subventions (stabilizing subventions in particular) by the public authorities. This is more noticeable in the transport subsector where the level of cost recovery is very low and the
management system does not give room to commercialization principle.107. In Senegal, however, transport and communications activities in general are profitable since they generated cumulative savings of FCFA 165.561 billion over the period 1984-1993.
Similarly, the Ethiopian Shipping Lines and the Tunisian Shipping company have respectively
recalled underscored for the period 1990/1991, acumulative net cash flow amounting $US 18.26 millions and $EU 26.12 millions; against losses of -380.3 millions Algerian Dinars and zSLIS
479r300 respectively for the Algerian shipping company (SNTM-CNAN) and the NigerianNational Shipping Lines (NNSL). Furthermore the Moroccan Railways Authority recorded in 1992 an operating loss amounting $US 6 millions, due to non-cost recovery tariff policy imposed on it; here we are talking about the necessary cost for efficient operations of the Railways
Authority.
Angola, Botswana, Burundi, Central African Republic, C&te d'lvoire, Ghana, Kenya, Malawi, South Africa, Zambia and Zimbabwe.
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108. In Uganda, the situation is rather different: air transport was in deficit during the period 1984-1991. There was a cumulative deficit of 5,740.8 million Ugandan Shillings over the period 1987-1994 for communications whereas the railways subsector generated from 1986-1993 total savings of $US 211.33 million.
109. In Mali, both railways and hinterland waterways transport were in deficit: FCFA 63,160
million (from 1987-1990) and FCFA 433.9 million (1992/1993), respectively. Furthermore a recent reports/ made in 1995 by the chairman of the West Africa Road Transporters Union, indicates that Road Transport Operations in ECOWAS zone is generally showing deficit: FCFA 32.8 deficit per kilometre for 504 station wagon-Cotonou-Lome (300 km, round trip); against a loss of Naira 36 per kilometre for haulage of 30 Tons operated in Round trip, between Lagos and Kano (2350 km). Main reasons for such a poor performance of Road transport operations in ECOWAS zone include very low level of vehicles fleet turnover, decrepit fleet, overcontrol at unnecessarily numerous check points or border posts and high level of taxes.110. Finally, the 'Centre de Billan' in the Republic of Cdte d'lvoire reported the following performance of the Transport and Communication sector for the years 1987/1991 as follows:
0) Shipping: Net profit of FCFA 1.1 and 0.195 billion, as against cost-flow of FCFA 2.87 and 2.84 billion cash flow in 1987 and 1991 respectively;
(ii) Air Transport: Net profit of FCFA 0.285 and 0.011 billion respectively in 1 and 1991 against cash-flow amounting FCFA 0.091 and 2.68 billion;
(iii) Road Transport: Net profit of FCFA 0.95 and 2.2 billion respectively in 1987 and 1991; against cost-flow of FCFA 7.74 and 6.64 billion;
(iv) Transport auxiliaries: Net profit of FCFA 3.15 and 1.27 billion respectively in 1987 and 1991; against cost-flow amounting FCFA 9.38 and 4.87 billion;
(v) Communications: Net profit of FCFA 50.1 and 59.9 million in 1988 and 1991 respectively; against cost-flow of FCFA 37.91 and 7.16 million.
(b) Financial assistance and lending terms to the transport and communications sectors in Africa
111. Africa received financial assistance for transport and communications under concessional terms. These are loans previously given to public administrations at favourable conditions as described on Table 14 within the context of long-term official debt of low-income countries.
"Experience of UTRAO in Intra-Community Road Transportation and Transit by Alhaji Lawal Issa Chairman West Africa Road Transporters Union (UTRAO)."
112. The records on Financial assistance for transport and communications development in Africa is hampered by the lack of relevant data, a fact clearly illustrated on Table 26.
113. Since Table 25a shows the actual expenditure made on transport and communications in Africa over the period 1974-1988, the arithmetic average expenditure over the same period could be taken as the annual financial flows to these subsectors, i.e. $US 4,937.03 million. By way of comparison of this amount with the figures indicated in Scenaro 1 to 3 in the section dealing with financial resources estimate in support of transport and communications sector in Africa, it could be concluded that only the lower Scenaro (i.e. US$ 1.1 billion) could not meet the required resources for financing transport and communications in Africa; this is contrary to the medium Scenaro ($6.71 billion) and high scenaro ($ 22,069 billion). The last amount could compare to Scenaro 1 to 3 in Section 2.5.
114. We note, in conclusion of Section A, that:
(i) year after year expenditures in the area of transport and communications in Africa rise; yet their distribution in terms of investment expenses in one hand and maintenance, rehabilitation and operational expense on the other hand take the following pattern: a large proportion for investments both on continental level and national level in certain intermediate income countries; this is in comparison to a large proportion of the second category of expenses for certain low-income countries;
(ii) relatively speaking, public African transport and communications enterprises are rarely show sustained financially profitable for several successive years;
(iii) nevertheless, there are positive indictions of support for economic and social development in Africa from the transport and communications sector: in addition to the fact that the sector is gradually setting the stage for the physical integration of African markets, it generates numerous jobs and substantially contributes to the continent's GDP. Such positive essential factors should encourage African Authorities in the public finance domain to raise the sector's level of priority by granting it the requisite direct and indirect support through budgetary and institutional measures aimed at strengthening the efficiency of public and private enterprises operating in this sector.
Section B: Experiences in Selected Enterprises in Africa
115. In enumerating the many problems facing the development of these sectors in Africa, it is commonly stated that African enterprises and orgamzations are self-sustaining due to poor financial performance, among other things. This section analyses the operating data of several selected communications enterprises in Africa in order to assess their performance and development patterns. These enterprises were selected on the basis of available information and cover the telecommunications. Other sectors will be considered in any follow-up studies.
TRANSCOM/946/Rev. 1 Page 43
1. Potential sources of finance
116. In the developing countries generally, funding for infrastructure development has traditionally come from government development budgets, loans and grants in the form of aid from foreign development agencies. However, recent changes in the development environment have exerted pressures for increased self-financing and more private sector participation. The capacity for self-financing by an African communications enterprise may be assessed from an examination of its financial performance and capital structure.
117. A typical expenditure programme of an enterprise is composed of the following elements:
(i) Self-finance/retained earnings; , ;
(ii) Government allocations (including foreign aid); m , ..
(iii) Domestic equity; ~:"■■■' ■ ■■-"' i :i;, w^ '.*&*<# ■■■■
-:(iy) foreign equity;
J;>';'^. >fZL-, '■ "-■■■ ■.;-.' ■.;■ ■■■:-.lf*ffl
(v) Domestic bank loans; and : '- : ,:;. ;^ :,- Lij , (vi) Foreign bank loans.
118. The recent trends in these components are analyzed from the financial statements several selected African enterprises in telecommunications. ;>, ri
2. Financial performance of African telecommunications companies in Africa 119. The present analysis will focus mainly on the current financial performance of selected African telecommunications enterprises in order to identify components of the cost structure which may offer opportunities for more self-financing. This sector is selected since it has been targeted for restructuring into autonomous operators in several African countries. As more enterprises are identified, the base of the study will be expanded accordingly.
120. Follow-up studies will be undertaken to explore in detail those opportunities for increased self-financing which are identified above. For example, as concerns introduction of user charges, it also appears possible to raise tariff revenues to rationalize demand. ~ .
121. Policy makers are increasingly aware of the potential benefits of telecommunications and are taking steps for its rapid development in Africa. However, the African countries still face difficult choices in allocating limited resources to extend and upgrade the telecommunications systems in competition with other national requirements. Accordingly, the ability of telecommunications operators to generate capital is critical to their success. If sufficient revenues are generated to self-finance development, sufficient new investment would be attracted to the
sector.
per cent of revenues.
n
. inters