Foreign Relations of the United States, 1955–1957, Africa, Volume XVIII

16. Memorandum From the Officer in Charge of Southern Africa Economic Affairs (Longanecker) to the Director of the Office of Southern Africa Affairs (Hadsel)¹

Washington, October 31, 1956.

PRINCIPAL ECONOMIC PROBLEMS

Dakar

Our Consulate General at Dakar has no special economic problems relating to French West Africa. There are no U.S. assistance programs in French West Africa owing to the fact that the French Government has not been receptive to aid involving American technicians in its overseas territories. The French Government has been agreeable to accepting strictly financial aid but ICA has taken the position that in view of the French Government’s rather negative attitude with respect to U.S. aid and to the evolution of its territories to self-government, U.S. aid should not be made available. We are interested, of course, in the political and economic development of French West Africa and in the development programs which the French Government is planning and carrying out there.

Monrovia

The major economic concern of our Embassy at Monrovia relates to our aid program in Liberia. The program goes back to World War II days when the FEA established economic and health missions in Liberia in connection with construction of the Port of Monrovia and its use by the United States military. The program was taken over by the Technical Cooperation Administration and is considered one of the more successful U.S. assistance activities abroad. It has been popular with the Liberian Government and people until recently when the Government began to (1) manifest dissatisfaction with the amount of our aid in Liberia compared with other countries and (2) put out feelers for economic assistance as well. American private capital and enterprise, principally in rubber and mining industries, are contributing to a steady expansion of the Liberian economy and the revenues of the Government. This has encouraged the Government to draw up ambitious development plans which have reached the point where they are now taxing its financial, including loan servicing, capacity. Instead of tailoring the development plans to fit the country’s financial capacity, the Government is endeavoring to build up a case for additional U.S. aid in the form of development assistance.

Accra

Our principal economic concern in the Gold Coast is whether this newly emerging self-governing territory will be able to plan and finance a rate of social and economic development which will insure sound and orderly progress and continued orientation to the West. The Gold Coast is primarily a one crop (cocoa) economy. Because of the very high prices which have prevailed for cocoa in the last three or four years the Government has been able to plan and implement a large and expanding development program. The revenues and expenditures of the Government, both for the ordinary services of government as well as for extraordinary development purposes, have multiplied in recent years. The approval of development projects, for which the necessary funds have been set aside, has been at an annual level which considerably exceeds the capacity of the country to carry out except over a period of years. There is consequently a several years backlog of approved and financed development work.

Within the past 12 months or so cocoa prices have dropped sharply from the peak reached in 1955. The price level is still high enough to return satisfactory profits, but the Government’s revenues available from this source have dropped sharply necessitating a retrenchment in both ordinary and extraordinary budget expenditures. Sterling holdings of the Government are substantial and the Cocoa Marketing Board established some years ago to stabilize cocoa prices and the income of producers has an appreciable reserve fund.

The major project of interest to the Gold Coast Government at this time is the Volta River Scheme. This project involves a hydroelectric dam installation on the Volta River in combination with bauxite and aluminum production to be financed by a combination of loan capital from the British Government, private capital from Aluminium, Limited, of Canada and, contributions from the Gold Coast Government. The project has been under study and discussion for several years and while the Gold Coast Government has already set aside an initial allocation of funds for it, the interest of both the British Government and Aluminium, Ltd., has declined appreciably during 1956. It is now in a decidedly uncertain status.

Various Gold Coast officials have visited the United States in the past year or so to discuss technical cooperation assistance. Several projects have been agreed on, the major one involving assistance in expanding the Gold Coast’s community development activity.²

Lagos

Nigeria is also headed for independence in the relatively near future. Like the Gold Coast, the economy has been prosperous in recent years and there has been a steady expansion of government revenues and expenditures. Various Nigerian officials have visited the United States in the last year or so in connection with their interest in obtaining technical cooperation assistance. Several small projects have been agreed on in principle and it is likely that such cooperation between the two countries will grow. Particular emphasis has been expressed in assistance in the fields of education and community development.³

Yaoundé

Our principal economic concern in the French Cameroons is with general economic conditions and progress of the territory, and the need for U.S. assistance.

Leopoldville

We have no particular economic problems in the Belgian Congo. The economy of the Congo is prosperous and flourishing and it is difficult to justify U.S. assistance even if the Belgian Government should ask for it. Our major economic interest is in maintaining access to the Congo market and investment possibilities for American business and private capital, the continued development of the country’s rich resources, and the availability to the American market of those Congo products we need.

Our particular interest at this time is the Inga Hydroelectric-Industrial complex development project on the lower Congo now being studied by representatives of the Belgian Government and Belgian industry. This is a very large project estimated to cost well over a half billion dollars. There is a growing disposition on the part of the Belgian Government to consider American private capital participation in this project. It remains to be seen, however, whether the long time nationalistic disposition of the Belgian Government and Belgian business and financial interests to pre-empt the commercial and economic potentials in the Congo will give way to the point of accepting any appreciable participation of American capital and enterprise in the Ingo project if it is undertaken.

Johannesburg, Pretoria

There are no special economic problems confronting our Embassy in the Union of South Africa as this is one of the two countries in Africa in which American capital and business enterprise have been welcome and have not had any particular difficulties with exchange or profit remittance regulations. The Union is not interested in U.S. aid and our economic interest is in the continued growth of South African economy and maintenance of the very satisfactory economic relations between the two countries.

Salisbury

We are very much interested in the success of the Federation of Rhodesia and Nyasaland. The economy is prosperous and flourishing and undergoing a rapid rate of economic development. The Government is trying to accelerate its already substantial social and economic development program in order to establish and maintain a progressive and democratic economy consistent with the objectives of the Federation. The Federation has a very favorable balance of trade and of payments with the United States and is therefore a large net earner of dollars. Its capital expenditures for equipment and supplies needed for both the government development program and private industrial expansions are a heavy drain on the country’s foreign exchange earnings. With the beginning recently of the large expenditures for the Kariba Gorge project, the Government is heavily committed credit wise and may well have to slow down or restrict its development expenditures in other fields. We are very much interested in the success of the Federation and are examining ways and means in which we might demonstrate our sympathetic interest in the success of the Federation and its multi-racial objectives, by providing some assistance especially in those fields concerned with improvement of the native peoples, i.e., irrigation and resettlement projects, vocational training, etc.

Nairobi, Kampala

U.S. aid was extended for several small projects in British East Africa a few years ago. The Mau Mau situation together with the lack of progress in the territories toward self-government, however, have resulted in a disposition on the part of ICA not to extend further aid to these territories. U.S. technical cooperation could be useful in meeting some of these territories’ problems but there are no prospects for such assistance at this time.

1. Source: Department of State, AF/AFS Files: Lot 59 D 293, Regional Economic Reports 1956. Written in response to a memorandum from Hadsel of October 26 to Longanecker, Donald Dumont, and James J. Durnan. (Ibid.)
2. The Ghanaian Minister of Finance, K.A. Gbedemah, visited Washington on more than one occasion.
3. Among the Nigerian officials who came to Washington were: Obafemi Awolowo, Premier of the Western Region; Nnamdi Azikiwe, Premier and Minister of Internal Affairs of the Eastern Region; the Federal Minister of Transport, Abubakar Tafawa Balewa; the Federal Minister of Communication, K.O. Mbadiwe; C.D. Akran, the Minister of Development of the Western Region; and I.U. Akpabio, Minister of Education of the Eastern Region.