Comprehensive economic planning in Mali

UNITED NATIONS

ECONOMIC AND

SOCIAL COUNCIL

Distr.

LIIIIT^D

E

16 September 1963

iiJNGLISH

Original: FRJNGH

ECONOMIC COMMISSION FOR AFRICA

I-Ieeting on Comprehensive Economic Planning Addis Abata, 15-20 October 1962

CGMPR3H3NSIV3 ECONOMIC PLANNING IN MALI

Seydou Bjim Sylla

63-2137

T3CHEIQITES Iff MALI'' ' ■•:■ - ■

1. The "bases of Malian planning

A. Possible planning techniques depend very much on fundamental economic choices* These choices as defined by Congress of 22 September I960 are:

(a) Economic decolonization: since that date new national structures

have been instituted: the establishment of State corporations in the main sectors of economic activity, particularly foreign

-: trade and wholesale trade (SCMT.LX) (Mixed Hbcport Company),

■transport (MaliState Transport. Company - Air Mali ■- Railways - Shipping company)^ ffsining and oil research (mining office, large

"building industries and undertakings, and the like) the setting

up of national currency institutions (Treasury, Currency exchange

office, Bank of the Republic of Malij People's Development Bank).

(b) Socialist-type developmei.- adapted to African Conditions" cc—.

operative organization of the peasantry, ~:tLen;^y development of iiho S^ut-"1 r:ce';c^ rc-r—r^i for all the main sectors of economic life*

B. Under V'.c-vo cr:.:-1i.-jic-.irj t^G Tr.rty C^ngr^ss imposed the choice of an imperative plan cc-ering all aspects of the life of the country*

(a) imperative plan: few African countries have a plan which is

imperative and not merely indicative. The measures adopted in this plan are:

(i) tho > central! Nation of all "funds of local or foreign" ori-gfn-in a

single public account: '-.;ho equipment budget (annual allocations of the Five-Year Plan) 'covering! '■ " f

all r.ot drVrrr-1;?."/ r"''"* "r"^ ''o"''i:rrGct-n;^ts of central and lo&a,l

administrations: r-oads, education, health (sectionsMO- to 40 of the

all productive investnsnts of State" under-fcaldngs (section 50 of "the

same budget),

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These undertakings are forbidden to practice self-financing:

all gross profits (i.e., including amounts written off for

depreciation) are paid back into special accounts managed by the equipment budget which redistributes the funds according to the

Plancs priorities.

- the annual instalments of the public debt linked to :t£tf execution

*" of the plan (section 60 of the above-mentioned budget), (ii) The direction given to the private sector by various classic

controls (credit controls, fiscal customs-and currency controls, import licences and the like), reorganization in the form of the

■association (of traders, transporters) in private African under takings and, specially for foreign undertakings, the "contractual"

system; any undertaking which wishes to re-export its profits must

■■ enter, into a sort-of contract, with the..State, of Mali and arrange

■its production and investment plan in accordance with this plan, (iii) The management of all public funds by a single State bank.

Ob) Plan embracing all aspects of the country's life's'

This is not an "investment programme" like those of the former

FIDES (list of works, schools, roads) but a coherent whole contained

in a national accounting system.

2. Malian national account ing system ■ -'---.■

The Plan covers the five-year period from 1 July I96I W *0 )June 1966.

It is based on detailed national accounts for 1959.

Brief Summary of Mali's economic accounts for 1959

:-;-.,: A. .-October I960: rapid establishment of a first series of accounts to a near stage of completion: balance of resources and use of goods and

services, external balance, accounts of administrations and table of aggre- gatea,inational income, gross national product at the cost" of factors and

market prices, national production).

B.. November I960 - June 1961: work conducted on two bases:

' (a) rapid and detailed re-evaluation of accounts item by item

(breakdown of nomenclatures of products and operations) by using all

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statistical data, monographs, studies, knowledge of technicians of the various services. This work was done in the following manner*

(i) Balance of resources and use of gocds and services: difficulties

encountered:

- Nomenclature of products: nomenclature based on "consumer" rather than the "producer" point of view, so as to obtain groups of

. . :. . . operational products for consumption projections;

- Definition of production pricesand grosj?: commercial margins

(taxes,internal transport and,commercial margins strictp sensu);

: ..Difficulties of home—consumption and-home—supplyt

r ■■■ ; - Definition of CIP and FOB prices of imports and exports in the particular case of Mali: importance of "traditional" uncontrolled

>■ ;-: ". commence j . ■ i .-■■:..■. , . ■.; ' : ;■;■

"- Definition of constituent elements of gross fixed capital formation

., -Synthesis of results in an. input -output tables

.., - Special treatment of the balance of services, particularly services of air transport, studies and research, international telecommu nications. .

; (ii) .Easing of accounts according to a .detailed n;omenolature of

operations: original nomenclature, which distinguishes:

'. ■ ■ operations on:.goods and. services ,:- ■ :

! distribution operations;. ; financing operations

: In this nomenclature particular care has beon given.to distinctions permitting the isolation of economically significant groups of operations that are consequently "operational", particularly operations for transfer

to and from abroad (publio -grants, operations of head,-offices of foreign undertakings,export of private, incomes^ centralized management as the level

of the West African and France areas of the liquid funds of undertakings

through a;banking combination),.rThat implied a break-away "from "European"

nomenclatures of the nomenclature advocated by UNv , ■-..,

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(iii) .Detailed analysis of the accounts of the administrative. ;.., departments by the classic examination of "budgetary documents '"""' (forecasts) and of" "financial inspection" and Treasury documents

(execution) of the various central and local administrative

departments, : • ■

Difficulties encountered:

Definition of administrative: departments including the delicate

: matter, of semi-administrativa, partly productive-groupings

; (rural groupings, etc.)

Method of integrating the accounts of foreign., administrations . in the territorial accountancy of Mali: difficulty of exact

calculation of official and concealed grants to. liali and from Mali to other States, Relationship "between, this difficulty and

the treatment of taxation, particularly entrance taxes,

Jj1 Break-down of current administrative consumption into goods and services "based on a Reliable sample* completed Impractical

;;: ! examination of the admini strati on's main purchases, hypotheses

and reasonings.

Break-down of salaries and social expenditure in accordance with the staff tfules, including the payment of contributions to

social systems managed abroad. . , . ■ ...

(iv) Detailed analysis of external acoqunts: .trade balance, particu larly of incomes, capital flow: foreign assistance, concealed

grants in both directions (from abroad to Mali and from Mali . : to abroad), particularly of liquid funds - comparison of "real"

balances with the balances of the financial-settlement of the

Difficulty of bringing these balances into line ..with the defini tions.of Mali's national accountancy. Break-down of different

■ : .. . - items by economic regions, monetary areas.*., types of commerce

("modern" commerce and "traditional" commerce), method of adjust-

ment (banking, postal or manual transport of notes), and the like.

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With respect to all these difficulties mentioned above under (a)

' (b), (c) and (d), refer to the methodological note published at the

same time as the economic accounts-,

; (b)lntegration of these "Key3!, accounts Xargely_reccnstituted independent

ly of each other m an over-a.Xl economic.table making.it possible, with the help of hypotheses and reasonings, to obtain household and business accounts by :means of the-difference. '

Business account: certain elements (value a&ded, indirect"taxation derived from the balance of resources and use, others (external relations, direct.taxation, etc) from external accounts and accounts

. ■ of administrations, ■.-■:_ ,- ■ . ■ _ .. ■ . ■ ■■;'-. . .-■

Others elements (salaries) were original. Sources: corrected information relating to wage—earners'(numbers, categories, wages).

All these accounting elements ware broken down into sectors selected '■ in an operational manner;1 socio-economic type of nomenclature

adapted to conditions prevailing in Malij public undertakings,

foreign private undertakings, "modern" type Maliah undertakings,

undertakings of the "traditional" sector, with classic sub-division

"by typQ of occupation ■ ('industry, agriculture, transport), '■ justifi

cation of this.ncmenclature in the. methodological note mentioned.

The general curve of the various sectoral accounts thus reconsti tuted is compared with the'partial information at our disposition, analysis of probability, and the like. . . ■

'Household accounts: generally reconstituted by pay — Then compari

son with the surveys (always partial) of family'budgets after break

down of accounts according to: foreign households, urban African households, rural A:..'::.caii households,'

Repetition Methods

The first overall economic table thus compiled showed inconsistencies.

"Hand" re-adjustment by hypotheses, rationalising- of various accounts'so as to pass from pure "accountancy consistency" to "economic consistency"

(consistency of behaviour of hoaoceaer/u?. groups). Whence the necessity of

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selecting significant and operational nomenclatures. No over-all mathematical

model but a series of partial models which had to "be combined, compared and made consistent. Long and difficult work which nevertheless enabled Mali, despite the great weaknes of its statistics, to be provided with a logical, consistent, precise and detailed accountancy system.

3» The choice on which the Flan is based - Projections :

A first 1966 (last year of the Plan) projection was made on the basis

of this 1959 accountancy system.

; A. The fundamental choices on which the Plan is based were defined by

the political organizations (Planning and Economic Direction Committee) on

the basis of the decisions of the Congress of 22 September I960.

Let us recall this choice:

(a) development, as a priority, of agricultural production to ensure alimentary independence (in relation with population growth),

and secure improved external balances permitting the import of equipment goods*

Methods: defined doctrines concerning

- development in irrigated areas (Office du Niger) (Niger Board)

various works carried out in the river valley);

agriculture in arid zones: doctrine and methods of technical and rural co-operative organization,

(b) systematic research into mineral and oil wealth and hydro—energy

possibilities to ensure during the 2nd Plan a base for heavy

industries. When the results of these studies and research work are

known it will be possible to draw up a forecast (10 to 20 years)*

To draw up a plan before doing research work would have been to put the cart before the horseo. The first Plan could not go beyond

five years. . ■ .. ...

(c) Diversification of the economy by the beginnings of industri.aliz.arr

tion: valorization of export products (abattoirs, oil mills, ginn

eries), replacement of imports by local production when the raw

material exists or can exist (textiles, sugar factories, tomato

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concentrate, cement factories, brickworks), beginnings of light

mechanical industries to use the equipment already installed .., (Markala, Keulikoro). . : :.. . . ; . ■ ■ .

(i:) : infrastructure investments: transport and ^cbmmunications,

;...' education, health, administration;-

(ii) On the basis of these directives, the Planning Board, in colla

boration with the technical services, drew up a first list of

"possible" projects. List submitted to,the political authorities

(December I960) who referred it back to the Planning Board with -com ments; .-■■;■ ■■ - ■ ■■■■■■.■..■

(ill-)'-Oh this new basis a fii^st projection of these projects as a whole

within the compass of the national accounts^ for the final year ,1966, no account of progressive stages being taken at this time.

,. . At the. same time constitutioruof a committee to, work out the first annual instalment maintaining only those parts,.on .which no

discussion.had, taken. p.lace and were in fa.cifc beyond discussion so as not to delay execution of the plan while awaiting the conclu sion of the examination. Obviously, this projection revealed in consistencies,. Whence, two series .of proposals by i;he Planning Board to the planning and Economic Direction Committee

- modification of projects (reduction of unproductive aims, increase of productive aims);

- measures of economic policy: Currency taxation, foreign exchange control.

(,iv) After the Planning Committee had given ite opinion on these mat

ters., the Planning Board applied Itself to.

- immediately organizing the first annual instalment of ^he Plans

- making a new 1966 projection which, because of the corrections

made and bearing economic policy decisions in mind, was consistent;

' - Drafting of he draft of the Plan in summary form;

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,,-- ■■■:■' apolitical submission of the document to: the National Assembly "by the Minister for Planning and simultaneous (August 196l) passing

of ,tjie Planand'of the first 1961 - 1962 instalment,

(v) Work undertaken by the Planning Board since August 196I:

, - ■ detailed fe-evaluatjlon of projects with the collaboration of tech-

■■.:.;.::'. nicicns and on the basis of offers made by countries tc which Mali

■'.■..":■ ; had applied.' Progressive stages bearing in mind 1961-1962 comit-

■ ;-:r .-.-■. ments (1st instalment) and detailed preparation of the 2nd instal ment (1962-1963) submitted to the National. Ass'eta'bly at the end of

. June 1962. "'■■' ■ '" " .

r_ . Finally, new I966 projection, taking into account the lessons learnt j from the first year of execution.. .Sories of measures suggested to the

.government by the Planning Board.,; Here as elsewhere the Plan is a continuous -affair,- constant re-adjustment, successive re—evaMa%ions as and when in- -formation'and studies become precise,-on the basis !ef the lessons of exper- ..Etence^-andj of course, last but not.least, institution-of essential statistical .vservices ahd organizations to control exscuticn.

: ; -'"' II. BALANCE OF RESOURCES. ■«D IfSE' OP GOODS'AND SERVICES

A series of tables.-pfj^esources and of the uses of the various goods and

l<Services according to quantity and value constitute the basis of our work,,

Under resources we plan, production and imports and under uses intermediate

consumption (commercialized intermediate consumption and home-supply), final

consumption (home-consumption and the.commercialized consumption of house-

holds and: ■administrative departments), exports and the gross fixed capital

formation.

li Stocks- "■-''" "■ ' ...

"r" li will be observed, that there is no plabe for variations in stocks.

Throughout the subsistence sector' this is no disadvantage since these

variations offset variations in home consumption and permit their automatic

adjustment to variations in production. This gap is much more serious for

the "modern" sector, since as a result of economic development the normal

increase in the stocks of undertakings (stocks of raw materials and finished

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products)' gives rise to a financing difficulty which; cannot be:ignore(i# .

2. The frontiers of production ' -; ■ i

The "production" taken into account in our ..national accountancy includes

■ only the production of goads and services which can "be put to economic use, 'iThusjidincrease in livestock is not regarded as a "production" except to the

extent of its.economic use (exports and local consumption). The "stocked"

I increase ienot taken into account, in the same way as the "trees which

growf form.part of social;production only to the extent and at the time they are cut.; ■ ,., . : ,. j... . ... ...

■In out accounts "production11 means- only.''social; production"; it does

not iierefbr^J-include-housework.:::^- ■■•[■:■■.

The distinction we make between self*supply and intermediate commercial ized consumption results from our anxiety not to bring together operations of a heterogeneous nature. Self-supply is the destination1of-products which

are transformed by the producer in accordance with tradition (rice husked by a pounder, millet distilled' by peasants^ karite'nuts transformed inio but

ter) using methods and at costs different frdm'those in equivalerit-indus

trial operations. The frontier between transformation operations;in the traditional sector which are taken into'account in our accountancy arid the

"household" operations which are not obviously to a certain,extent arbitrary.

3?. Production prices ... ~ . :

v. ■"■: Pr'Odu.ction and home—consumption, are evaluated at "production prices".

By "jHTOduc-fcion priced we understand the weighted average of prices at which producers seLl that part of. the^r production which can be put on the market.

. ..Thopje saj.es. may be made, tiireqtly, ^rom the producer to the consumer or thiey, may pjas& through the hands of the ..middlemen in the trade. This defi—

nitlon^.o^'produc-fcion;., prices coulcl be criticized because in efiect those

prices are the averages between wholesale operational prices (for deliveries to the trade) and retail operational pri-Ges (sales direct .to ppnsumers).

Should not production prices have been defined as the weighted average of deliveries to the trade only? In that case, for direct sales from producers

Page 10

to consumers, there should be addei to the income from production a supple mentary income for the producer of the nature^ of: commerciaZ margins. In this way it would have been possible,to avoid over-estimating both^the value of. production and that of home-cpnsumptxoft.. However valid :thi.s objection, r, w«< did not think .that it should prevail. Firstly., because there,(are. some

.products for which; n^fcaown wholesale prices exist: ...this is so wi%; products which are only either tome-consumed or, directly, sold by producers to. the ultimate consumers, .Secondly, because delivery prices to traders are often very low because of rural indebtedness. In this case the sale price is, not really a, production price. The real production price would be higher and from it would have to be deducted the price of the lender's service. On the

other hand, the prices at which producers sell their produce directly to

-consumers'are nearly always close to p-roductxoh prices. Although producers

■ gain oh urban markets from high retail prices - which contain: wide commer- .

;' cial margins - tHe ;exchange rates which ob-araoteriz©: transactions between

; producers on markets in -the- l*ish are close to real■-production"prices because it may validly be supposed that^in these rates the producers - include the 'effort the^have to make to produce the various goods exchanged*' because

also transport and "trade "services" are of the lowest and because these prices do not correspond with but are lower than those on urban markets.

The main "advantage of our definition of production prices is that since home-consumption and home-supply are entered, in^e/accounts on.the

■ basis of production prices whereas comercialized consumptions, are entered in the accounts at the purchase prices paid by ultimate,consumers, the

"margins" include;, only the expenses and incomes, of transporters .and trades-

; men and exclude any;^supplementary" income-earned by^rpducers^ for distribu- . tion services. This;:method: facilitfites analysis of the distributeor^. of

national income by maintaining, the notion of the income, of distribution rather than tha^ of the production of distributive services. it

■4. Gross fixed capital formation ': : '

"only the following are regarded as gross fixed capital formation opera

tions:

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■ .A«'.■ •■- Jfesfh buildings for administrative, industrial and commercial use,

; an<i dwellings in durable materials.,The:building of traditional mud huts is entered in../the accounts, under the current consumption of households. The result is that only the rental value of houses

in durable materials is considered as a productive service*:- The

value of new buildings charged to gross fixed capital formation is their value with vacant possession, i,e., with all electrical and sanitary fittings in place, - ■ ; , " . . ;.

, B.. The "heavy upkeep" of the buildings, i.e., the upkeep of their

outer parts. , , • . . ... ;

- C*: New works and the hc^vy upkeep of engineering works: roads rail-

■ ■■$■: i-., ways,, .bridges, agricultural^engineering .and the like.

D. :Vttfb.k e^rday maintenance of industrial and commercial buildings,

The everyday upkeep'of dwellings, administrative,.buildings and.

'^engineering1works> on'the other hand, is charged to current consump

tion. : ; : ; .

B... Purchases by undertakings and administrative departments of all

means of transport (railway material, aircraft, vehicles, river

boats). Purchases of vehicles "by households are, oh the other hand,

charged to current cc:isumption.

F. Purchases by undertaking and administrative departments o'f all

electrical and mechanical equipitsnt the-unit-value bf:.Vhloh exceeds

;/ 100,000 CFA francs. Exceptionally, purchases of light agricultural

equipment (ploughs, harrows, carts) are also charged to gross ;fixed

capital formation although the unit value of these goods is lower

than 100,000 francs. Household purchases* however,;r whatever their unit'Value are charged to ultimate conBUmption>: and. purchases, by under-

" takings and administrative departments of goods:of a value of ,less than 100,000 francs are charged toithe intermediate,; consumption of under

takings or the final consumption, of administrative departments.

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G.

Study ana research services, "pre-financing" studies (preliminary - studies of engineering works, specifications of industrial equip

ment) and mining and oil research.

5. External trade.

Since our national accounting system is a territorial, accounting system, imports are entered in the accounts CIF at the Kali, frontier, .and exports FOB

at the Mali frontier. As a result of the fact that certain African countries have: joined larger customs unions (Mali, for example, is a member of the for mer French West African States) and as a result of the relatively high inci dence of smuggling (control difficulties, at the land frontiers between the former French West African countries and Ghana and Nigeria) these CIF and FOB prices at the Mali frontier are "artificial". In most cases the prices really charged include entry duties (customs duties and fiscal taxes) levied in West African ports and the Malian tradesman buys imported goods already made avai lable for consumption in other States. The difference between the duties really borne by imports consumed in Mali and the duties "refunded" by the coastal States in accordance with the duty rules in force is entered in our account? as a concealed subsidy from Mali to the coastal States. We consider that this phenomenon, to which attention should be drawn, is encountered in more or less similar circumstances in a large number of land-locked African

States. ..

6. Nomenclature of goods and services

A nomenclature of goods is based on an over-riding criterion, the adop tion of the viewpoint either of the producer (in which case the goods are regrouped according to the nature of the raw materials from .which the goods are produced) or of the consumer (regrouping of goods according to their main

function). In our opinion, the scarcely industrialized African countries should opt for the "consumer" rather than the "producer" point of view. Al though it is advantageous for an industrial country to make..a distinction between leather shoos and plastic shoes and: regroup the latter with other

products of the plastic industry because this classification meets production

Page 13

distinctions which ar,e worthwhile making, such distinctions are, we ^consider, superfluous in the present state.of non-industrialized African economies. We shall choose, therefore, to regroup industrial products according to their

main use* ■ ' '!■■':■■■ ■■

The nomenclature of "services" is confined to modern services: mechani

cal repairs, transport of travellers, housing services (for houses of dura ble materials), services of the liberal professions, studies and research,

hotels, cafes and restaurants, health and medical services, entertainment

services (cinema)* The "traditional" services of sorcerers, tom-tom players,

and ■witches are not regarded as productive any more than religious services,

pro0titut£ortV, etc. Operations for the payment of those services are there

fore regarded as operations entailing the redistribution of the national in come and not as "production" operations*

7• "Distribution margins" and financial services"

Neither commercial services, goods transportation services nor financial services have been included in the balance we have struck between resources and employment. The difference between "the value of employment entered in the accounts at the purchase prices paid by the ultimate consumers and the value of resources entered in the accounts at the sale prices of suppliers constitute the distribution margins* Those margins are, in their turn, bro ken down into indirect taxation, gross transport costs and gross margins of trade*

Financial1 services have be n excluded from the production of various

"branches" in order that the accounts of financial institutions (Banks,

insurance companies, Post Office Savings Banks, Treasury* Savings Banks, etc*

should be shown separately. This distinction is made because of our desire to bring out the role of financial institutions as redistributors of< funds*

It appears to us that this role is worthier of emphasis than the business

nature (search for profit) of these institutions* ; :

6* Table of inter-branch relationships

The advantage of this talile from the point of view of inter-branch

relationships (technical -coefficients) is - under the conditions of a

Page 14

non-industrialized economy - very small. It' is only'a convenient way of

"summarizing1* the "base information obtained from examination "of the balance . of resources and employment and from examination'of "gross distribution

margins".

III. ACCOUNTS OF ECONOMIC'TRANSACTORS

Examination of resources and the use of goods and services .-. which constitutes the basis of our work - supplemented by other information,should make it possible to establish the.accounts of .economic transactors.

Economic transactors are divided into four groups.: enterprises them selves, classified, in sectors and for which, operational, ^prjofcriation and

capital assets accounts have been established; general administrative bodies and households for which appropriation and capital assets accounts have been

drawn upj and the outside world.

!• Nomenclature of economic operations

^ the nomenclature of economic operations; it was found necessary to emphasize^he operations connected with the relations of. Mali's economy with the out.sids, the strategic, importance .of which was obvious to all.. It was for this reason that we found it difficult to. follow any of the nomenclatures in.use in. industrialized, countries.. ..

. ■■■■•■ -Our'nomenclature of economic operations* which is given as an annex,

taked account of this important matter. - ' '

In it we distinguish three categories of operational operations on goods and services (B), distribution operations (r) and financing operations' (f).

Among'the distribution operations a special place has been given to those operations which constitute elements of the external balance, in.particular social contributions paid to organizations managed outside Mali and the bene fits paid to Kalians by those organizations (R21 and R22); the compensatory subsidies paid to foreign undertakings "by their Head Offices (R4IE); and the

compensatory subsidies raid ty the outcide to.loeal-a^miniatrative offices (R4IA),

the earnings, and liquid aGs.ets exported l?y enterprises (R4OC and(B4Ol), the

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Page 15

savings of.households transferred abroad (ft$02) , earnings repatriated ' by trad9smen and.Kalian workers (E4O3) andthe foreign expenses of local"'

agents (H42). ; :. .,-... ■ • ■ ■ ■ : .

Similarly, among the'financing transactions^ special place has teen '.

given to external financing operations (IT), equipment subsidies granted"

by the outside to administrative bodies (iTOA) and equipment subsidies

■ panted to foreign enterprises by their Hoad Offices (HOE) ,'foreign 1 oans ' to administrative bodies (JTIA)' and to enterprises (Frig). "...

2* .. Nomenclature of sectors of activity ....-,

In.our opinion, the nomenclatures of sectors, based on the principal activity; in constant use in co^pl^v economies are of but miWr interest ^- :to primitive, ^industrialized economies. Ifhat is the use of distinguishing

the food industries, the textile industries, the metal industries, the wood industries, etc,, in a country whe^e the sum of industrial production'

represents less than -5. per cenVof the national products?'

To us it seemed much moro useful, in order to obviate the overlapping of sectoral and branch accounts, to regroup enterprises into socially homo-

geneous sectors.

In this way 5 principal sectors are distinguished:' the traditional ' economy, the public .sector,- tho forei^ private seotor, the African private soo.tor and.financial institutions (public dr for sign). ' ' : -:

Beiaviour, and pfarticularly financing behaviour, within each of these groups iB similar. A foreign industrial enterprise which manufactures '' food products is in this respect nearer to a foreign textile enterprise' '' than to- an African private enterprise WMoh produces foodstuffs. This was ' why, we-considered it more advantageous to regroup enterprises according to. their "politico-social" status rather than clarify them according to

their/'main activity", ... :;

- Within each sector thus defined we have distinguished sub-septors "

based on the criterion of the main activity. Thus, there are seven, sub-'

sectors in the fweigs^seotor. transformation industries^ mining and oil '

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research enterprises, public works enterprises, domestic transport enter prises, air transport enterprises, commercial houses, service enterprises "

(hotels, liberal professions, cinemas, etc.). Tho African private sector is

divided into 3 sub—sectors: transporters? tradesmen and service entrepreneurs.

The economic activity of Af^ir.e*"*.3 is regarded, as 'luntraditional" if its principal purpose is to make a pecuniary profit. This is with transporters

("by van and canoe), tradesman and somo service enterprises. On the other hand,

if production is not governed by the rules of capitalist enterprises', 'the.

activity is called "traditional". Ibis is the case with peasants and gra ziers, named transporters and craftsmen. In the case of public enterprises,

special, places have beon given to the Office du Niger (Niger Board), the Re*gio dos chemins de for (Railway Board), and tho French Itfest African Power Board, Other unimportant public enterprises (official printing, Government garages., etc;) have boon regrouped' under one heading. As the public sector

is expected to develop it will be necessary in the future to regroup enter

prises in sub-sectors according to their main activity; Higer Board (agri culture) transport enterprises (railways and Ilalian Transport Board), public works onterprisesp transformation industries, commercial houses (SOMIEX — Mixed Export Company), public service enterprises (Mali power), etc, ,.

3, Accounting of administrative dopartmonts

■In accordance with commonly accoptod rulos, the criterion on which is a transactor is classified in the category of administrative departments or in that of enterprises depends on the nature of its operations, in particular its

resources, qnd not iJ;3 juridical status. Administrative departments are those organisations whose share in the economic life of the country consists in . rendering the community services, vhich, individually, .are .not traded. ■ :

In our accounting we havo made a difference between "local administra tive, departments" and external administrative departments"; It is because in 1959, Mali, at that time the Sudanese Republic , not having attained

complete sovereignty was in tho same condition as the Sudanese administra tive departments, which were corporate bodies coming under tho local public law and financed out of the resources of tho "local budget", and French administrative departments, tho rosourcos of which wero supplied from the

E/CN.14/CP/5

Page 17

PrenctL budgets (State budget and FIDSS), exercised their functions directly

in the territory. As, moreover, at that time the Sudanese Republic formed

pari; of a larger African whole, French West Africa and subsequently the

Federation of Mali, "federal" administrativo departments, which obtained their resources out of the "federal" budget, also exercised their functions in the territory. There will bo no question of making such distinctions in the future since tb.3 Republic of Mali has become a unitary independent

State.

Certain specific aspects of the economic life of Mali are such that the distinction between administrative departments and enterprises in some—

.what arbitrary. The State and the communities assume responsibility for carrying out productive development work which directly profits the sector of the traditional economy. Public, expenditure on these agricultural de velopments might bo considered as equipment subsidies granted by the general

administration to enterprises (of the traditional agricultural sector) in

the same way as the work of the Nigor Board, which is analogous in every way,: is entered in the accounts as an investment of the Niger Board enter prise. .We. have preferred to regard them as investments of the general govern ment 9 since the idea of the capital asset account, as indeed the idea of "enterprise", is unknown in the traditional agricultural sector.

Having made this choice wo have treated tho co—operative and para—

'State organizations which promote rural development (Mutual rural'development societies and the Territorial Economic Action Fund) as administrative de

partments although thoso organizations, which are also responsible for typically administrativo supervisory functions and for executing planning work, also perform commercial functions for the. population and serve as agricultural credit institutions. In our opinion this question, of many- sided para—S1;ate socio-economic organizations arises in more or less similar terms in many African States*-. • ; , , . . .. .. .. .

Finally, we would draw attention to one last matter which is peculiar to the administrative departments of Mali it occurs also in our opinion,

in many inland African States):' the connection between public accounting,

E/CN.14/CP/5

Pago 18

fiscal receipts of which include only the frontier charge*

refunded hy the Coastal States and the economic accounting whxch into consideration all «* duties effeOtiv,l,.*orne^ the reaX

d b ^^"^

Liia, int

imports of the country. This connection maybe made by ^^

"caled ,ubsxdy« to the .out

imports of the y

account of the administrative d8partments, a "concealed

side worXd which offsets unrefunded frontier charges.

4. mstribution of the national income

1 It i8 well Vcnown that it is extremely difficult to pass from economic accounting to a system of social accounting which will give * ^ ^ picture of the distribution of income between the various socxa classe

Le only way in which this can ,e done effectively is through th, detailed ZZ^i the socio-economic condition^ of enterprises (distribution ac

cording to laical status, «t of capital invested, number of waga

earner , et ) supplemented *y precise information on the socio-prcfessicnal

^us of the wooers (nature of wor, performed, professional ^Xiflcat,on, salary spread, etc.). I» «- absence of such information a first approach to this question may ,e made through surveys on income and consumption

axthough these surveys provide poor information on capitaX accumuXation

Phenomena. ; This method is generaXXy used in industrialized cou.tri In the present state of Malian statistics - and this s93ms to he the

'for Larly^allifrican countries ~it seems impossible to try and assess the

ocial diction of income. T.i this is a matter on «*«-££? ^

«., wor^Will have to he done i. the future. Otherwise x im gino that the political authorities will *e ahle to adopt a

1 ftude in this matter, particularly if they have chosen to «or^: o_ -

ist principles. The precise extent of "potential reserves of «cumu^^at n

E/CN/14/CP/5,

Page 19 >""

the mechanism of the distribution of the national income,

5. ; External relations and the operation of the monetary system

There is ritf need to emphasize the strategic role of external relations

in the development mechanism of primitive economies. ■. Tkis role* results:

from the immediacy of the reaction of the: external "balance to internal; strains in.primitive economies :in process of .de-rslopmeni;,. This abruptness of:the -reac

tion ofr::the .external "balance to internal, tensions, strains results .from the relatively important place of imports of raw materials, in .new productions, which is due in turn to the small extent to which tho branches of the local ooonomy are integrated with each other and to the fact that these economies are obliged to import nearly all their capital equipment" goods and to the strong tendency of wage—earners to consume imported goods*

The strategic importance of external relations is fur-pier increased by; the place of foreign, undertakings particularly busihops .houses, ;in tiio economy of Mali, and by the presence of foreign entrepreneurs and rwage- oarnors who account for inflows of private capital in tho form of equipment

subsidies granted by their head offices to tho foreign enterprises, the outflow of the profits of those enterprises, transfers of savings of foreign households, memberships of Mali of larger political bodies and tHo budget ary links this membership.entails.

Tlio stratetic roio of external relations is accentuated when tho pri mitive economy in process of development bolongs as docs Mali to a widor

curroncy area* External dopbndoncy is also accontuatod by tho contralizar-

tion of tho liquid assots of undertakings ani of tho:curroncy and financial

reserves of post office cheque accounts, saviVf.gs" banks and various provident

■r and social -insurance funds, tho -centralization of accounts which character ized ^Treasury opora'tiohs ih: France and in th©^ African countrios of the

franc area, and doalin;gs of the -branches of for ox gn banks which, may supply

ilib: currency needs of tho 'eounti-y either by causing bills; to be rediscpuntod

by tho BCEAO (Contral Bank of: West African States), or by bringing in funds

fci.frpm^thoix.bead offices* All these curroncy flpws which, undor. othor ,.Trflco]adi*i0B.s, dp.no^; j.ntorvene in "fchp; exiiornal balance, constituto hero

Pago 20

important olomorits of the balance of payments. --..-..

To construct tinder thoso- conditions a system., of .national accounts for Mali amount to making up tho regional accounts.of a province tho oconomy of which, is not an intograted whole "but a conglomeration- of transactors whose driving controsaro situated outside the territory.

It is in order to tako "those preoccupations into considoration^iha-fc wo havo given a special placo to external relations in our nomenclature of1

operations. (Soo above).

These external, relations havo ovon bo.en apportioned as botwoen tho

African neighbours of Mali, Franco and tho rest of the woprld. The usefulness of this distribution comes from the fact that somo Fronch colonial enter

prises havo their head office at Dakar or Abidjan which acts as an operational centre for all their formor French Wost African branches:■ those branches do riot'enter into direct economic and financial rol tions with Paris but pass through Dakar or Abidjan.

The distribution of all the headings in the balanco of payments (includ ing those relating to "currency" flows ) between Mali*s African neighbours

and Franco moroly made it possible for our economic accounting to b© brought into line with the accounts of curroncy flows held by the issuing institute.

Currency dealings arq entered in our territorial accounting system and

appear in tho last linos of tho complete economic tablet bank notes (F300), bank deposits and post office cheque accounts (F30l), deposits in tho

Savings Bank (F3O3), bank credits (F3l), various crodits granted ty the ad ministrative departments (F32)»

■ In accordance vith generally accepted rulos, increases in, liquid:,assets

are ontorsd in our. accounts for the use of tho tran.sators who hold them and doorcases as resources of these transators,. in. the same way as in- .croasos in credits are enterod;as resources for the transators receiving

them and1decroasds of credits as uses for those agents*

As the accounts of financial institutions (banks, insurance companies,

savings banks, Treasury, etc.) have bean separated from those of other entor—

Pago 21

prisos, tho whole of the*' o-olumn "Capital Assots account of financial insti tutions" and linos F30 to 32 cons^i.tuto a condensed table of financial opera tions. It will "bo noticed that tho capital assots account of financial institutions is balanced thanks to the balance in the movomonts of "oxported or imported liquid" assets entered in the accounts under R40. The existence of this balance is the vory mark of currency integration* __;_;._.■—

:■ . ... AIWEX: ABRIDGED NOMHTCLATUBE OP .ECONOMIC OPERATIONS

B. Oporations on goods and services R. Distribution operations

HO Fiscality and parafiscality RI Intorosts and insurances

R2 Incomo ^stributod locally

R20 wages,iadonmities and social benefits paid by employers

to wage-^amers- .. p^..

. . : R21 contributions paid to various social insuranco organic;:'.; ion 3

R22 ponsions, relief and fellowships

R22X benefits paid by social insuranco organizations R230 incomo of individual bhtroprehours

R231 incomo of shareholders and'managors of companios with headquarters in Mali."'

R3 balancing subsidies frpm administrativo departments to - ■:■■; ..;- ©ntorjprises ■ -^ .- m ...

R4 oxportod or imported earnings and liquid assets

R4OOs oxportod earnings of ontorprises

R401» oxportod liquid assots of entarprisos.

R4O2: oxportod savings of housoholds R403: oarnings from outsido

R41Ei balancing subsidies of head officos to Kalian branchos of foreign ontorprisos.

Pago 22

R412 balancing subsidios granted, by tho outside administrative

■ " ■"" departments ■" - ' ■ •' ■ ■" 'i-" ■■'■■■.

R42 'bxtornar exponsos ■ : -r-

R5 Gross businoss income

F Financing oporationg ....= , , .

Foi IXimostic solf-financing

FOOi undistributed incomos of companios Srtrth hoadquartcrs in Mali ...: ..." . . '"..,.v^-.-'' ._. ^

F01: financing "by individual entrepreneurs

FO2s savings of housoholds ET: External financing

FlOAs oquipmont subsidios to administrative dopartmonts F1OE: cquipmont subsidies'of •ntorprisos

Fll: oxtdrnal loans

F2t Financing by administrative dopartmbnts

F20: Qiquipmont subsidies from administrative departments to

enterprises F21: equipment loans-

F3: Shprt-torm financial ,.Qporations

F300*. notos .. .. , ■ , , ■

F301: d.oposits (Banks and Post Offico choquo accounts)

F302: savings doposits F31 : tSank credits

F32 : rarious credits of administrativo departments.

*