- Email: [email protected]
Reports from developing countries
Reports from Developing Countries PROGRESS OF NIGERIA’S DEVELOPMENT From Jimoh Gbadamoshi DURING his tour of Nigeria late in 1972, Mr. Pierre Paul Schweitzer, managing director of the International Monetary Fund(IMF), expressed the hope that Nigeria would not need any special assistance from the Fund in the future. This optimism stemmed from the fact that Mr. Schweitzer was very much impressed by what he described as “spectacular contributions” Nigeria had made to the Fund, her favourable balance of payments and the progress of the economy since the civil war. The country’s special drawing rights already had risen from about E50 million to 2135 million, Mr. Schweitzer also indicated that Nigeria would be given special treatment in the next review of the IMF’s allocation of quota in 1974La treatment which if given would no doubt increase her voting rights in the Fund. Also, 1974 will be the end of four-year development plan which was launched in 1970. The creators of the 1970-74 plan in which about El600 million of investment was anticipated were optimistic that its operation would no doubt represent a further step in the modernisation of the economy. Moreover, the output of the was expected to rise from economy 21585.6 million in 1970/71 to 21993.3 miilion in 1971/72, with the resultant effect of a compound growth rate of 7 per cent. And from the investment target of 21596 million, g780 million was expected to be generated within the public sector while the private sector would generate !Z816 million. It was argued that the second national development plan (1970-74) could be likened to the first one if only because of its infrastructural emphasis. That is to say, the plan gave priorities to the Transport, Agriculture, Industry and Power sectors, at the same time including reconstruction after the civil war damage. In practical analysis, the percentage distribution of the total capital expenditure for the four-year National Development Plan (NDP) was put as follows: 56.7 per cent to the economic sector; 27.9 per cent to the social services; general and 14.4 per cent to the administration (including defence). The first progress report published in 1972 on the second national development plan showed that on balance the Nigerian economy performed far beyond the expectation of the planners. According to the rep.)rt the output rose by 9.6 per cent in 1970-71, -while the estimated growth rate for 1971.72 was 11 per cent. performances in capital Moreover, formation, exports, Government revenue
22
and balance of surprisingly good.
payments
have
been
All this was due mainly to the prosperity in Nigeria’s oil resources. For example, the production of crude petroleum has risen from 950,000 barrels a day before the civil war to over 1.7 million barrels a day towards the latter part of 1971.72. In other words, all earlier production targets have been exceeded and the original plan to produce about two-million barrels a day by 1975 will likely be reached ahead of schedule. No doubt Nigeria has benefited substantially from the production increases already achieved through successive rises in the price of oil as a result of agreements with the Organization of Petroleum Exporting Countries, while she also has gained by maintaining the value of her currency in the face of the dollar devaluation and pound flotation. This apart, Nigeria’s oil exports have increased from227 million in 1968 to 2463 million in 1971. Although Nigeria has always been a traditional exporter of agricultural products and minerals, nevertheless oil alone accounted for 58 per cent of her exports in 1970, and for 74 per cent of total in 1971. Moreover, government revenue has proportionately swollen. It will be recollected that three years ago recurrent revenue amounted to %173 million, and in his 1972 Budget speech, Mr Shettima Ali Shagari, the Finance Commissioner, forecast $X+45 million for 1973 financial year out of which 2343 million was expected from oil. Nevertheless, the first progress report observed that because oil is a wasting asset and will not flow for ever, there is an urgent need for a bold approach to Nigeria’s traditional sectors, particularly agriculture. It is envisaged that steady growth of the economy will to a large extent depend on what is happening to the agricultural sector. Nigeria’s population is estimated at about 65 million, and is expected to reach a levelof 102 million by 1985. All has not been beer and skittles for the Nigerian economic development, even though she has made some remarkable advances. The 1972 first progress report pointed out that the inflation which started during the Nigerian civil war, caused by a cheap money policy to finance the war, continued after the end of the war. The Government have taken steps to control this situation. The main problem, the progress report tried to emphasize, was the executive capacity to prepare projects, which might affect public investment in industry. Even here rapid improvement is expected if
available talent can be used to the best since some areas have a advantage, shortage of skilled workers while others have a surplus. The report noted as a problem the unemployment which was not significant during the civil war, since most school leavers were absorbed in the and local industries. Nigerian army Certainly it has now become a major problem. Hence in order to alleviate the problem the Federal Government have embarked on rural electrification, and industries are being encouraged to rural areas in the hope that such measures coupled with the expansion of agricultural sector would reduce the influx of the young school leavers to city centres. Private investment is vital to any developing country, and Nigeria is no exception. At the moment the private sector has a promising outlook in Nigeria. Investment has proved more substantial than anticipated and expansion is expected tocontinue, although some industries have been affected by the removal of restrictions on imports and others might be affected by the recent wages and salaries award. Nevertheless the 1972 progress report noted that satisfactory though the level of private investment was, it has not been guided by the industrial strategy laid down in the four-year plan which aimed to industry from production of shift consumer goods to that of intermediate and capital goods. The progress report on the second national development plan has pointed out that the disbursement of external financial assistance lagged behind schedule but emphasized that some domestic resources had shown some buoyancy. In effect efforts were being made through project preparation to maximize the rate of utilization of aid. Like most developing countries, however, most Nigerians now felt that financial aids with stringent conditions tied to foreign goods and services had all along made it difficult for Nigeria, with all her tremendous resources, to develop her own local economy with a propensity to produce in her own industries and sell in the world market. Faced with a growing burden of repayment arising from aid programmes, many developing countries are setting aside ideological objections and turning to foreign investment as the most likely means of faster growth, diversification of their economies, and hence the wherewithal to finance their everincreasing needs. Even in this respect, Nigeria has limited the scope of the activities of her foreign investors in order to give her nationals the opportunity of enjoying investment potentials. In the main the future looks good for Nigerian economic prosperity. For a long time oil will remain a substantial source of revenue and this will continue to pay off any balance of payments deficit and
increase
development
projects.
At
the
moment Nigeria is not very enthusiastic in associating with the EEC probably beyond special agreement, all things being equal, but is keen on the West African Economic Community as this may provide, among other things, a better market for her agricultural products. The Federal government is fully aware of the importance of agriculture in sustaining the long-term growth of the Following the importance economy. placed on agriculture the central government released between 25 to c6.5 all State Ministries of million to Agriculture to increase the pace of food production. It also allocated E20 million in rhe 1972 Budget for capital expenditure in agriculture.
INDIA’S EXPORTS AFTER THE CONFLICT By Dr. R.S. Nigam Reader in Commerce, IJniversity of Delhi IN 1971 72 India’s economy passed through severe strains due to influx of about 10 million refugees from the erstwhile East Pakistan, the actual war and assistance in Pakistan, with and economic reconrehabilitation struction of Bangladesh. These strains have severely effected the export efforts (although during the calendar year 1971 the total exports from India, including to Rs. 15,771 reexports, amounted millions which was slightly above the level of 1970). The crisis of the international monetary system has also added to the uncertainties facing the Indian exporters. In addition, certain domestic bottlenecks, like the continued shortages of certain critical inputs (e.g. iron and steel, cotton, fertilizers, etc.) affected the momentum of Indian exports. The emergence of Bangladesh has opened new vistas for Indian trade and economic relations with her neighbours. The IndoBangladesh trade and payment agreement, signed towards the end of March, envisages a twoway trade of Rs. 1,000 millions for 1972.73. This is in addition to the economic assistance of Rs. 2000 millions, provided in the Indian budget for this year. The IndoBangladesh trade is expected to gather further momentum with the removal of transport bottlenecks by repair of bridges and ports damaged during the conflict. Normalization of transportation and rehabilitation of the Bangladesh economy should result in greater demands for consumer and light engineering goods from India. India will also be benefitted by imports of raw jure , fertilizers and fish from Bangladesh. At the international level India and Bangladesh are trying to forge a common front for mutual safeguard of their export markets. It is worth noting that Bangladesh currency (T&k&) has been fixed at par with the Indian rupee and sincere efforts are being Vol. 1 No’s I & 2
made to form a jute community competition in the international
so that markets
may be circumvented and better terms of trade for this commodity may be realized. After the conflict with Pakistan India’s exports have begun to show a significant rise. Considerable increases have been registered in jute manufactures, tea, pearls (including precious and semiprecious stones), cashew kernels, raw cotton, cotton apparel, leather and leather goods including footwear, handloom piece goods, fabrics of art silk and synthetic art silk, rubber manufactures, tobacco manufactures, lace, pepper, etc. Certain items like millmade cotton piece goods, iron ore, oil cakes, cotton yarn, paper and paper board, hides and skins, plastic goods, mica, engineering goods, coir and coir manufactures, etc. have shown some decline. In the direction of exports there have been considerable increases to USA, Canada, UK, Western Europe (including the EEC) and Latin American countries in 1972. Exports to East European countries, Africa and the ECAFE region were marginally lower. India’s In assesing exports performance in 1972 due consideration should also be given to certain new developments like devaluation of Pakastani Rupee, stoppage of American Aid and Britain’s entry into the EEC.The heavy devaluation of the Pakastani Rupee will make exports from that country cheaper in the world market by as large a margin as 57 per cent. Although it is true that Pakistan is no longer India’s competitor in jute manufactures and tea, it should be noted that ic continues to remain a main competitor in respect of textiles, leather and leather goods, tobacco, handlooms and handicrafts, and many other items in respect of which Pakistan will now have a distinct price advantage over Indiangoods. The stoppage of American Aid has also some impact on India’s capacity to produce export surplus, but efforts are being made to compensate for such loss by increasing economic cooperation with USSR, East European countries, Western Europe and international agencies. Britain’s entry into the Common Market will mean loss of substantial tariff and nontariff preferences which India enjoys in the British markets. The Generalized Scheme of Preference of the EEC and Britain and the possibility of nonpreferential commercial cooperation agreement with the enlarged EEC is expected to reasonably compensate the disadvantages which Indian goods are likely to suffer by phasing down of the Commonwealth preferences. The recent realignment of currencies and the floating of pound sterling have added to some uncertainties for India’s exporters. India, being a member of the Sterling Area, has natural concern for rhe pound’s future as a reserve currency and the consequences of the projected
European Monetary Union. It is the aim of the Indian policymakers to sort out such as the IMF, the UNCTAD, GATT, etc. In the meantime India is in continous touch with various countries of the world for devising bilateral safeguards to her exports. Efforts are being made to diversify the and commodity pattern. geographical More attention is being given to exports of non-traditional and various manufactured goods like engineering goods, small tools, garments etc. India has also started exporting turnkey projects to various AfroAsian countries and at present around 150 joint ventures involving Indian capital participation in foreign countries (mainly in the form of equipment exports) have been sanctioned by the Government The Indian economy is now recovering from the unusual stresses and strains of last year. Despite several hampering factors the performance of exports in the year 1972 has been encouraging and it is expected that the projected Fourth five year plan target of an annual 7 per cent in exports will be realised in 1972/73. The 1970/71 level of exports of 15,350 million rupees is projected to go up to 19,000 million by 1973/74 and to 30,200 millions rupees by 1980/81. By this time the ration of exports between nontraditional and traditional items is expected to be 50:50 as against 35:65 at present.
TOURISM Kingston
PROBLEMS JAMAICA
IN
From H.P. Jacobs
THE Hon. P.J. Patterson, Jamaica’s Minister of Industry & Tourism, recently announced the suspension of the licence of an important north coast hotel. This step had been taken after close consultation with the Jamaica Tourist Board, the Jamaica Hotel & Tourist Association, and the management of the Holiday Inn, which was the hotel involved. The Director of Tourism himself then inspected the hotel, and shortly afterwards the licence was conditionally restored. Service in Jamaican hotels is often below standard. The Minister has pointed out that the more successful Jamaica was attracting visitors by a vigorous advertising programme, the more fatal would be the consequences if service was poor and the general atmosphere unsatisfactory, since the larger would be the number of persons who would return to their own country ready to warn all their friends against coming to Jamaica, In the Holiday Inn incident 480 workers were involved, most of whom had been employed by the hotel for two years, During the three-week suspension, the management brought in 18 experts from the U.S.A. to carry out a training programme for the workers, and began certain structural changes. The licence was renewed for three months only to enable the workers to obtain training on the job.
23
22
and balance of surprisingly good.
payments
have
been
All this was due mainly to the prosperity in Nigeria’s oil resources. For example, the production of crude petroleum has risen from 950,000 barrels a day before the civil war to over 1.7 million barrels a day towards the latter part of 1971.72. In other words, all earlier production targets have been exceeded and the original plan to produce about two-million barrels a day by 1975 will likely be reached ahead of schedule. No doubt Nigeria has benefited substantially from the production increases already achieved through successive rises in the price of oil as a result of agreements with the Organization of Petroleum Exporting Countries, while she also has gained by maintaining the value of her currency in the face of the dollar devaluation and pound flotation. This apart, Nigeria’s oil exports have increased from227 million in 1968 to 2463 million in 1971. Although Nigeria has always been a traditional exporter of agricultural products and minerals, nevertheless oil alone accounted for 58 per cent of her exports in 1970, and for 74 per cent of total in 1971. Moreover, government revenue has proportionately swollen. It will be recollected that three years ago recurrent revenue amounted to %173 million, and in his 1972 Budget speech, Mr Shettima Ali Shagari, the Finance Commissioner, forecast $X+45 million for 1973 financial year out of which 2343 million was expected from oil. Nevertheless, the first progress report observed that because oil is a wasting asset and will not flow for ever, there is an urgent need for a bold approach to Nigeria’s traditional sectors, particularly agriculture. It is envisaged that steady growth of the economy will to a large extent depend on what is happening to the agricultural sector. Nigeria’s population is estimated at about 65 million, and is expected to reach a levelof 102 million by 1985. All has not been beer and skittles for the Nigerian economic development, even though she has made some remarkable advances. The 1972 first progress report pointed out that the inflation which started during the Nigerian civil war, caused by a cheap money policy to finance the war, continued after the end of the war. The Government have taken steps to control this situation. The main problem, the progress report tried to emphasize, was the executive capacity to prepare projects, which might affect public investment in industry. Even here rapid improvement is expected if
available talent can be used to the best since some areas have a advantage, shortage of skilled workers while others have a surplus. The report noted as a problem the unemployment which was not significant during the civil war, since most school leavers were absorbed in the and local industries. Nigerian army Certainly it has now become a major problem. Hence in order to alleviate the problem the Federal Government have embarked on rural electrification, and industries are being encouraged to rural areas in the hope that such measures coupled with the expansion of agricultural sector would reduce the influx of the young school leavers to city centres. Private investment is vital to any developing country, and Nigeria is no exception. At the moment the private sector has a promising outlook in Nigeria. Investment has proved more substantial than anticipated and expansion is expected tocontinue, although some industries have been affected by the removal of restrictions on imports and others might be affected by the recent wages and salaries award. Nevertheless the 1972 progress report noted that satisfactory though the level of private investment was, it has not been guided by the industrial strategy laid down in the four-year plan which aimed to industry from production of shift consumer goods to that of intermediate and capital goods. The progress report on the second national development plan has pointed out that the disbursement of external financial assistance lagged behind schedule but emphasized that some domestic resources had shown some buoyancy. In effect efforts were being made through project preparation to maximize the rate of utilization of aid. Like most developing countries, however, most Nigerians now felt that financial aids with stringent conditions tied to foreign goods and services had all along made it difficult for Nigeria, with all her tremendous resources, to develop her own local economy with a propensity to produce in her own industries and sell in the world market. Faced with a growing burden of repayment arising from aid programmes, many developing countries are setting aside ideological objections and turning to foreign investment as the most likely means of faster growth, diversification of their economies, and hence the wherewithal to finance their everincreasing needs. Even in this respect, Nigeria has limited the scope of the activities of her foreign investors in order to give her nationals the opportunity of enjoying investment potentials. In the main the future looks good for Nigerian economic prosperity. For a long time oil will remain a substantial source of revenue and this will continue to pay off any balance of payments deficit and
increase
development
projects.
At
the
moment Nigeria is not very enthusiastic in associating with the EEC probably beyond special agreement, all things being equal, but is keen on the West African Economic Community as this may provide, among other things, a better market for her agricultural products. The Federal government is fully aware of the importance of agriculture in sustaining the long-term growth of the Following the importance economy. placed on agriculture the central government released between 25 to c6.5 all State Ministries of million to Agriculture to increase the pace of food production. It also allocated E20 million in rhe 1972 Budget for capital expenditure in agriculture.
INDIA’S EXPORTS AFTER THE CONFLICT By Dr. R.S. Nigam Reader in Commerce, IJniversity of Delhi IN 1971 72 India’s economy passed through severe strains due to influx of about 10 million refugees from the erstwhile East Pakistan, the actual war and assistance in Pakistan, with and economic reconrehabilitation struction of Bangladesh. These strains have severely effected the export efforts (although during the calendar year 1971 the total exports from India, including to Rs. 15,771 reexports, amounted millions which was slightly above the level of 1970). The crisis of the international monetary system has also added to the uncertainties facing the Indian exporters. In addition, certain domestic bottlenecks, like the continued shortages of certain critical inputs (e.g. iron and steel, cotton, fertilizers, etc.) affected the momentum of Indian exports. The emergence of Bangladesh has opened new vistas for Indian trade and economic relations with her neighbours. The IndoBangladesh trade and payment agreement, signed towards the end of March, envisages a twoway trade of Rs. 1,000 millions for 1972.73. This is in addition to the economic assistance of Rs. 2000 millions, provided in the Indian budget for this year. The IndoBangladesh trade is expected to gather further momentum with the removal of transport bottlenecks by repair of bridges and ports damaged during the conflict. Normalization of transportation and rehabilitation of the Bangladesh economy should result in greater demands for consumer and light engineering goods from India. India will also be benefitted by imports of raw jure , fertilizers and fish from Bangladesh. At the international level India and Bangladesh are trying to forge a common front for mutual safeguard of their export markets. It is worth noting that Bangladesh currency (T&k&) has been fixed at par with the Indian rupee and sincere efforts are being Vol. 1 No’s I & 2
made to form a jute community competition in the international
so that markets
may be circumvented and better terms of trade for this commodity may be realized. After the conflict with Pakistan India’s exports have begun to show a significant rise. Considerable increases have been registered in jute manufactures, tea, pearls (including precious and semiprecious stones), cashew kernels, raw cotton, cotton apparel, leather and leather goods including footwear, handloom piece goods, fabrics of art silk and synthetic art silk, rubber manufactures, tobacco manufactures, lace, pepper, etc. Certain items like millmade cotton piece goods, iron ore, oil cakes, cotton yarn, paper and paper board, hides and skins, plastic goods, mica, engineering goods, coir and coir manufactures, etc. have shown some decline. In the direction of exports there have been considerable increases to USA, Canada, UK, Western Europe (including the EEC) and Latin American countries in 1972. Exports to East European countries, Africa and the ECAFE region were marginally lower. India’s In assesing exports performance in 1972 due consideration should also be given to certain new developments like devaluation of Pakastani Rupee, stoppage of American Aid and Britain’s entry into the EEC.The heavy devaluation of the Pakastani Rupee will make exports from that country cheaper in the world market by as large a margin as 57 per cent. Although it is true that Pakistan is no longer India’s competitor in jute manufactures and tea, it should be noted that ic continues to remain a main competitor in respect of textiles, leather and leather goods, tobacco, handlooms and handicrafts, and many other items in respect of which Pakistan will now have a distinct price advantage over Indiangoods. The stoppage of American Aid has also some impact on India’s capacity to produce export surplus, but efforts are being made to compensate for such loss by increasing economic cooperation with USSR, East European countries, Western Europe and international agencies. Britain’s entry into the Common Market will mean loss of substantial tariff and nontariff preferences which India enjoys in the British markets. The Generalized Scheme of Preference of the EEC and Britain and the possibility of nonpreferential commercial cooperation agreement with the enlarged EEC is expected to reasonably compensate the disadvantages which Indian goods are likely to suffer by phasing down of the Commonwealth preferences. The recent realignment of currencies and the floating of pound sterling have added to some uncertainties for India’s exporters. India, being a member of the Sterling Area, has natural concern for rhe pound’s future as a reserve currency and the consequences of the projected
European Monetary Union. It is the aim of the Indian policymakers to sort out such as the IMF, the UNCTAD, GATT, etc. In the meantime India is in continous touch with various countries of the world for devising bilateral safeguards to her exports. Efforts are being made to diversify the and commodity pattern. geographical More attention is being given to exports of non-traditional and various manufactured goods like engineering goods, small tools, garments etc. India has also started exporting turnkey projects to various AfroAsian countries and at present around 150 joint ventures involving Indian capital participation in foreign countries (mainly in the form of equipment exports) have been sanctioned by the Government The Indian economy is now recovering from the unusual stresses and strains of last year. Despite several hampering factors the performance of exports in the year 1972 has been encouraging and it is expected that the projected Fourth five year plan target of an annual 7 per cent in exports will be realised in 1972/73. The 1970/71 level of exports of 15,350 million rupees is projected to go up to 19,000 million by 1973/74 and to 30,200 millions rupees by 1980/81. By this time the ration of exports between nontraditional and traditional items is expected to be 50:50 as against 35:65 at present.
TOURISM Kingston
PROBLEMS JAMAICA
IN
From H.P. Jacobs
THE Hon. P.J. Patterson, Jamaica’s Minister of Industry & Tourism, recently announced the suspension of the licence of an important north coast hotel. This step had been taken after close consultation with the Jamaica Tourist Board, the Jamaica Hotel & Tourist Association, and the management of the Holiday Inn, which was the hotel involved. The Director of Tourism himself then inspected the hotel, and shortly afterwards the licence was conditionally restored. Service in Jamaican hotels is often below standard. The Minister has pointed out that the more successful Jamaica was attracting visitors by a vigorous advertising programme, the more fatal would be the consequences if service was poor and the general atmosphere unsatisfactory, since the larger would be the number of persons who would return to their own country ready to warn all their friends against coming to Jamaica, In the Holiday Inn incident 480 workers were involved, most of whom had been employed by the hotel for two years, During the three-week suspension, the management brought in 18 experts from the U.S.A. to carry out a training programme for the workers, and began certain structural changes. The licence was renewed for three months only to enable the workers to obtain training on the job.
23