. CPA 2,362 million PART THREE

THE ECONOMY OF THE CONGO REPUBLIC

I, INTRODUCTION AND PHYSICAL DESCRIPTION

1. The Congo Republici/extends over 800 miles inland from the Atlantic coast in a narrow strip along the northern banks of the Congo and Oubangui rivers to the border of the Central African Republic (formerly Oubangui-Chari). The regions of major economic importance are the Mayombe mountains, which run parallel to the coast, the Niari valley and the Brazzaville area. The rest of the country c-asists either of the largely impassable flood plains of the Congo depression in the north, or of sandy plateaux. With the exception of the savanna area near Pointe Noire, the Niari valley and the Bateke plateau north of Brazzaville, the country is covered by dense forest. The tropical climate, although generally less humid than that of the Gabon is not conducive to sustained physical effort.

2. Until the completion of the Congo-Ocean railway linking the port of Pointe Noire to Brazzaville, the lowest navigable point on the Congo river, the interior of the territory was virtually isolated. The creation of this rail-river link to the north, which was the principal object of the prewar public investnent in the territory, has exerted a strong influence on the subsequent development of the Congo itself.

3. There are 760,000 Congolese spread over 130,000 sq. miles of terri- tory giving an average density of less than 6 per square mile, but since one sixth of the population lives in the two main cities, Brazzaville and Pointe Noire, and the Miari valley is relatively well populated, much of the country is almost empty. In contrast to the Gabon, the population has increased rapidly in the last ten years due, however, to immigration, mainly from the north, rather than to natural increase. Outside the main towns which have attracted people from many tribes, the Congolese are divided into many small communities with little contact and consequently no sense of national unity. Political divisions have been based on and have indeed served to exacerbate long standing tribal rivalries, particularly between the south and less favored north.

II. Political Situation

4. The Government of the Congo is formed by the Union Democratique pour la Defense des Interets Africains (UDDIA) under the Abbe Fulbert Youlou. Out of a total of 45 members in the Assembly the UDD[A cLdrely on about 25, the remainder voting, more or less consistently, with the opposition, the Partie Populaire Congolais (PPC). The party of the Abbe Youlou came to power in November 1958 as a result of a marginal shift in the balance of votes in the

1/ Formerly the Overseas Territory of the Middle Congo (Moyen-Congo). - 16 -

Assembly. The PFC demanded new elections on the grounds that the Assembly was no longer representative but the Governmient refused to g7rant them.

5. The main support of the UDDIA is found among the Balaris around and south of Brazzaville, while the PPC draws its strength from the H'Bochis liv- ing in the northern part of the country. The political agitation resulting from the irreconcilable attitudes on the question of elections sparked off the bloody riots in the African townships of Brazzaville in February 1959. The disturbances quickly assumed the character of open war between M'Bochis and Balaris and led to many casualties and extensive damage to native housing. The riots were a strictly African affair and at no time were Europeans or their property in danger.

6. Unable to restore order, the Congo Govern-ent requested the inter- vention of the French forces, under the control of the High Commissioner. Al- though order was restored tension persisted and the Government of abbe Fulbort Youlou finally agreed to new elections, the date of which was eventually set for June 14, 1959. The present government has been confirmed with an in. creased majority.

III. NATURAL RESOURCES AND T11EIR DEVELOPMENT

7. The Congo Gross National Product had been estimated, for the first time, in 1956 at roughly 3100 million equivalent or some $135 per head; no other estimates are available and this is probably much too high. In some areas agriculture is more developed and the income of the rural population, is on the average higher than in the Gabon. In the Congo substantial income arises from transport and from public administration since Brazzaville was the federal capital of A.E.F. for many years. The output of enterprises is relatively less important amounting to 39% of G.N.P. in contrast with the Gabon where it is over 60%. The difference is explained by the much smaller size of the forest industry in the Congo, and the absence of oil production.

Forests

8. The timber resources of the Congo are less valuable and less favor- ably located than those of the Gabon. Before the opening of the Congo-Ocean railroad lumber exports were negligible and the first area to be exploited was the otherwise inaccessible Mayombe range through which the railway runs. As the more convenient stands were used up, exploitation spread to the foot- hills of the Niari valley. The timber is mostly limba which is used for veneer and cabinetry. From the Sangha river area some timber is exported to the Belgian Congo.

9. The forest industry provided 58% of total exports in 1958. Timber exports amounted to nearly 190,000 tons valued at frs. CFA 1.7 billion (.6.9 million equivalent). They have developed remarkably in recent years. In 1953 they amounted to only 43,000 tons worth frs. CFA 350 million. Nevertheless further increases cannot be expected as the economically exploitable areas are relatively small. Most of the other reserves are far north where transport costs are prohibitive or close to the Gabon border. The primary importance of - 17 -

the Comilog project to the Congo economy is due to the fact that the railway will open up an important forest region. It will extend the exploitable okoume reserves by approximately 1.5 million tons. The expected output could run as high as 100,000 tons annually and increase lumber exports in a few years by 50%. In the future the huge reservoir of the Kouilou dam, if it is built, covering some 700 sq. miles would also greatly expand the exploitable forest reserves,

10. The government embarked on a large reforestation scheme some years ago. In the savanna area around Pointe Noire, experimental planting of eucalyptus, which is suitable for pulp production, has been tried with appar- ently satisfactory results. If it could be produced in sufficient quantities and if cheap power were available from the Kouilou dam, it might form the nucleus of a modern pulp industry. Also, in the Kayombe range, more than 4,500 hectares have been put under limba.

Agriculture

11. Agriculture provides 52% of the Congo income and involves more than 60% of the total active population. The traditional Afric,n agriculture is limited to manioc, the native staple food, peanuts, bananas and products from the oil palmp, These products together with some fish and small amounts of sugar and flour constitute the main diet of most of the Congolese. The sub- sistence economy is still predominant as 3/4 of agricultural production of African households does not reach the market and the standard of living of the rural population remains low.

12. Agriculture produced frs. CFA 650 million ('2.6 million equivalent) or one fourth of total exports which were close to frs. CFA 3 billion in 1958. Peanuts and palm kernels form the bulk of agricultural exports and amount to frs. CFA 460 million or 16% of total exports. Most of the peanuts, some 12,000 tons, are ,rown in the Niari valley both on large European plantations and by African farmers. The oil palm grows all over the Congo and the kernels are collected by the local population and processed in small local presses. In several regions planted palmgroves have been started and have shown a consider- ably better yield and quality. In the north they now cover 1,500 ha. Under the agricultural development plan it is hoped that within four years the out- put of palm kernels and peanuts should increase to frs. CFA one billion, at present prices.

13. Other agricultural export products are coffee, cocoa, bananas and tobacco which are mostly grown by African farmers. These crops have been officially encouraged in recent years and results are gradually showing. The cocoa output, which is still very small, is concentrated in the Sangha area while coffee is grown in several areas. The banana which was formerly con- fined to the Mayombe is now also grown in the Niari valley. Many of these crops are, however, still either in the experimental stage, or in the early production stage. By 1962, production is expected to reach 400 tons of cocoa, 1,000 tons of coffee and 5,000 tons of bananas (five times the present output of bananas).

The Niari Valley

14. For years many hopes have been placed in the agricultural development of the Niari valley which potentially is the richest agricultural region of the "18 -

territory. Conditions in the valley are in many ways favorable; no forests, a relatively fertile soil for a tropical country and good communications via the Congo-Ocean railroad. However, these expectations have so far not materialized; costly public experiments have failed and private European plantations are losing money. It becomes increasingly clear that large scale mechanized peanut cultivation does not earn adequate returns and that the farmers have specialized in the wrong crop, in the light of the insufficient and irregular rainfall. Cotton is now being tried as a substitute for peanuts in the dry season.

15. Another important crop in the Niari is cane sugar which is refined at the recently established S.I.A.N. (Societe Industrielle et Agricole du Niari) sugar factory. The objective is to meet the entire sugar needs of A.E.F., estimated at 10,000 tons. However this would depend on the production of more cane as at present raw sugar has to be imported. In 1958 an exceptional drought reduced a number of crops including sugar and it is doubtful if a regular and sufficient supply of cane sugar can be provided without costly irrigation. Irrigation may also be necessary if bananas and citrus fruits are introduced on a large scale in the valley.

16. Unfavorable for most crops the climate appears suited for cattle and the only experiment which has so far given good results is ranching. imported N'dama cattle from Guinea have proven well adapted to the lower slopes of the valley and the total herd now numbers over 15,000. Cattle raising or mixed farming may well be the solution for European farmers.

Lead

17. Since 1937 lead deposits have been exploited near MtF*uati in the Niari valley,- The atnual output in 1958 was about .6,000 tons-bf toncentratea(52%) with a value of frs. CFA 117 million. Owing to technical difficulties. output dropped substantially in 1957 but the exploitation of a new deposit has now brought production back to its former level.

Oil Industry

18. The SEAEF, which is responsible for oil production and prospecting in the Gabon, is also active in the Congo. The main prospecting efforts were directed along the coast and finally concentrated some 13 miles north of Pointe Noire. Gravimetrical and seismographical teams have been in the field since 1956 and drilling started in 1957. Several productive wells have been found and exploration is still being actively pursued.

The Kouilou Project

19. As it passes through the Mayombe range, the Kouilou river (the lower reach of the Niari) is forced through the very narrow Sounda gorge making an exceptional dam site where a relatively small concrete dam could create a huge reservoir of 35 billion cubic meters and provide more than 6 billion Kwh a year. It is estimated that the power would cost about 2 mills per Kwh includ- ing the cost of transmission to Pointe Noire some 50 miles away. TRAFFIC OF THE CONGO-OCEAN RAILWAY (MILL IONS) 175 175 YEAR LY

150 150

125 ø__l _125 TONS/KMS 100 100

75 75

50 _ ___PASSENGERS/KMS 50 -- 50

25- 25

0 - __- -- 0-__ 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959

6/8/59 R1503 I BRD - Economic Stoff -19-

20. Technical studies of the power project have been largely completed. Proposals are being discussed to establish an aluminum smelter at Pointe Noire to produce 250,000 to 300,000 tons of aluminum, a ferro-manganese project of 200,000 tons and smaller plants to produce ferro-silicium, magnesium, phosphorus and wood pulp. With the exception of alumina, which would have to be imported, nearly all the other raw materials might be obtained in the Kouilou region. The total investment for the dam and the associated industries in Pointe Noire was estimated at approximately $400 million (as of the end of 1957). Although the studies are well advanced, final decisions depend primarily on the general outlook for aluminum,the supply of alumina, and, more broadly, on the competi- tion of other power projects on the African continent.

Industry

21. The industrial sector of the Congo is relatively small and employs only some 4,000 workers, many of them employed in the forest industry, in saw mills and a veneer factory at Pointe Noire. Apart from the sugar factory in the Niari valley and a fish cannery at Pointe Noire, all the other plants are in Brazzaville. They include a tobacco factory, a blewery and a cotton mill. The industrialization of the city, about which many expectatiors had been held, has not yet bee- a success. Private capital did not respond and only a fraction of the anticipated investment has been forthcoming. A large proportion of the capacity of the Djoue hydroelectric power station, which had been built in anticipation of it, remains unused. Power exports to the Belgian Congo which were an outlet for a small part of the capacity have been decreasing since 1955.

TV. TRANSIT FUNCTION OF THt CONGO

22. The Congo economy performs important transport services for the other republics of A.E.F. and for the Belgian Congo and Portuguese Cabinda. The transport sector employed some 7,000 people in 1956, which is as much as trade, banking, insurance and the professions employed together. The budgets of the Ocean-Congo railway and the ports totaled in 1958 frs. CFA 1.1 billion ($4.5 million equivalent). Trade and commerce in the Congo also benefit by the transit function as 41% of all A.E.F. imports are handled by Brazzaville or Pointe Noire trading companies. The combined rail-river route between the ocean port of Pointe Noire and the river port of Bangui is the main transport artery of French Equatorial Africa. Most of the export products of the Central African Republic and the southern part of the Tchad use this route. Southern Gabon, including the Franceville area is also supplied from the Congo. Timber from neighboring Portuguese Cabinda and copper from the Belgian Congo also travel over the Congo.

23. This extensive transport system represents a very large investment, both public and private. Since 1947 some frs. CFA 5.3 billion have been in- vested in the improvement of the rail-river route to Bangui. Twice that amount was spent on the road connections Bangui-Tchad and on feeder roads in other territories. The capacity of the single track and of the port of Pointe Noire is much greater than the traffic at present passing over them. Traffic at Pointe Noire nearly doubled between 1952 and 1958 to reach 549,000 tons, which is, how- ever, only aboutl/3 of the traffic through the Belgian Congo port of Matadi. In the full production stage shipments of manganese ore from Comilog will double present traffic handled at Pointe Noire. - 20 -

24. Transport recorded at the river terminal of Brazzaville has also shown increases although with fluctuations because downstream traffic on the Oubangui and Congo rivers is primarily determined by the size of the cotton and peanut crops and their effect on the ability to import consumer goods. Recently the output of cotton in the Central African Republic decreased but in 1958 owing to the agricultural development program the acreage under cotton increased by 30%.

25. Investment activity in the north has also directly affected the volume of river traffic but the evolution of traffic in the future is obscured by the uncertainty as to the level of future aid from France. Among the various proposals to improve access to the Tchad is the 600 mile Bangui-Tchad light railway project which has been submitted to FEDOM. Such a project would attract additional traffic to the Congo route but its practicability remains to be established.

V. MINPOWED, PROBLEMS

26. Apart from some unemployment at Brazzaville, the Congo has no particular manpower problems. Economic development, with one exception, was either under- taken in relatively populated areas such as the Niari valley or else did not necessitate much manpower. The only exception was the construction of the Congo- Ocean railway between 1920 and 1934. In the absence of mechanization some 150,000 men recruited from all parts of A.E.F. worked at some time or other at the line and as many as 30,000 people were employed at one time.

27. The construction of the Comilog railway will present some manpower problems, although on a much smaller scale than the Congo-Ocean railway. A maximum of about 2,700 Africans will be needed for the railway, of which some 1,200 will need varying degrees of skill, from driving engines to carpentry. However, over a period of three years the employed labor force would amount to less than 5. of the Congo wage earners. The manpower needs of the future Kouilou project would be much larger and could present substantial problems.

28. The Comilog company has plans to ensure that the adverse effects on the local population are reduced to a minimum. Close cooperation between the authorities, the contractors and Comilog on all problems related to recruit- ment, social welfare, wage levels, supply of foodstuffs and local price levels should do much to avoid difficulties during the construction of the railway. A special African affairs service will be created by the main contractor in charge of the railway construction to deal with all these problems.

VI. TRADE BALANCE

29. The trade of the Congo has always shown considerable deficits. Dur- ing the last ten years imports have on the average been three times as large as exports. In 1958 total imports amounted to frs. CFA 10.3 billion of which frs. CFA 1.8 billion was re-exported to other territories, while exports reached a value of frs. CFA 3.0 billion leaving a record deficit of frs. CFA 5.5 billion. VALUE OF EXPORTS (BILLIONS OF CFA FRANCS) 10 10 YEARLY 8 8

6 -0> 1 6 GABON

4 4 CONGO ....

O3 0 1951 1952 1953 1954 1955 1956 1957 1958 1959

COST OF LIVING INDEXES (1953 100) 130 , , I 't' I I I I I I I I I-T-- 13 0 JANUARY OF MONTHLY EACH YEAR

IFRANCE 0 I 120 I/ I/ I / / POINTE NOIRE* I / 110 -110 I I/ I

100 100

90 I Il l sI I Il " 90 '52 '54 '56 '58 D J D J D J 1957 1958 '59

Cost of living index of European family

6/8/59 1I 8/I IBRD- Economic Staff - 21 -

30. In part these large deficits are the result of heavy public invest- ment in the Congo since 1947 financed by an iq;low of French Government grants and loans. Credits allocated under the FIDES:/ plans since that year have reached frs. CFA 9 billion. If the FIDES program for the next four years is carried out on the scale envisaged the trade deficit may possibly increase further. The third FIDES planning figure for the Congo amounted to frs. CFA 4.5 billion while FEDOM is expected to contribute frs. CFA 1.7 billion. During the 3 year construction period of the Comilog project, imports will again increase by more than frs. CFA 2 billion per year.

31. The known public capital inflow falls short of the recorded trade deficit. There is thought to have been in recent years a small inflow of private capital but it must be assumed that the residual deficit (apart from statistical lacuna) primarily reflects the Congo's position as a transit economy and as the administrative and commercial capital of the former Fed- eration. Moreover, some part of imports into the Congo are presumably financed by invisible earningc in transactions th the other territories and by metropolitan subsidies to the federal bud.Tet.

32. The composition of Congo imports reflects the relatively large European population and the large urban popul2tion which has a higher than average income. This results in a higher proportion of imported foodstuffs and consumers' goods. France provides 63% of all imports and takes half of all exports,

VII. PUBLIC FINANCES

33.. The substantial political and administrative changes that have taken place since 1956 have led to substantial transfers of revenues and expenditures between the French, the federal and the territorial budgets. Comparisons with earlier years are not, therefore, significant but it is clear the Congo finances tend to be somewhat shaky. In 1951 and 1952 the Congo ran into serious budget problems resulting in large deficits. Previ- ously accurulated reserves were entirely drawn down. In order to make ends meet, current expenditures were severely pruned while capital expenditures, which were largely nominal, disappeared altogether from the budget. The situation improved gradually as increased taxation brought in additional receipts. Between 1953 and 1954 higher tax rates increased revenue by 13%. Despite a very strict budget policy, there were still small deficits. In 1955 a special advance of frs. CFA 195 million from the French Treasury was necessary to refinance the accumulation of previous deficits. The final 1958 budget which amounts to frs. CFA 2.6 billion is expected to show a small surplus for the first time in many years.

34. In 1958 out of total estimated revenues of frs. CFA 2,362 million nearly 27% came from the federal budget while another 4% consisted of a sub- sidy from France. The yet unsettled liquidation of the Federation leaves un- resolved the same kind of problems as in the case of the Gabon. A third of the Congo receipts come from import duties. These, together with the proceeds of taxes on business bring in half of all budgetary revenue. The drawback is

./ Fund for Economic and Social Development of Overseas Territories. - 22 -

that they fluctuate substantially because they depend on the level of invest- ment and economic activity not only in the Congo but also in the other repub- lics of A.E.F. Revenues based on the physical output of the Congo itself, including export duties, consumer taxes levied on local products (tobacco and sugar) and receipts from the forest industry tend to be more stable but they amount to only 10% of the budget.

35. On the expenditures side of the budget the picture is quite dif- ferent as expenditures are independent of fluctuations in investment and economic activity outside the Congo. Salaries and wages amounted to 51% in 1958 and have shown a steady tendency to increase. Each public invest- ment in fact adds to the current charges,.

Capital Budget

36. Public capital expenditure in the Congo has been nearly exclusively financed through FIDES, which meant in effect by France, since the Congo con- tribution to FIDES has itself been borrowed from the Caisse Centrrle at low interegt rates. The Congo capital budget (budget d'equipement) financed by own resources is not likely to become very important in the near future. In 1958 it was only with much difficulty that the Congo c:ould make a contribution from the current to the capital budget of frs. CFA 105 million representing ho of budget revenue. The budget prospects of the Congo do not leave much room for in3reased contributions towards the capital budget. For many years to come the Congo will have to rely on continued financial assistance from France and FEDDM.

Repercussions of the Comilog Project on the Budget

37. During the construction period large imports of equipment mainly for the railroad will raise revenues from import duties by frs. CFA 10 million for three consecutive years. An agreement with the Gabon on the division of the frs. ,CA124 million in export duties on the direct revenues from the manganese shipments through the Congo has not yet been reached. The increase in overall economic activity and purchasing power will generate additional imports. In a few years an estimated 100,000 tons of timber worth approxi- mately frs. CFA 900 million could move over the railway. The exploitation of the forests opened up by the railway may add frs. CFA 60 to 70 million to the revenues from the forest industry. On balance, although the direct and indirect budgetary benefits of the project are sizable, the overall situation of the Congo public finances is likely to remain difficult.

Debt Service

38. In the estimates of the 1958 budget, total debt service amounted to frs. CFA 17 million or less than 1% of current revenues. Now that the Federation has ceased to exist the debt burden it formerly assumed will have to be redistributed among the four republics. Because of the large investment in transport and federal buildings the Congots share will be relatively large and the debt service may amount to some 10% of the 1958 budget. This is com- parable to aoproximately 8% of total export receipts for the year 1958. - 23 -

VIII. CONCLUSIONS AND CREDITWORTHINESS

39. The emphasis of public investment before the war, as well as after, was on the transport system while other productive investment has been relatively small, As a result the natural resources of the Congo, which are perhaps smaller and less favorably located, have also been less developed than those of the Gabon. There has, however, been a shift to more productive investment in recent years. Development in agriculture, though increasing, is bound to be slow and limited and the prospects of the forest industry, aside from the area to be opened up by the Comilog railroad, E.lso appear in the long run limited. It is too early to know whether o.e.xists in commercial quantities. A higher rate of growth can only be expected if the Kouilou power project and the related industrial development at Pointe Noire is undertaken.

4o. The financial position of the Congo Republic is difficult. The current budget is just about balanced and the rcp3rcussions of the liqui- dation of th federal administration and the re6D-.:tribution of its debt burden may well again disturb the precarious eqvil.ibrium. For many years to come the Congo will have to rely on aid from Foance and elsewhere to finance an iLvestment program.

41. The short run benefits from the Comilog project during the construction should not be offset by harmful effects, for example, on prices of foodstuffs,. if the measures proposed by the company are proper- ly carried out. The major long-run benefit will be the railway itself which will be a substantial addition to the productive potential of the country. The direct advantages of the project to the budget are more limited. Al- though the beneficial effects of the project will be less than in the Gabon,, they should contribute to the gradual development of the Congo economy.

42. Not only further development but even maintenance of the present economic levels is dependent on the continued inflow of financial aid and technical assistance. In the absence of such aid, the Congo Republic could not be expected to be in a position to honor her guarantee of the proposed loan to the Comilog project if called upon to do so in the immediately fore- seeable future. The creditworthiness of the Congo must be regarded as direct- ly dependent on the continued economic interest and aid of France and the French. TABLE I

GABON AID CONGO

STRUCTURE OF THE AFRICAN POPULATION

(in porcentages)

Primary sector: Agriculture, husbandry, fishing, forestry

Secondary sector: Mining and industries

Tertiary sector: Transport (including P.T.T.) trade, services (including schools and health services)

Public sector: Consisting of public administration and anned forces.

Inactive Persons Active Persons

Under Over Primary Secondary Tertiary Public Overall 14 14 Total sector sector sector sector Total Total

GABON urban centers 1.7 2.5 4.2 0.1 1.2 1.3 O.h 3.0 7.2 rural regions 24.4 14.3 38.7 45.4 5.5 2.8 o.4 54.1 92.8

Total 26.1 16.8 42.9 45.5 6.7 4.1 0.8 57.1 100.0

CONGO urban centers 6.1 7.h 13.5 0.2 1.2 2.7 1.4 5.5 19.0 rural regions 30.4 8.7 39.1 35.8 3.2 2.6 0.3 41.9 81.0

Total 36.5 16.1 52.6 36.0 h.h 5.3 1.7 47.4 100.0

Source: AEF, Economique et Sociale do 1947 a 1958. TABLE II

GABON AND CONGO

!RANPOT INRASTRUCTURE

Road Network (in Kms) Congo Gabon (approximate distances) Main roads 1,810 of which: Hard top 65) Improved earth 84o) 300

Local roads 4,080) 2,700 Other tracks 2,h80)

Total 8,370 3,000

Airfields

International airports Brazzaville Libreville Pointe Noire Port Gentil

Territorial airfields:

for DC 4 3 3 for DC 3 3 13 airstrips approx. 5o

Railroads

Congo-Ocean Railway from Pointe Noire to Brazzaville: 515 Kms.

River Navigation Distance and navigability in Kms. Main Rivers Seasonal All year 6 mos. or more

Gabon Ogooue 370 - NtGounie 150 120 Coastal area, miscellaneous rivers 88 -

Congo Kouilou 75 - Congo-Oubangui 1,210 - Misc. tributaries of the Congo and Oubangui rivers 90 2oo

Total distance: 2,797 2,124

Source: Annuaire Statistique .E.F. TABLE III

CONGO AND GABON

INING FRODUCTION

1953 1954 1955 1956 1957 1958 estimate

Diamonds (carats)

Gabon 7,053 5,280 3,396 2,776 1,210 -

Congo 1,133 145 - - - -

Gold (kgs)

Congo 396.3 371.4 286.6 226.7 230.3 188.0

Gabon 1,255.7 1,027.8 i,15.6 1,029.1 706.9 495.2

Lead, concentrated ore (52%) T-ns)

Congo 8,193 6,572 6,h07 5,675 3,481 6,691

Crude oil (tons)

Gabon - - - - 198,101 500,744

Cassiterite9 tin ore (production started in April, 1958)

Congo - - - - 3.9

1 Figurcs on the year 1958 based on Industries et Travaux d'Outremer, May 1959.

Source: Bulletin Mensuel de Statistique. TABLE IV

GABON

OUTPUT OF AGRICULTURAL -XiORT PROEUCTS

(tons)

Products 1953 1954 1955 1956 1957

Cocoa 2,690 2,557 2,362 2,563 2,481

Coffee 279 419 494 4l2 610

Oilpalm 1,128 750 757 625 630

Peanuts 791 337 210 350 750

Palm kernels 1,h7 1,017 757 907 865

Rice 638 1,013 860 760 1,220

Tobacco (kilograms) 700 - - - -

Fibers (punga) 139 87 163 127 112

Fibers (raffia) 61 8 32 19 24

Pepper (kilograms) - - - 100 400

Source: Ministere de lAgriculture TABLE V

CONGO

AGRICULTURAL PRODUCTION

(tons)

Products 1950 1956 1957 195821

Bananas - 2,846 3,227 2,595

Maize 900 1,210 1,388 972

Rice 750 1,024 2,152 1,651

Peanuts shelled 1,200 4,535 4,359 1,979

" unshelled - 4,452 5,832 5,466

Peanut oil - 1,519 1,134 878

Palm kernels 7,800 7,2149 6,798 5,299

Palm oil 3,600 5,174 5,732 3,361

Urena and Pounga fibers 575 1,304 1,183 754

Cocoa 10 98 237 113

Coffee 40 152 142 82

Copal - 140 19 81

Rubber - 69 78 68

Tobacco 200 606 576 305

Citrus fruits - - 30 80

Cane sugar - 5oo 5,750 4,4oo

1/ Provisional.

Source: Dossier FEDOM of the Congo. TABLE VI

GABON AND CONGO

EXTENAL TRADE

Imports Exports

Trade Quantity Value Quantity Value Balance (1000 t) (miliTon CFA) (1000 t) (million CFA) (Value)

CONGO

1951 164.6 7,800 53.4 1,050 - 6,750 1952 153.6 7,400 60.0 950 - 6,450 1953 129.2 5,800 69.2 1,200 - 4,600

1954 111.8 5,959 97.0 1,450 - 4,500 1955 1o5.7 6,000 141.6 1,950 .4,050

1956 131.8 6,750 167.1 2,150 - 4,600

1957 149.1 8,450 194.6 2,500 - 5,950

1958- 10,250 214.8 2,950 - 6,950

GABON

1951 73.9 3,350 262.3 3,750 + 450

1952 70.2 3,750 225.7 2,900 - 850

1953 56.0 2,650 360.6 3,850 + 1,200

1954 63.6 3,200 439.3 4,400 + 1,200

1955 73.6 3,900 513.4 5,300 + 1,400 1956 84.1 4,400 517.6 4,850 + 450

1957 143.4 7,750 774.9 6,300 - 1,450

8 1958' 7,450 1,0 9.1 8,370 + 900

2/ The 1958 figures are provisional.

Source: AEF,Economique et Sociale, 1947 a 1958. TABLE VII

GABON

VoLU2E OF HAIN EXPORTS (Tons)

1952 1953 1954 1955 1956 1957 1958

Ivory (kgs) 200 1,786 1,071 496 1,378 1,687 1,323

Coffee 136 368 322 21 131 113 172

Peanuts, shelled 5 84 123 - 3 143 713

Palm kernels 90 56 15 - - h - Cocoa 2,679 3,516 1,483 2,698 2,850 2,259 2,366

Okoume, logs 180,161 300,910 375,OO 472,331 443,58L 530,884 529,413

Other, logs 16,59 28,380 1h,360 40,716 43,815 53,766 72,573

Okoume, sawn 2,342 3,182 3,205 3,842 2,832 1,898 3,616

Other, sawn 2v5)41 2,hh0 1,777 2,246 2,748 2,733 1,218

Sleepers,poles,etc.3,494 14,903 3,318 1,022 2,057 3,h23 3,259

Veneer, plywood 1o,402 15,516 18,08 20,345 18,[69 24,847 21,925

Diamonds (crts) 9,411 8,202 5,828 3,21 2,831 1,25, 90 Gold (kgs) 1,032 1,315 954 935 1,025 646 516

Mineral oil - 1-3-- 3o 450,42

Total 225,666 360,633 ,39,290 543,39 517,561 77o,5ol,089,137

Source: AEF, Economique et Sociale, 1947-1958. TABLE VIII GABON

DESTINATION AND ORIGIN 0' YOREIGN TLRADE IN 1957

(in millions of CFA francs)

Exports

Overall Total 6,261 100

Franc Area 3,393 54

of which: France 2,987

Other Coimmnon Market Countries 1,619 26

of which: Netherlands 3o5 Belgium and Belgian Congo 45 Western Germany 1,244 Italy 24

Dollar Area 266 4

of which: U.S.A. 180

Sterling Area 452 7

of which: U.K. 437

Other Currencies 5ho 9

of which: Israel 290 Denmark $3 Sweden $9

Imports

Overall Total 7,340 100

Franc Area 5,141 70

Other Common Merket Countries 411 6

of which: Netherlands 71 Belgium and Belgian Congo 71 Italy 30 Western Germany 239

Dollar Area 1,373 19

Sterling Area 181 2

Other Currencies 233 3

Source: Service du Commerce Exterieur. TABLE IX

GABON

IMPORTS BY CO1IODITMIES 17 1957

(millions CFA)

Foodstuffs and Beverages 917.5

of which: meat and poultry 98,8 dried, salted, smoked fish 107.2 dairy products 66.4 vegetables 69.1 flour and rice lo4.5 canned goods 111,9 wine, beer etc. 287.4

Industrial Raw aterials 584.9

of which: cement 152.1 fuels 175.7 chemicals 95.1 explosives 52.8

Finished Gocds 614.8

of which: soap 85.0 paper and products 47.6 textiles 210.6 clothing and a :parel 13.9 chinaware 55.o

Vehicles and Machinery 3,522.6

of which: machinery 2,130.0 vehicles, automotive 487.7 vehicles, special 192.3 equipment, misc, 198.4 transport equipment 412.9

Metal Products 624.0

of which: iron and steel, sheets etc. 179.3 various metal products 412.h

Misc, and postal packages lo.5

Source: Service du Commerce Exterieur, TABLE X CONGO

VOLUZ OF MAIT: 7XFCRTS

(tons)

1952 1953 1954 1955 1956 1957 1958

Ivory (kgs) 92 489 4114 1,200 1,262 1,647 1,142

Bananas - - - - - 548 984

Coffee 458 105 120 37 123 164 82

Peanuts, sholled 352 1,735 1,544 3,387 3,364 5,462 3,204

Palm kernels 7,696 8,904 9,179 7,605 7,161 6,250 7,116

Sesame - - 59 233 - 330 41

Peanut oil - 251 221 424 954 502 100

Copal 206 12 210 161 78 167 78

Palm oil 2,154 3,563 2,795 2,489 3,138 3,770 2,837

Cocoa 22 30 26 34 96 180 289

Tobacco 245 223 542 771 451 450 460

Lead ore 6,000 8,884 7,000 6,000 6,ooo 4,ooo 5,735

Electric power (1000 K.W.H.) - - 12,751 16,737 2,628 10,266 - Rubber 49 66 11 79 62 79 88

Okoume, logs 5,255 10,146 15,5141 17,527 20,831 20,357 31,279 Other, logs 24,515 25,262 453,392 88,243 106,508 129,173 140,795

Sawn lumber Sleepers, poles 5,919 6,695 10,598 9,919 10,423 11,299 12,913 Veneer, plywood 404 553 950 874 234 3,427 3,866

Jute 1,668 1,074 - - 1,633 872 1,075

Diamonds (crts) 2 31 - - - - 5 Gold (kgs) 387 463 417 387 272 285 187 Total 59,986 69,226 96.979 141,559 167,100 193,379 214,782

Source: AEF, economique et sociale, 1947 a 1958. TABLE XI

GABON AND CONGO

FIDES PROGRAMS, FIRST ANHD SECOED PLAN

Territorial Section

(Total program authorizations from 1947 till the end of 1958)

Billions CFA francs

Sectorc- Gabon Congo

GenerLl 2 2

Production 995 1,767

Infrastructure 5,819 6,185

Social 1,313 2,780

Total]. of authorizations 8,128 10,734

Actual amounts spent, the difference being due to unused credits, etc.

Gabon: 7,800 Congo: 9,000

Source- Information submitted by AEF authorities.

Third FIDES Plan

from 1958 to 1962

Sectors Gabon Congo

General 2 5

Froduction 920 1,573

Infrastructure 2,515 1,624

Social sector 879 1,440

Total 4,316 4,642

Source: Gabon and Congo Programs of the Third Plan. TABLE M

GABON AATD CONGO

TERRITORIAL BUDGETS, REVENUES

1958 estimates - millions of CFA francs

Gabon Congo

Total Revenyes 1-926 2,362

Taxaiion revenues 1,087 1,324

of which: direct 438 691

indirect 584 49

registration, stamps 98 157

Revenues from Public Domaine

(rents end miscellaneous revEnues from forests and mines) 338 133

R.evenues of Public Enterprises and Services 37 164

Contributions, Subsidies, etc. 465 741

of which: from Federal Budget 419 631

from Metrop. France 33 93

Source: L'AEF Economique et Financiere, February 1958. TABLE XIII

GABON AND CONGO

TERRITORIAL BUDGETS, EXPENDITURES

1958 Estimates - millions of CFA francs

GABON CONGO

Total Expenditures 1,926

Public debt 28 17

Wages and salaries 840 1,210

Supplies and equipment 270 351

Common expenditures 196 129

Maintenance 202 157

Contributions, subsidies, refunds, etc., 363 461 of which: Contribution towards the cost of the service dtEtat 32 0

Subsidy to private schools 116 112 Scholarships 25 36

Contribution to the budget d'equipement 27 37

Source: Data provided to the Mission. TABLE XIV

A.E.F. MONEY SUPPLY

(in billions of CFA francs)

Credits Note Bank to Total Circulation DeposIts Economy

1951 9.24 .5.24 4.00. 8.54 1952 10.12 5.83 4.29 11.05

1953 10.06 6.27 3.79 10.11

1954 11.44 7.03 4.41 9.84 1955 11.88 6.91 4.97 10.40 1956 13.23 7.65 5.58 10.88

1957 16.15 8.41 7.75 11.43 1958 17.07 9.67 7.40 12.23

Source: La Zone Franc 1957 and Institut d'Emission de 'AEF. L I B Y A EGYPT

AFRICA

N I G E R CHA D

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Inhabitunts per square mile Urban Population

under 2.5 8- 20,000

2 5- 52-o, o 00 ~~5-102-o,0

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o Plywood or C H A D veneer plants

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Iron

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* Manganese

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Cocoo 40 • Coffee 4

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Okoume in exploitation

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FRENCH EQUATORIAL AFRICA

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POINTE NO E

JUNE 1959 IBRD-570R