Development priorities in Africa

(1)

11* MARS 1973

AFRICAN MINISTERIAL CONFERENCE

ADB/CONFMIN/73/WP/l/3

ENGLISH

Original: ENGLISH Distribution:

Abidjan, 2nd May, 1973 RESTRICTED

£,5052

DEVELOPMENT PRIORITIES IN AFRICA

♦

j

by

the Economic Commission for Africa

A,

Report presented to the meeting of

the group of , perts responsible for the preparatory studies

Abidjan, 26-28 February, 1973

THE AFRICAN DEVELOPMENT BANK IS NOT BOUND BY THE OPINIONS EXPRESSED

IN THE WORKING PAPERS

(2)

_ •

DEVELOPMENT PRIORITIES

IN

AFRICA

Note prepared by the

Economic Commission for Africa

for the

OAU/ADB/ECA

Ministerial Conference

on trade and development

M73-?64

(3)

?

»

f

TABLE OF CONTENTS

Paras, Page

I. Introduction and intent

1 1

II. Development

priorities in the light of

the International and Africa's

Strategy for the

Second Development

Decade

2- 5 1- 4

III. Development

priorities in selected African

countries

6—23 4-10

IV. Suggestions

for future assignment of develop¬

ment priorities

in Africa 24—47 11-17

(i)

Agriculture

and rural transformation... 25—28 11—12

(ii)

Industry

29-30 12

(iii)

Infrastructure...

31-33 12-13

(iv)

Social

services 34—36 13—14

(v)

Trade and

financial

resources

mobilization

37-45 14—17

(vi) Research

46 17

(vii)

Economic

do-operation 47 17

V. Concluding remarks

48 18

(4)

»

♦

DEVELOPMENT PRIORITIES IN AFRICA

I. Introduction and intent

1. • The purpose of this paper is to shed some light on development priorities in Africa in view of the targets and policies contained.

1 ' • •

m■' "■ " '

in the national development plans and Africa's strategy for develop¬

ment in the 1970s.

II. Development _priorities _in _the light of the International and Africa's Strategy for the Second Development Decade

2. It has been pointed out that "Africa is running hard to stay in

almost the _same

place"-^.

^This ^is because of the low average annual

real rate of GDP growth in _general, _the _per _capita growth in

particular^,

^{and the} very many social and economic problems which

most African _countries face, especially those termed as the least

developed among the

developing

countries.

y

3. Facing this economic challenge, the African Governments meeting

at the First ECA Conference of Ministers in February 1971 adopted Africa's Strategy for Development in the

19709^

^as part of the global International Development Strategy for the Second United _Nations

1/

_Target, ECA: Addis Ababa, Vol.4, No. 3, September 1971.

2./

mobilizationandotherearnings,In additionorganized capitallowremittances,levels(f) hightoandof

(a)

usemarkets, \d)healthindebtednesslow

(e)

ofinadequatelevelssavings/services.ofexcessiveandpersonal

(c)

levels

(g):

small_highcapitalandsavings,andrates ofhusbanding

inadequately

outflows,

(bf illiteracy

ineffectiveofandexport''

_3/

Thelevelsmain characteristicsof labour of these countries are extremely low

productivity, scarcity-

of skilled manpower,

inadequate knowledge about the nature and _extent _of their natural resources, low level of physical and insticutional

infrastructure,

the predominance ^of subsistence production, dependence on a very

narrowstructures,tion. range^andof

primary

lack of commoditiesintegrated andin -theirco-ordinatedproductionindustrializa¬^and export

4/

^ECA resolution 218(x)

(5)

- 2 -

ê

Development

Decade.-^

4. A basic goal and

objective of the International Development

Strategy is to

achieve

an average

annual rate of growth of at least

6 per cent in the gross

product of developing"countries during the

Decade. This implies ^an average annual

expansion of 4

per

cent in

agricultural output

and 8

per

cent in manufacturing output. To attain

the overall growth target of at least

6

per

cent

per

annum, there

should be an average annual

expansion of 0.5

per

cent in the ratio

of gross

domestic saving

to gross

product so that this ratio rises

to around 20 _per cent by 1980 and

somewhat less than 7.per cent in

imports and somewhat

higher than 7

per

cent in exports. This is in

addition to other qualitative targets

designed to increase the

opportunities

available

to

all people to enjoy a better life such as,

the expansion of employment

and the improvement of education, health,

nutrition, housing and

social welfare facilities, etc.

5. With regard to

Africa's

strategy

for development in the 1970s

the following are the

major priority

areas

(i)

The integration of

national economies in all physical,

organizational,

economic and socio-psychological aspects. The need

for such integration stems

from the pluralistic structure of almost

all African countries. The achievement

of this development objective

requires an

effectively co-ordinated programme which concentrates on

regional

physical planning, integrated rural development, the reform

of local government,

income policies, transport and communications,

building and

construction,

etc.;

(ii)

The mobilization of

domestic

resources

so as' to increase

the ratio of savings to the gross

national product to at least 20

per cent by the

end of the decade. This would increase the rate of

growth of

African economies and provide a basis for independent

economic policies and

the preservation of sovereignty. In this regard

the provision

of adequate financial insticutions to encourage savings

and appropriate monetary

and related fiscal policies should be a

major concern

of African Governments;

_l/ General Assembly resolution 2626(XXV)

(6)

(iii) Since Africa may be considered the least

developed:among

the developing regions, priority should be

given by the international

community to the identification of the problems

peculiar

to

African

countries and the finding of solutions for them.

The objective

should be to enable African countries to accelerate their rate of

economic development and to carry out necessary

structural reforms.

(iv)

Africa's strategy in respect of trade

and mobilization of

resources determines the priorities of the

region within the frame¬

work of the Second United Nations Development Strategy.

Africa's

strategy for trade defines two

basic objectives if the development

requirements of the region during that

period

are to

be

met.

The

first objective is "to generate structural changes

by being

a

vehicle

for transforming African economies from ^a

traditional, almost

exclusively primary—producing basis, to a

dynamic combination of

agriculture and manufacturing

industries". The second objective is

"to provide foreign exchange earnings

for

the

financing of development

This strategy was further

amplified

and

developed by the African

Ministers at their meeting in October 1971.,

prior

to

the Third

Session of UNCTAD. A coherent set of measures to be taken by African

and non-African Governments as well as international organizations

a.t the national, regional and

international

level were

adopted by the

Ministers at that

meeting.-^

(v) ^In view of the International Development Strategy,

"developing countries must, and do, bear the

main responsibility for

financing their development. They

will, therefore, continue to adopt

vigorous measures for a fuller

mobilization of the whole

range

of

their domestic financial resources and for ensuring the most

effective

use of available resources, both internal and external, for

this

purpose, they

will

pursue

sound fiscal and monetary policies and, as

required, remove institutional obstacles

through the adoption of

appropriate legislative and

administrative reforms. They will

pay particular attention to

taking,

^as

appropriate, the

necessary

steps

l/

Report of the African Ministerial

Meeting

preparatory

to

UNCTAD III

(E/CN.14/545)

(7)

ê

- 4 -

to streamline and strengthen their systems

of

tax

administration and

undertake the _necessary tax reform ^measures.

They will keep increase

in their current public expenditure under close

scrutiny with a-view

to releasing maximum resources for

investment. Efforts will be made

to improve the efficiency

of public enterprises

so

that they make

increasing contribution to

investment

resources.

Every effort will

be made to mobilize private savings

through financial institutions,

thrift societies, post office saving

banks and other saving schemes

and through expansion of

opportunities for saving for specific

purposes, such as

education and housing. The available supply of

saving will be

channelled

to

investment projects in accordance with

their development

priorities".-^

III. Development priorities in selected African

countries

6. It is not intended to give an exhaustive

list of what

are

considered the objectives or

aims of each country*

s

economic-policy

or the means which are employed for achieving

such objectives. The

main aim is to distinguish the

principal objectives of economic

policy that are most

commonly accepted and advocated by policy—makers

in the individual countries of the Africa

region. These

are

the

following

(i) ^a rapid increase in ^gross

domestic product

or

its

rate of growth or in ^per

capita income,

(ii) a high level of and greater

opportunities for

:

productive employment,

(iii) ^a relatively stable

price level especially with_

regard to the export

prices of primary commodities,

(iv) equilibrium in the balance

of payments,

(v) a reduction of

inequalities in income distribution,

(vi) the avoidance of marked

disparities in the prosperity

and growth of different

regions-within

^a

country,

and

(vii) ^a diversified economy.

l/

International Strategy,

ibid., p.12

(8)

*

- 5 -

7• In addition to the above mentioned targets of economic policy

which can be said to apply to all the individual _countries _of _the Africa region and for most of the

developing

countries of the world, there are some qualitative objectives such as the

following

(i)

_whichthe establishment of a socialist society and economy would foster the steady growth of the prosperity

of the people

including

the further development of cultural, educational and health services,

(ii)

the provision of support for socio-economic trans¬

formation through the establishment of

self-sustaining

economic growth ^and welfare,

(iii)

the fostering of a spirit of self-help and co¬

operation,

(iv)

the establishment of national unification and

integration,

(v)

the achievement of. the maximum'use of human and material resources, and

(vi) the achievement of economic independence through self-reliance, and the maximum participation of nationals _{in the} development of the country's economy.

8. Indeed, each of these quantitative and qualitative objectives may be desirable for its own sake. The question of development priorities involves the determination, _according _to theo-si'tuãtTõh"in each

individual African country, of the objectives to which precedence should be given in planning economic development. Furthermore-, since the objectives of economic policy may be achieved through several instruments of policy such as, investment, fiscal, _monetary _and _wage policies, development priorities al'so involve the choice of the main instruments for the attainment of the objectives ^concerned.

9. Since each individual country in Africa has its own economic

structure, pol-icy and problems, development priorities differ according

to the situation in _each country. But in a general way, it may..be said that in most African countries, a rapid rise in the per capita income has always been given high priority for the simple ^reason that the

(9)

t

source of all material well-being is the

availability

of goods and services. At this point, it may be useful to look at the existing

economic situation in a limited _number _of African countries paying special attention to the question of development priorities (i.e.

targets and investment choices).

Arab Republic of Egypt

10. The Egyptian ten-year perspective plan

(1973-82)

aims at

achieving

an annual 7«5 _per cent growth in GDP, a target which exceeds that set for the Second Development Decade. The Plan further envisages

an annual 5 per cent growth in consumption, 3 million new jobs, surpluses in the balance of trade to provide foreign exchange for investment and an increase in the _per capita income from £E 80 in 1970 to £E 130 by 1980.

11. The Egyptian Plan, which is to be implemented in two phases, provides for a total investment of £E 8,400 million ($19.2 billion)

of which £E 3,200 million or 37 per cent is to be invested during the first phase of the plan. The industrial sector is to receive the

largest single allocation of about 32.1 per cent of the total amount to be invested under the plan. This is a continuation of the

country's economic policy launched since the late sixties, when it was

decided that only industrialization could solve the traditional economic problems of Egypt.

12. Within the industrial sector, the main aim of the plan is to increase the production _{of steel,} _cement, _{crude oil} _and _petroleum products, phosphate fertilizers, and aluminium. The scheme for

industrial development also includes the construction of an equipment factory, ^a spinning mill, a plant for the manufacture of elevators,

a nuclear power station, and a pipeline.

13. With regard to investment choices within the industrial sector, the following factors are taken into consideration:-

(i) where export-oriented industrial projects ^are concerned, full consideration is given tó the

"direct effects of a project on economic develop¬

ment and the balance of payments,

(10)

é

(ii) industries using â relatively low proportion of imported equipment and raw materials, ôr depending mainly on local raw materials âre given high

consideration,

(iii) ^industries which would improve the economies of

other industries are assigned high priority, (iv) import substitution industries which produce, in

particular, essential goods for the home market

such _as, fertilizers, paper and caustic soda are-aj¬

assigned high priority,

(v) petroleum prospecting, after the making of very

promising discoveries, is given special attention,

(vi)

heavy industries are given special' consideration

in order to lay a solid foundation for future

industrial development and to allow industry to play its leading role in the development process, and (vii) great emphasi-s is placed on the small-scale feeding

industries and craft industries, as opposed to capital intensive modern industries, to absorb

some of the rapidly increasing ^manpower resources.

14. In addition to investments in the industrial sector the Egyptian Plan provides for the investment of £E 1,000 million out of the

total amount to be invested over the 10-year period, in the agricultural sector, £E, 1,200 million in the transport and communications sector and £E '850 million for public utilities and social services.

Libya ■ *'

15. The development plan of Libya stresses the importance of agriculture

and of diversifying the economy so as to end the country's dependence

on oil and to provide services that would raise the standard of living

and reduce the differences between various communities in the country.

Morocco

16. Morocco's development plan envisages ^a growth rate of between 6.4

per cent and 7.5 per cent and pays special attention to the development

of the rural areas and the establishment of new industries. The

development plan also stresses the need for the participation of

employees in company profits, the regulation of the prices of essential products, the provision of

housing,

the

Moroccanization

of the

(11)

- 8 -

tertiary sector, the reform of the

industrial investment

law,

the

development of exports, more effective State

participation in the

industrial sector, and the drawing up of an agreement between

the

public and private sectors

which

lays

down the rights and obligations

of each party.

Ghana

17. Ghana's economic policy is the

integration of agriculture,

fishing, livestock and

industry for the achievement of rapid economic

growth.

Government's activities center

on

important structural

changes that would

shift

the

country's dependence

on

the

cocoa

industry

through the widening

of

the scope

of agricultural activities and the

increase of exports. During the years 1972-74,

the Government's

economic policies and measures would

be directed towards increasing

agricultural

production

to

feed the people, increasing production of

raw materials for industry, containing the balance

of payments

problem,

increasing

export

earnings, reducing the large budget deficit,

rehabilitating and expanding other

vital sectors of the economy and

establishing the proper

priorities in the provision of social services,

low-cost housing, rural water supply

and rural health facilities.

Mauritania

18. The current development plan of

Mauritania contains various

projects designed to

increase agricultural production which at present

is basically for subsistence.

The major investment expenditures

are for irrigation schemes,

dams, modern palm plantation and increased

livestock production through

animal health projects, sinking wells

and boreholes and the improvement of pastures.

Senegal

19. The main objective of the

fourth plan of Senegal is the achievement

of an annual rate of growth of 4.2 per cent.

The development

priorities are the

fertilization of arable land, the defence of

territorial uaters, the conservation

of forests, greater integration of

industry and agriculture, the

intensification of mining and oil

exploration, the development

of .ourism, the training of farmers and

the provision of medical services and

housing.

(12)

Zambia

20. With a view to reconciling its development

aspirations with its

available domestic and foreign exchange resources,

the Zambian plan

seek-s -in particular -to- -improve

conditions of rural life, increase

productive employment,

diversify its

economy away

from excessive

dependence, on. copper,

arid' raise" the~Taw levels of education- -and

training.

Tbie

major

emphasis is

on

rural "development with the

^_ ^_ ^:::

stated aim of reducing inter-regional and

inter-provincial disparities

in development.

21. GDP is to grow at a projected average

annual rate of 6.8

per

cent.

In order to improve the basic

nutritional standards within the country

and to provide an agricultural surplus as an

input for industrial

development, agricultural output

is

to

expand at

an average

rate of

6 per cent per annum.

22. The manufacturing sector is to expand as part

of

an

import-

substitution strategy designed to promote a

diversification of the

economy, expansion and

diversification of the mining industry,

expansion of the

tourist potential, development of transport,

expansion of education

laying

greater

emphasis

on

vocational, technical'

and professional education so as to reduce

the country's shortage of

trained manpower, and the expansion of

health

programmes

and services

^ï r.V.V',-J

with highest priority given to

the training of health personnel and

to preventive ^over curative

medicine.

^{■ ■} ^-

23. Table 1 below gives ^a quantitative assessment

of investment and

growth of the GDP by sectors

in fifteen African countries taken

together.—^

^The ^sectoral

distribution of investment

among

the various

developmental sectors sheds some

light

on

the investment priorities.

l/

Algeria, Botswana, Cameroon, Ethiopia, Kenya, Lesotho, Mauritius, Mauritania, Nigeria, Senegal, Somalia, Sudan, Swaziland, Tanzania

and Togo.

(13)

- 10 ^-

TABLE 1. Sectoral distribution of planned investment-and- onticipated growth of GDP in

fifteen

African

countries during the most recent development plan period,

l/

Planned investment Planned increases in GDP (Million US&) (Million

US$)

Total Per cent Rank ^From ^To

Agriculture 2,865 ^15.5 ³ 6,440 7,870

Mining ^2,307 ^12.4 ⁵ ⁸⁵⁰ ^2,040

Manufactu:r~ 3,681 ^19.9 ¹ 1,610 2,700

ing

Electricity ⁹⁰⁶ ^4.9 ⁸ ¹⁹⁰ ²⁸⁰

& water

Transport 3,015 ^{16. 3} ² ⁸³⁰ 1,160

Education 1,293 7.0 ⁶

;

^—•• ^— ^-

Health 386 ^2.1 9

Housing ^1,271 ^6.9 ⁷ ^6,300 ^8,200

Tourisra 320 1.7 ^. ¹⁰

•X-

Other 2,465 ^13.3 ⁴

* Includes some unallocated expenditure in addition to commerce and

transport.

Source: Statistical and Economic Information Bulletin for Africa, 1972.

Algeria, Botswana, Cameroon,

Ethiopia,

Kenya,

Lesotho, Mauritius,

Mauritania, Nigeria, Senegal, Somalia, Sudan,

Swaziland, Tanzania

and Togo.

(14)

- 11 -

Suggestions for future assignment of development _priorities

in Africa —

24. Having regard to the guidelines outlined in Africa's Strategy

for Development in the 1970s and in line with the current trends in individual African countries, the Economic Commission for Africa considers the

following

development priorities ^as those required to cope with the _present social and economic problems in Africa,

(i)

Agriculture and rural transformation

25. Agriculture ^- the largest industry in most African _countries -

should be assigned a high priority among the various development

sectors. Indeed, the aim during the 1970s is to raise its growth

rate from the present 2 per cent or less, to a minimum of 4 per cent per annum. Figures available on physical agricultural crops show

that in 1972, African countries only achieved ^a growth rate of less than two per cent. This situation calls for further efforts to be made by both individual African countries _and international

organizations in order to achieve the objective of the Second Development Decade.

26. In allocating investment ^funds within the agricultural _sector, priority should be given to land reclamation and irrigation, the propagation and dissemination of pure seeds, the establishment of fertilizer _and pesticide factories and the provision of agricultural

credit. The development ^of

livestock—breeding

and ocean, river ^and

lake fishing is of vital importance to _any increase in the rate of

growth of animal production and should not be overlooked.

27. The need for the modernization of African agricultural systems

through the introduction of new techniques and _processes and the commercialization of agriculture, requires further research which in turn _means _more _resources for investment.

_

28. The transformation of rural communities, which accounts for

three-quarters of the population ^of Africa, is ^a prerequisite for

the achievement of a structural change in the way of life of rural communities. The rural transformation _process includes vocational

(15)

- 12 -

. -i

training and functional

literacy^.,the-provi-sáron-of-rursi

water and

electricity supplies, health, nutrition and mothei^and—child care

services and home improvement. ^Rural transformation requires the establishment of physical, economic and social links between rural and urban centres and the augmentation of

income-earning

capacity

in the rural sector and its contribution to the national _economy.

These are necessary conditions for social transformation and self-

sustaining

growth. Therefore, in choosing development priorities,

rural transformation _should _rank high in the scale, of investment preferences.

(ii ) industry

29. Table 1 on page 10 shows that industry is ^of particular concern to many African countries. This is because agriculture, despite its importance in the overall development ^{of the} _economy, _is not by

itself sufficient to achieve the required rate of growth for the economy as a whole. The structure and rate of growth of the urban economy are also at present incapable of ensuring adequate employment

and higher standards of living for its growing population. The

acceleration of industrialization is, therefore, smother development priority.

30. In order to transform the structure of rural production and link the rural and urban sectors, development within the industrial sector should give precedence to'the development of small—scale industries based on innovative and appropriate technology, the development of agro-allied industries and industries providing inputs for agriculture

such as fertilizers, agricultural machinery and implements, the development of export industries and the promotion of industrial research within the producing units.

(iii) Infrastructure

31. In contrast to commodity producing sectors such as agriculture and

industry, the infrastructural _sectors, including housing and

public

utilities, transport and communications, and public administration have not received adequate attention in _many African countries because of the lack of adequate financial resources.

(16)

- 13 -

32. It is therefore of the utmost

importance

to

give due considera¬

tion to the infrastructure sectors in the

overall development

priorities.

Without the development of these sectors, the rate of

growth of the economy as a

whole will slow down. Collective action

is needed to develop physical

infrastructure in order to facilitate

the expansion of the

productive sectors and the flow of trade

between African countries.

33. Due consideration should be

given

to

transport and communications

and housing. The importance..

g£ t^^nsport„both rnthin the same

country and between

different African countries should not be over¬

looked. The development of the

housing sector which directly

affects the social welfare of the

growing African populations should

also receive

attention.-^

(iv)

Social services

34. Available information on

this

sector

indicates that there is a

great need to develop

further social services in most of the African

countries. Within this sector, education and

health facilities rank

high in terms of

social needs. It is therefore necessary to give

due consideration to social services in

assigning overall and sectoral

development priorities.

35. In this connexion, it should be

recalled that the International

Development Strategy

for the Second United Nations Development Decade

stressed that,

(a)

particular

attention should be paid to achieving enrolment

of all children of primary school age,

improvement in the quality of

education at all levels, a substantial

reduction in illiteracy, the

reorientation of educational programmes to serve

development needs

and, as appropriate, the

establishment and expansion of scientific

and technological

institucions, and

2/

It

is recommended in the International Development Strategy that

housing facilities should

be expanded and improved, especially

for the low-income groups and with a

view

to

remedying the ills

of unplanned urban growth

and lagging rural

areas.

(17)

«

- 14 -

(b)

each developing country should formulate a coherent health

programme for the prevention and treatment of diseases and for raising the general levels of health and sanitation.

36. However, since development implies the acquisition of skills by the people, emphasis must be on training ^programmes adapted to the specific requirements of each African country. This ^can be done by incorporating a training component in every development project.

(v) Trade and financial ^resources mobilization

37• Having regard to the International and Africa's strategy for

trade and financial _resources, African countries, in determining

their development priorities, should give due consideration to generating structural changes in the commodity composition and

direction of their trade and to

providing foreign exchange earnings

for the financing of development.

38. In order to generate structural changes a determined effort will

have to be made to remove those rigidities which are inherent in the

economic and institutional links between African countries and

developed economies and in that way change the production structure of African economies.

39. To maintain and increase foreign exchange earnings, due con¬

sideration should be given to the following major policy areas:

V

(i)

an international commodity policy to secure

remunerative, equitable and stable prices for primary commodities,

(ii)

improved access to the markets of the developed countries for primary commodities in their

natural and processed form,

(iii) the establishment of associations and groupings

of African primary producing countries to enable commodity producers to take action on their own initiative to protect their interests in

commodity markets, '

(iv)

international action to facilitate the diversifi¬

cation and expansion of trade in manufactures and semi-manufactures by African countries, and

l/

Africa's Strategy, para. 10

(18)

1

(v) improving

the competitiveness of natural products through research and development efforts designed

to reduce the cost of production of natural products;

to improve the quality ^or characteristics of such

products and to find new end-uses.

40. It can also be recalled from Africa's strategy for external financial and technical co-operation that the basic objectives ^are

to'M

(i) increase the flow of external assistance commensu¬

rate with the special requirements of African countries,

(ii)

facilitate the transfer of foreign technology

appropriate to the needs of African countries, and

(iii) generate structural transformation and changes in African countries by enabling them to utilize their

own natural resources, accumulate their own capital and operate their own economies with a view to

achieving ^not only an accelerated growth of _average income, but also more equitable income distribution and more jobs for the rapidly growing labour force.

41. At this point it may be useful to examine briefly the experience

of African countries in connexion with the question of development priorities in the trade and financial sector in an effort to shed

some light ^upon the interplay of external trade and the other

developmental sectors, namely, agriculture, industry and infrastruc¬

ture. The object of the exercise is to show to what extent the choice of development priorities in sectors other than the foreign

trade sector affects the latter.

42. One- of the main economic objectives ^{of the} developing African countries is the diversification ^of their economies. This, in turn, will affect _the _structure _of

foreign trade in general, and the balance of trade and payments in particular. For instance, the establishment and expansion of the production of agro-allied

industries and industries providing inputs for agriculture may have

a favourable effect on the external trade situation.

Similarly.»,

the development of export industries and import-substitution industries may have the same effect on the balance of trade and payments.

- 15 ^-

l/

Africa's _Strategy, _para. ₁₅

(19)

«

'

ft

- 16. ^-

■

<■

m

Equally, the development of the transport and communications sector will enhance foreign trade.

43. In other words, the development of the trade sector depends

on the development of the other domestic sectors and the world market. These sectors, however, ^are inter-dependent and the

expansion of each will have its own impact on the other sectors through linkage effects. Hence, as it is pointed out in Africa's strategy, "The prospects for transforming a country's economy through the growth of the export sector depend to a great extent

on the linkages of the export industries with other industries in

the economy. The stronger these linkages are, the greater is the

effect of a rise in exporte on production in other sectors of the economy"

44. The conclusion that _emerges from the preceding discussions

is that the priorities of the trade sector cannot be determined

in isolation from the priorities of the other sectors. Trade

priorities, however, can be derived from the development priorities

of the other producing sectors and the priorities chosen within

each sector. For African countries, priorities aimed at the achieve¬

ment of structural change in trade and at providing foreign exchange earnings, should certainly rank high in the overall scale of

development priorities.

45. With regard to the mobilization of domestic and financial

resources, high priority should be assigned to the following:- (i) policies and development projects increasing

the average tax ratio of African countries, (ii) policies and projects improving the fiscal

^ mechanism and the monetary system,

(iii) policies ana projects increasing the flow of

external assistance which:

l/ Africa's

Strategy, para. 11

(20)

* y*

- 17 -

(a)

enables

the recipients to make the fullest

use of their ^own

local resources and of

whatever other forms

of assistance are offered,

(b)

is

tailored to the needs and repayment capa¬

bilities of

individual African countries and

which reduces the

increasing burden of debt

servicing on

their balance of payments, and

(c)

encourages

the formation of wider markets, a

rational investment

policy based on sub-regional

or regional

co-operation and greater mobility

of skills and private

investment,

(d) developing the necessary infrastructure for

the expansion

of intra-African trade, including

adjustments to

the present network of communica¬

tions, transport,

banking and trade-institutions,

(e) developing the necessary institutions within the

framework of African

multinational co-operation

and integration,

and

(f) supporting the creation of regional payment

arrangements

by financing credit balances in

such arrangements.

(vi) Research

46. Research

should be accorded top priority in all spheres of

economic activity. In

allocating investment development funds

among the

various development sectors or within each sector, due

consideration should

be given to research facilities. Individual

production units should give precedence to research facilities since

the latter affects

directly the overall and sectoral rate of

economic expansion.

(vii) Economic co-operation

47. This is an area

of special concern to most developing African

countries. It

is,therefore, necessary to give due consideration to

economic co-operation

and integration in determining development

priorities at the national and international level.

(21)

- 18 -

V. Concluding remarks

48. The determination and choice of development priorities among the main development sectors or within each development sector, is

in the final analysis, a political decision rather than an economic

one. In making this decision, it should be remembered that the

primary responsibility for development rests upon the developing

countries themselves. In order to enable them to achieve the desired development goals, however, they must be assisted

through

increased financial resources and more favourable economic and commercial policies on the part of the developed

countries.

*