745R.5 MSP/12–1052: Airgram

The Secretary of State Ad Interim 1 to the Consulate General at Nairobi

restricted

A–32. Reference Consul General’s Despatches Nos. 165 of December 10, 19522 and 184 of December 31, 1952.3

With further reference to the forthcoming trip of Bayne, Dechert, and Clemens (Deptel 48, January 9, 1953),4 the Colonial Office evidently has cleared both the extension of the railroad line to Kilembe and the construction of a power line from Owens Falls to Kilembe as possible projects for MSA financing and the essential details for the necessary project applications will be worked up in Uganda by the MSA team in cooperation with the local authorities.

The assignment of an investment program officer to Nairobi, however, would represent an innovation for MSA in its operations in African DOT’s. Although there is no objection in principle to such a proposal, assuming the local representative does not usurp the Colonial Office’s prerogative of determining the acceptability and priority of the various projects, the Department feels that the assignment of such an officer at the present time might raise hopes prematurely. Consequently, it would appear preferable to defer action on this proposal [Page 365] until the general pattern and scope of United States economic aid in Africa has been determined.

The British have expressed a definite interest in attracting American capital to aid in the development of the African territories. On the other hand, the Department had also heard that prospective investors have been discouraged by the number and variety of obstacles that have been imposed upon them. Consequently, the Department is anxious to appraise the situation, and will appreciate information regarding the conditions imposed on prospective United States investors by the local authorities.

Within the limits of the absorptive capacity of the colonies, the Department favors African development. The Department believes that private capital, both United States and European, will perform the major role in the economic development of Africa. However, the deterrents to increased private financing may lie as much in the lack of basic facilities, such as ports, railroads, water and power facilities as in governmental controls. It is in these areas where private capital may be less likely to respond that United States Government lending could be most appropriately applied. As a practical matter, the Department regards the official development program that has been worked up for each political subdivision as the appropriate starting point for any prospective United States loan projects.

The limits within which the United States aid program to the DOT’s must operate for fiscal year 1954 has not been defined as yet, with respect to available finances. The proposed budget allocations may be radically changed before the appropriations are approved, and other sources of financing may have to be explored. Consequently, the Consul General should pursue a policy of “wait and see” during the interim while the quantity and limitations upon United States aid to Africa is being determined.

Matthews
  1. Deputy Under Secretary of State H. Freeman Matthews acted in this capacity on Jan. 20 and 21, 1953 until John Foster Dulles assumed office.
  2. Not printed; it indicated that Kenya was asking the Colonial Office for the authority to negotiate directly for MSA assistance and expected a favorable response. (745R.5 MSP/12–1052)
  3. Not printed; it reported that the Government of Kenya had been instructed to submit its proposals to the Colonial Office for evaluation and ultimate presentation to MSA, London rather than proceeding through the Nairobi Consulate General. (745R.5 MSP/12–3152)
  4. Not printed; it stated that Edward A. Bayne, Special Assistant for Overseas Territories, MSA, Paris; W. Cornell Dechert, Chief of the Payments Section; and George Clemens, Transport Specialist, were flying to Uganda for 3 weeks to study the Kilembe railroad and Owens Falls power-line projects. (745R.5 MSP/12–2452)