Conf6rence of Governors of African Central Banks

..j . ^i:"

-.- i

ECONO,HC COMMISSION FOR AFRICA

Conf6rence of Governors of African Central Banks

Adq'1s Ababa 15-22 Feb;ruary 1966

AFRICAIf PAYMEIfTS UNION

v /"/

< "r;t"

, ",,- Di t

" . / . j , / S r",

, ;;' LIMITED

~jg~:i1j~li~ (':',

11 January 1966 Original: ENGLISH

.~.

s_ ^upm·-

EleN • 14/wp .214 E/CN • 14/JlNA/12

TABLE OF CONTENTS

Paragraphs

,

INTRODUCTION

-s.~ CHAPTER I. lillY A PAYMENTS UNION?

1 - 11

~ CHAPTER II. THE AFRICAN TRADING BACKGROUND

12 - 20

CHAPTER III. THE PROLIFERATION OF BILATERAL

AGREEllliNTS IN AFRICA

21 - 34

CKo.PN:R IV. fIDLTIPLICITY OF EXCHANGE RES-

TRICTIONS

IN

AFRICA

35 - 81

CHAPTER V. THE EXPERIENCE OF THE EUROPEf,N

PAYMENT,S UNION

82 - 135

CHAPTER VI. THE EUROPEAN HONETARY AGREEliillNT

136 - 172

CHAPTER VII. THE CENTRAL AMERICAN CLEARING

HOUSE

173 - 212

CHAPTER VIII. OTHER EXAMPLES OF PAYMENTS UNION

213 -221

CHAPTER IX. THE MORAL OF THESE EXPERIENCES

FOR AFRICA

222 - 249

CHAPTER X. 'THE AFRICAN PAYllliNTS UNION

250 - 278

ANNEX

;,~

'.

:(--

•

- - '--"¥ir-' ^{" ' f --} _.,"'-- ,.,-1''' t'tWF W1..,-·,1 - TXT·... ··---

INTRODUCTION

""Y'" ^,~..J^{' . 0.-} aX'Q --W

E/CN.14/WP.2/4 E/CN.14/AMA/12

•

..

PUrsuant to Resolution 87(V) of the Economic Commission for Africa, Prof'essor R. Triffin. in his ·capiJ,ci ty as' special consultant to:·ECAproduced •_"-'.1,

~.I" 0 . " ' " -•.-.

a re;lort (Annex VI of E/CN.14/262) which Was the subject of study by an Expert Grvup which met in Tangiers from 13-17 January 1964 qrar African Payments

Un:i.~n.·

The recommendations of this group wereoonsidered by :. . . .,_ . . . . .- .. 0

the sixth

se~~ion

^of

the'

Commission which adopted them lout at the:sam,e .' time' asked :theExecut'ive Secretary of ECA "to undertake, as ..part. o.ftl;te

studies

o;;-fh~harmoniza

tion of the programmes for 4ev<>lopip.g "",pdi,llte.ru;ify.,.

• __ :~...,?,0.' •.' - . - -, 0 , : 00 . . . ." . . ' "

ing intra-Afrio'an trade, a study on the possibilities of .ovsr-comfng. obstacles

, , . . ' , .. ' " ' : . 0 0

to progress in these fields resulting from paym"17ts ...diffi9ulties betw.een African oountries taking into cons.idera^tLcri the .pr.opcs al s contained in the report of the Group o fExperts (E/CN.14/262;p-;ras. 23/28) ",elating to the establishment of'a Clearing

Uni~~".Resolution

95(VI) alsoexpres-

t . •.-; ...,~ ,.: ' ^{0 -}

sed "the hopes tha tthose Governments which have not,:\i'."t r"p1ied to the Executive

Secretaryl~inquiry,

or who have. r-apLi.ed i,,90mplete1y, . will

supply to the secretariat of the Commission the particulars for which they Were asked, invited the Executive Secretary to prepare, on the basis of the information thus collected, a complete and accurate survey sho~­

ing their monetary institutions, the difficulties experienced in effect- ing their financial settlements, both between each other and with out- side countries, and the means of remedying the situation, requested the Executive Secretary to communicate a summary of these documents to member States and, at the same time, the results of the inquiry called for by the Commission's resolution 30(111), of 16 February 1961".

Since these other studies were not completed when the matter came up at the Tokyo meeting cf the African ~onetary Authorities of 11-16

September 1964 it was resolved that "the Secretariat of the Economic Commission for Africa, in conjunction with the appropriate Commissions of the Organization of Afrioan Unity and in consultation~withthe rele- vant national, regional and international organizations pursue further the studies called for.by Resolution 95(VI) adopted by the Economic COm- mission for Africa in Addis Ababa in February 1964". These ancillary

i

studies are being actively pursued and another reC[uest has gone out to Gov-einnie'nts inyit:bl.g;'j'n.foim1itioh on thil d1ffiOlll ties

ex.peri.e~"ed

ⁱⁿ

'eff~ctJh:lg

pajments;L"The'compi:eHon' ofa'll thes'e s tJdies 'will be faci-

l itated ifdovernmeflts respund 'iuHito the rEiquElst. '

Meantime this study is a first step .to the,,;r.e-,submissi9n,(9f :I<b.i,s.

important problem called for in Resolution

.131(VII),.Th~j.,~t':\~;

^a.Hempts.

to clarify the issues of a payments union and aclea:r;il)g urrioj; and )-Jndex:",

. - ' " . ' ' - . .' .. . , '- ,'. " ,i " " "0" ,;.,_,

takes .an analysis of' the African background with ,sne.Qial emphaa_{_ c - , : . . " , . - , ' . " - . . . ,} ;.";,,,.,:'1.. " , ' - ' i s on'".

wha'::(

i'e rele~nt

^to

the~a:in

^.issue. Then the previour; ex.I!erienc"j'l with"

-,'~.;.-; .

payments union ar"..exannned and conclude . with the lessons of tUese. ,:

'-. :,

Union as they emerge from these k;llowncases and. these ch,?cpt"rs may with

." r~ _ " ; . . ' . "if. " :"' ': ,cr "

profi t be read first by those inte.rested in the suNsct.",F'inall:r,there.

is a theoretical appendix. which es"!J.ys ..to clari;fyp!le theoretical issues for

th,,~'e who~re~oi;'

alreadY too

fami~ifLr

^{wi t.h}

the~.

: f.:' .rr

.. ..

.J.:. .v •

" :.".'. :>',1

t i '

:

..

ii

.:.=, ' ..1:-.

, ,

. T -'.'~'

•

- fir;' 1

"

E/CN,14!WiE\.gJ,'

:1-.'

E/CNol4/AAAjl2

- , , -" "." ' ' ' ' ,..'

.~.,'.

.--".-,' " lIllY It PAYl\ij:NTS

UN;J:mn '

_".~,·I.;

•

1. lp1l.Ym,,':'ts union

is'~n inte'r'~\a>e'

o·rganizat:i.on for settling

mi:J.t~i

claims to payments in an area

'·C~ 'Yt;

make inc;nvert:i.ble cur'rencies" ' inside the area tl'.ansferable, i.e. to enable a countzry ~ haVing' trade creditaigii.inst country' .:I!.to·use i t ih'payment of a trade debit against coun:.tci

.'SiJ

·Tetnis' mult:1.lateralization of payments may be added nia~

cthl:;r.'j:nft:po'ses" such'aS:'Tiberal:L"ation of'<t.r-ade (1.e~ freedom fi-oin ;

quarredta t·i"" , rerstrictten) ei'Tefuovalof disoriminatory' barriers to . trade,' or ev:efj2,r.8moval:;-'of,,:' a-lT.i:trade':·OO,f:Pi·et's "insi·d.e:] the ar-ea, If' these, o-ther-":'--« .-',;

purposes',w-€r~,;a:dded, the agre"ementto s·ettip·a payments union "Woiild^Ja'l"so' .

become-:;a.:n,rQ:.'greemG,.:ht·:·:f-or:':rnul

tila·tera'iizing'trad'Eh -',

~

:'

i;'<} >~l(^__;,'-r.,-r+~-:^...J .__ , _ - . - - , - ,',-, ' , " ' , " . . .- -:; , r. ""',,~.~ ^>,,;

2..A."p'aym'imtsunion i;',.kes ordini3.riiy the

form'

of aninternat:i.()nEl-l cor- pora te o:rganizaiion of central banks for

cofp~.rat~Ihilli:ii;;'~~;aifI~<Ulc':'

ing of payments deficits and "cahs-less" clearing of payments among the parti!eipating countries. With thepaymonts'union agreement, a.new juri- .. ' dioali,p-.<lrsonali ty thSUnion, oomes:Ln'to existenoe, '('hich interposes

it-

self between·.thede^1.otor nations ahd' the' creditor

loa.

tions. The debtor"

nEl-l;ion~;'exohEl-nge thei'l:<j,ncl.c!btedhess to o\:;,e';:, cbuntries for indebtedness t.o th'FUl1ion~ .: Similar

Iy;

'the credi'tbr na hons .exchange their claims"

El-gainstothe:c 'countries 'fo;:,:olaims"El-gainst the Union•.

to it wluntar:ilY"by' the 'cehtrEl-l·banks cif··the''member countries. The

former is known as compulsory clearing arid the latter -as voluntary 'clear...'·

iug. The payments union ,is always ,able to.grant?t l~ast,automa~iointerim­

credits. to liebtq.r .countries , that .ts, credit ..whiCh the debtor ,po:untry is enti tl",d to.r.eceivoaccording ,to c"rtain,.pre."ar:r;anged rules until the

next. settlement day. ^{,c__ •}

4. '.A cleEl-ring l.in:tondiffersfroma paymerrbs unib:iijhoweve:r';'ln 'that a clearing.uliion.'does ,·not "<ronfer upon debtor countrieS ·an au'toma td.o or

,-:..:..,!"';f",'-atCY" -~-, ~''F'-o"~,,',Xc ""MW:')"--_~ ""'i'-;'£'iB"~'-';'i"~'-;-'o'"',s'-~G"'-""T'H"'-;;J<",'#''i''R'Fi#''''''0£'-Q '",yp".",'"- _~-"''i ' "''''~#;ri,,''':'-;'',' !';""'-"ri"""---"''''cc;''\';'k" ""', ""-"i',- ,=jA, """"",,',"'p"-ot"'E¥'-""-- "li"Wbw*j«~ ..-T'-'-- D

"

E!CN.14.

!wP.2!4

E/CN• 1 4/AJ\IA/l2 Page 2

even discretionary grant of credit for,longer than to i;he next settlement day. II clearing union as such is an international corporate organization of central banks for corpora te'multilateral, chiefiy "oa.sh.Lee a'", clear- ing cf payments among participating countries, The clearing thr9ygh a

':ii.' '· , ,', :,._. ':';';-; " ,

clearing union may, as witha payments urri.o n , either be voluntary or

. i - ,.~ ^{, '} .L

'j"

it may be comp111sory.

5.

Different from these are themul t:i;la teral· .. c omperisa tion groupings';'·_'.

,

of countries. Of the latter tttl'lreare, twq.types.,., T'4ese are the ~ hoc mUltilater,a,lcompensati,cnLgroupingsof mOnei<ary authorities such.as,that:

which.was"Qrganizedby the.. ECE•. [",These clearings arenon,coorporate and'._{> ' - - ''" ' - ' , ' . ." --',~', " , '" ,,} non-auuomatLc • .;: This means that the oompensation;.grouping·.has.no legaL,

perso~litJTl;lut is merely an advisory body. Itlor~ovr, it means tha.t

each separate compensation transactiqI) has tol;le"indivtduaJ:ly:'approved by all parties to the compensation. The group

or an

ev~:r"oha';~;:,;g

ad hoc group. It may also the

S'~;;;e

^co,mtries;

itself mayb,:' . " " " ' , ,<"

e a

^transient", ',,' '>

be a.perma~ent group of

",--,,' ' o.

6 . , An analysis. :in detailofi the ,organization of a.payments union, its mode of operatio,n,: its ef'fec te va.nd problems :;1:0. laterattempted.in .thd.s report. ,It, w:411 exo Iude from consideration CliPilymentsunionwi thout the mel1ns.:,?;f' granting cLear Lng credits. The,argumeuts against. establislJ,.;;

ing auch a ^{l I}s.i mpl

e

c l e ar i ng house" inpr.esent daY: Ai':r'ica .will bep'resenit'ed:' later on. Here are lis tee', the major r-eascne "hy theset,tingup of a·

payments union (with clearing credit f'aci.Lf,tie.s) in an ar-ea , espeoially one wi thin;'onvertible currencies may be advantageous •_.,,'

, - - ' , --

7.

A paymerrt;a union may be. advazrtagecus in any area ina v~r,ie~;I"bf

spegillJ: circumlltances.,

, - . , , , > ' - " , , '

(a)' If

there exists ane'twork of bEa te:ral trade ae;reement~ ^and 'payments agreemen:ts which by virttreof discrimination

bet~e~h

trading pal'tners'contracts and di ver-ts trade compared with the volume and direction of trade in the absenoe of'bilateralism;

a payments union. would, expand andvmu.lt-i Lateralize trade wi thin

,f

ts::e-r~a and permit the removal of.d:!'scrimination between sources of imports and exports.

.'

•

"1 \-"n"(@ "W'W "... "t - ... f@hnt ^{t ., . -}ern j r ""Z-- 'ne .p-

"','

•

.

,

•

'rbt·:rf,tli(O

'iiHatecral agreeme;n),S ,r!,strip,t"trade, and, payment!" rela-

"', " '. ,_. ,,,.... -- " , ' . ' --', . ','X."'. ' , ' i -'.

tiohtr'to oertain'bategori!e.!3 .0ftFansaqt.:ions.,e.g. e xo Iud.e trans- . .,' ,.:J ',,", -- ":: ,:~c.

idciti'bn'ssuOhas' translt, itr.ad,eI' touris t.,travel ,debt servioing,' . , , ' , ,• .', . , , ' '." ' J , . . ".-,'j",.,.

tr,J;hsfer'of'profi ts 'andamor.t;:Lzatio,n, a. l)a;yrne:q.t.13 union oould greatly faoi1it;>.te the extensio~of th~permittedtransaotions

•... ilioJ,ud,ing

,.for

in~tahOe, ~xclla~ge

ar biifagetridisao tions in

·

theiinterf!~~

of more intensive_';":'J

~;ade.

^)"

H "imultaneou.s r"l1loyal of'luanti ta_,;,;J " .... " , . , , " , ~" _ " h ve z-es triotions

(=

I iber-a-, liz"j;;i.on). on trad" wi thin' the .

ar~~' i~' d.~H~ed';

t4E; pa;yri,E,l'\ts

• ' , ' , , , ' , ' ...',:' :...' 'i','.~"

'wiiQnby l"rovi9-itng cr-ed.i,t to the' temporarydefloii oountries

· removes the fear,.9.r tempora,:!:';'! imbaian~esthroU:gif IJ.beraliza-

•

tiol1'

pr"

tr,ade, o,

.,,( ct}J:fther.e .exists .incony",rtibili ty and exchange instability among ,y, the ourre!)Oi.es ,qf t.he .azea and where ·'in consequence iIhport

,.;i:,poliq;i.<>s. <Ire l"rgely based on hardness ofcurrericy considera- J,t;i.'?l1!'1 il;l.R;),p.ce of '!olllparative

co~ts,

'a paYments uMon would

";t\es.;\;ore,co,nyertib;i.+i tyand exchange gUarantee

~i'thin

^{the unicn}

and would endow the cu;rency of

a~count'0ith

a uniform degree of hardness or softness.

"V i

(e) .

If .the.total ,foreign exchange reserves wi thin the area are

·

lQw,,~he

paymerrt s unio):)

all~~s

^a

s~bstanti:a{~ifbnomy

^{in the}

movemerrt of.,.re$erves "as only the

'net'b'~ianoes'()feach

^member

country with another member dount;y of the paydElrits union re- quire to be settled.

"'/

If ~he,·"econol)lieswi til inconvertible currencies are high cost

and,hi~!'c,;price

^a;r:ea'!',

o~causecompeti

t:ton th"bugh imports

',' . ',;:,,;' '" ",1- '

,from:.convert;i.bfe ar-ea does. not exist apayments union by grad1fa,py:reetoring

~;nv'?rtibiii

ty first within the Union area

. " " . . ~',' ,,",.. ":. t"'· ~.

and later also between the Unicn area and the outer world would ultimately e'lualize cost and prices, exc~pt for transport costs,

betw~eri

ihcOll';'e;tibIe'arllf convertible areas.

,-.--

E/cN.14jWP~V4

•

E/CN.14!AMA!1;2

Page 4 .

(g). If inf1;atipn caul3;ing over..,importationand under-expprtation ill :to be atopped

~it4011,t.

cnea ting an import

famin~,

^{the pa,y-}

mentsu,nion b;yp;rovidi,ng international iiquidHy"oan keep

"'"

importsg!Jing until. e;x;ports have a. chance to,grow.

(h) If transit trade inside the area for whioh otherwise favour- itlll",:'oonditions exist is inhibited by iX10911Y~I:;tibility, a pay- ments union would restore opportunities.,for. transit trade, t) Ifincoi!'V'ertibility in the area is the .0au,l3efor ee tab.Li.shLng

subsidi'ai'ybtisinesses in individuali..i1100rlvertib;L~ oountries '1here they would be unecononu c in j;h",·. apsence of inconverti- bility,a payments. uni:on: would make possible a rational loca- tion within the whole area of the pa,ym",nj;s union.

(j)

If dueto'historic circumsta;nces the trading relations of the economies in theiarea are principally with the outer world to

>ehe neglee t· of·ini>ra-area trade, a paymant s union is an

':t indispensable pre..,oondii;j.on .a Long with'!Jlany R4ysical, monetary

-and

organizational'ohanges :t:or establishing a common market (Customs Union or Free Trade Area).

(k) If due to the same historicciroumstances the foreign exchange transactionS within the areaa:r;e traditionally conducted via e:x:'ohange'markets in overseas countries '. ll<pay)"lOnts union can seourEffor the area ·concerned the foreign exchange t;ransactions for intra-area trans£ers.

(1) If there exist temporary or persistent deficit nations and . cz ed.Lt or- na tioris inside the area without· any means of transfer-

ringcredit from one eoonomy.xo the.other, a payments union would organize the grantingof.oreditsfrpm the creditor to the debtor natiOns and the aJioptiQn of m~asuresto correct a

..

•

persistent external imbalance. ^:,'" .

(m)

~f some nations inside the area have large multilateral oredits with c~nvertible currency naticns otitsidethe area and others have deficits with them, the cr-edI tor nations vis~a-vis the

•

•

.

, mer' ^{r _ . ~_rXt@}

,.,"'.o)~i;!ii::ri'\"jL'14.,;coUldlliakeavailable; iiliToug:fr'kJpaj\iiiHl'ts 'union' ) convertible exchange to thJ·<deffc'it'·rra;·iii6.rts

'n'rf4a":'vl'i

^'the

,~:'

.

•

(n) If a country on

aG~ieving

^political

emanci~~~ion.~ish~s

^to

chams<e. some, ,pf....the -,Q.ept;j,nati(J,ps.Qf .8c'\IlOJits ,PJ.'J'OUirpeW·of (

:::.;; gtrr!;:!lfr\~'~',.. ;'_~'.~':/',l.',!..i";,, 1:~:"J',',•• , ,:';'~;."'_'_'-_".'., -- '" .. ".,. - '-',," L ^{, r _ ,"} '-"_7:-'

U'G;~J'.. S r,+m.pf?fff~!r.a .!i'EL.J'3~}itl'~; u,~jLpn,,,iJl, .;f<,.p,itiit a t

't

)the, ge.o~c\'"PR~cal re-direction of trade away from the out er-wor-Jd a>¥1::i:roto the union areao

-..., "

If it is ultimately ~sired,to ~iden:the tr:~nsfer~pi:lityof

f _:\U ::,:::,' " " --.' . ' . ' ,.,-,

currenciee beyond the limits of the initial area where trans- t ^Pc

'Xl}

,.dferabilitY) of~i:t1ot>nv(irU

b1

^{e ,}curr~n6i

e

^{s i}

a'

'Qi-gan'iz~\:j}i:'i1:l'il' p'a~-'

'If.'j lllan(flfi'"il:il!1ion:. elwibIM,s

£116

si;r6n'ger'In'ilIf,l)'!i'i'" ci)un1tfi\is'Cto"eH~"'d Ai'!'alilsferabiH:ty beyond theconfifieii of 'tlie~paym€\ntEl"·i.lrl±dil.,~"o

area , For instance Britain, a member of the EPU, ·i?;i'tEfilaeiF'·

transferabili ty of sterling beyond t!+e,EE.>JJ.and,the,.ste1'liOOi;

;:'\C.C,:~:;'}}J i1·;il"L~,2'·'.:~<,')i:;i; ,'';'.',_\;:.;: _::- '-'''''.:'' " , " ; , . , . . ' .. ' ,;'.. ".'I ',,_'~i,_ ^{. - y , . ,. -:'} "-.'" -'-

,ar,,;a,~9 ino~~q.'l,yirtw"lly

.,,)1 ..•

Ooul'lt:pie~ollt\>Me.:th",{dl':lJ,.a~

hf{ "',-,,,. I."; .':1_' " -

areas.

'.':~::,!).'f' i,"',~:

:<

r'~'_\'~~"!,:., ^.'.."'- ^{-, ~-.~} ,

8.

The

~1;),?;''f,\,;Jl;''l''?;tj;Q.ned

c'J'urI'0ses .and ob ject iV8's' of

·'paym'eM#'iu'i±dn.f

"fie"

'n., ,

1'19il;;

f~+;W'?o~,s

,,,ljl>p.Ei:J;>:!;e q[c

'f~<i",1-i.z[j;tion:~-

,; The Ili;!lJJY.'g

li",ta<5\l'"

S'

'!exper:f~tic'ed' 'l'Ii'i'l

ibn be P9,i¥lJ;i;e,<i.' - - ' ,,' ''',,;;,?,u^'-:~

t

j,b",lp'W.ic

~reve:rdhBle

se' 'the list.'OI"fib

iiiva'tfo!iis: for ~i\tt'i'rl~;")

up a,;il"'YHent)',:,;HWlon ,g:i:1CSJ4'.:a'hbve.;i.nclude s Jiio'lt.1v'r£tidnii'A"llich

,lie. vedp'la':V~<f" ,; ,'f

a major par-t il1.:t.A8'.s.8't:t;.ingllpo;l\,.ac~uaipaymeii't,ftmib'nsW"·'·'; .·,."JI";;",

9.

The folloWing is a list of the multilateral payments agreements which were oonoluded or payments unions 1ulicn were set up after the Seoond World War.

(a) First agreement on Multilateral Compensation drafted by a sub- oommittee of the Committee of European Economic Co-operation and signed in November

1947;

(b) The first Intra-European Payments Agreement

1948/1949;

(e) The Seoond Intra-European Payments Agreement

1949/1950;

(d) The European Payments Union created by agreement of

10

Sept- ember

1950

but actually operating for the preoeding

70

days, i.eo from

1

July

1950;

~,,:, '

E!CN.14!WP.2!4 . E!CN.,l4/AMAfl2>

Page 6 .

•

• ,

(e)

..J._;...'.."~e ~opean,".,,:,. ",.<:-Monetary Agr.eement^{0 ' ' . • •• - - ' ,} .. forc.esip.ce2Q,December_. ·C,:.!. ,-' _.~,.~~.,.-,_. . ' ..'., ' , ' ,

1958;

. ,-.

in

(f) '. The Agreement area Eng the Central American Clearing House signed

, ,', .. f

(g) 'rhe"'Agreement on the EstabTfshment 'of the African Paym12ints Union .·) ..proposed by ths'siignatori:esof the' Casablanca Char'terbn 2 April

-:.~.

(h) The Central American Monetary Union agreement proposed by Central 'Ameritran C'€!'1tral Banks in Mari:h

1964. .,'

^J

..',, ^{)L ' -.,-:f"}

10. In subsequent chapters th.e"d.~stinctivsfeatures of ,all: but. the first three agr\3eIDellrs will be exanri ned,, This. will enable tl1e,]l",oposal for African P1l,Jroent" uni one to be bas:"iq" on the s oL'id exper-Lencerof pr-evd.ous

.", ' N •

payments .up.~Qns. "'

Ll., However;"before embi3ii-king On the discussion of these payfue'rits unions clari ty mus tbEl"ahcieved about: two f'undamerrta L p1'obl~ms.' First,:the nature and effects of bilateral agreements - both trade and payments agreements must be fullY Q.1'lderatood. The desire, t.o overcome the shortcomings of

' - . . ^{: '} ..-.,...^:

such agreem".nt".is the .r<tison dIetreot paymanbs .uni.ona, seccnd , anutlder'- s tanding9f ';;h!' thIf.O:!i;:;,:::;::sa ';:-nginteJ1nationai'claimsJto p<tJlnients<i c.

o,.,,~.' " ',_'^~." ._. ,-:-', , -.^{J . . •...} .. .. " - ' " " .

is fund1l,!I\ental "t,o .t,rre:.p:qderstanding of the payments linion:es,suS'i"mHIS'e ",_{. ',.; c. - _ .-". ;~'}

.~... _ ,

matters a1)13, tak:~.!n' up,in .tne theoretieal annex .to.,this report;

,-,-,_:,",

-'~, ,o. :_

"~;- .... r,-t.~'~o..) .,'

. ", :,'

,.

^{." \}

';\.

.

"

.....:;..

----

--"o. .r :r·,/r.j·

('.)/

1 ..

, ,(JliAETElhcII.,

ron

",-~: r ..:.s

szoran

•

THE _•AFRICAN TRADING BACKGROlOO)

"~c.

l2.Outs;i.de theunlonof South Mrica, thegeograplhdal structure of Africantrad'e- is typified by a' high dependence on outstde ml9:rkets and sources of supply. That' J.s to say, Afridan trade is dEi'~endent ^a.Lmost entirely on OVerseali;,m<\rke,ts for its exports"nd on imports_" " , , " , '<', ,"" " , . . . ' ., " ...., ' -- ' , , , , ' "" ' ' ' ' ; ' . ' ' ' ' " , ' , . ' " .. ',; fromso~ces

ou:t;side"M'riga.,;AJ,rnost the whole of recorclecltr"de (on,the average "round 9()lle:rqent )i,s acoount.ed f Clr,1;ls,thfs ,way.. Onlya,sm"n frac'tion of

recorded trade - the'residue - pertains ,to intra~A:r:rical1tr"de. Of6ourse, there is Bome unrecorded trade but this would "ppear to be more he"vily cd'ridentrated wtthin extstingcustoIris unions or commonmarke£ "reas whoile

m~mbers

share the same currency and in adjacent territories

wh~~¥tranS~

frol1:l!ier'Qart,llr;t?@cdets"tr"di tiollal. ~is is then the first,'outs,tandirlg fact in the ,si;r1;lctw;al'[)alckgro);mdtCl African trade and, payments.: , '

13. ' The nextolitstanding faci'of' this background is that the:traded:l.rec-

tion~

a Lthough 'showing tenderibiesof change .:.. has beena:nd

"5:ei

towaI'ds' coui'itr±eswith cioiNertible curiencfes - the sterling area,the Franoihne arid<the'dbllara:tea'.prinia.'t-ilY:;

~e

earnings of "ny African cotihti:'y'fforii

theseexte~iia;i

lIlarketscah be rea<iiiy converted into other'

ctir:rJ~noies'

"tdththe'excep'£ibn of a still significa.nt portion of

theF~en~h!f~\3.nc

^'

earn1ngsof' ihe'66tintries belonging totheI'ranc zone".

'Th~pro~orti6n

of trade with centrally ;planned economies is on the whole Bmail'thotigh growing"aI\donlYi!>; pqrtion of, ;1ihis is subject to ,bilateral clearing agree- ments. Even with re,corcled d,ntra-African trade thi,S;'",is, in, the main con-«.' dueted in convertiblecurrencies or" through bilateral agr,eements W'hioh.., ,;;

stipula,.te set;tlement"in some convertible currency. ,'Ill this connexion'''C intl)a..-'African trade, can be gr-ouped, illto;three main categories s.s:f'ollows'

(a)'I'Tade among countries belonging to the 'same moneta:r:ya:rea which is' :for allprac'Hcal purposes free,., The principal eiceptiblls ,,' ' , h e r e

wi

:thih' ,their respe d i ve monetary areas'are Mali'and

G!la:~i.

Protective infant industries tariffs exist.

1

•

•

•

(b) Trade between countries,J;lI>tl;JeJ.3ii:l)ging to the same monetary area for whioh expor t, or, :j,mport lioences are required. Once>

.- ,c-'''-',' -,.' ',.': ' .c'\~,,;-,',:' ,, .,: "'";' ^{,-T - _.,-},J~:,:-: ",' '.' ",

the licences ire @'ant'edthe'fi~ces'sa;h'foreignexchange is

aLl.ooated a1,ltomaticalJ,y. Sett1elllenj;sgenf-taJJy;lnvqly@; har-d

:)';J'~::., J.J:;:.':.!','.,i"'·',:~:,:;;,_.-:.~;.,::-: :~!':_:l'.' - _. L .' ;", ~__::_ ".' -, .'C .c. - • . ' - ; , •.'~' ";'... ., .. , '•. '",

currencies and these courrtrLea usuaUy, lim~:tj;hE; S;i?'E;';rp,f the

~_,,\.'T.;;C •. '... " .:',> ~ -,·!:::.::...cv:,~-; £~;:>:~:;::!. ,-' {:u ',""'.:,.L.,.";i.<:,:' '",

deficits to be incurred. in these transactions.

,: s.£:·,'t1:·.~(:r:::<' ,-;,~; -',,"';;;;'-"~-; ,._ ;,).::.,::-.:!.; -<r:::oe :"':,j" _':~:.-r -- '....,:.. \ ' ;

.'

,(q)

",T.!;'a,d"'j11E;'j;wee~· cclintrieSinoti,belonging',;ic:i:the.c"samei' curr-ency :a:t'",aTI!li.Qh·, if? c cndueted under bilaieral clearing,arrangements

with~"oIJl"':!'IwingGredit1?, and generally pJlovmd±ng for settlement' tn, cqp,ve:d:j,bl",,"ourrencies.

n;~,~io~~e~ ofs~~i~>';~~~~~V;7rt,ibil~~y,

^{)hef, e}

^{f o,1\'?} "'~:'

^'JHght

t~;U~~[i~;~"

unimportant.

M~:"~f:rolJl,th",,nElJ<ttwoi"'!!,l.ptersi t "ill be::amply demonstrated'that two 'iCC,

a ther outs tlil.ndi,l(lg "f

",ac

t1U!e«.:Q n ttlE! rGlli,ef C'mapsofAffiioa;·'s·'tradefcare {the

'.;~.-. d.-,.

proliferation of bilateral agreements in, theJ;,egion, "c') jh", qn~,hlil.nd, U

.. " '-YL.C _ " " :·~I,.:; J .r:,~"':,.,::,::"):>.! <::- :.:' ,,' . ' . J " , ' , . i . , · , r · ,,,,t_'~, " , •• ") , •.~• •

and the multiplication of, exchange restricticn« ,in tlle :J.'eg;j.on, en ~he.

,i".::'"L~;1'! ~':: ',-<r :.:.'J,,", ...':...1:.) - ',.-- - ~"".:~'-'" -

other hand. Balance of p,ayments,. difficulties. exper:j,eIjl:),El,<J, ,by", thes,e,,q:q1ln-".

'.'7-if,.~.'::: ~ • - ~'i ~~: ^•,F;;"V: ',,0_' t-,.L '.:::•.t "'~ ,;,J,':' _" -:-~...':,b '-' " .: ,~. ..:'C " ; :••- :••' .,: ',,; , . . ~,' - -, . - 0'_.,~

tries appear to ',stilj)uia te t,he ,mov:e~ept t,o"ardsbila j;era,l,:fi;r'aq." i!7,1i'X'eEl,llleljtJ;',

:'~:". _:~:l. ::,10 '_:i>,~).I " , '. __-.·'~,i:,~ -:..;.1.J.,'.~;· : , , .',.-_.~ _ . " 0 • • • • • ' . _"."..1 • • • . . ., '. ,.

as .i

~~~f1ec~~d,~n

^E/

c~ .

¹⁴

_/STCl~M~)e

y.l" •.. 'J.:h<:.thr" a t

'Ii;?, .

<lis

~iI'/)j;egI!qt,i

^':1;\"Ii of existing group Lngs mayi;end also J,,o,,c,coentua,t,e bilil.tera,::I.",il.~""!D,,,nt,,,,^;-',7"

:'';.~.':.''''' :,:.,_..'.:~.:--(-;_ :'-'.~- ' ' ' , _ :,,~...,;,.F,":"-:.;-.CLL~ ,.:",~ , . , , - , - .. l , . " - , __ ",._",- ..." •.'-, .. _.;,~._,

and; .. " .1.. ,"S?,~, in "ffeqt , tq,=se,duce,ins" ,_ ',J _..', . .~'" _ •.J . _ _ . t,ea~'i!of "t(),il1.CJ:'ea;s"ci~i;J;il.;-Africap. . ' - " ..~.,", .- •••• -_. ..•• , ' . - . , . " , .

,,'t,t,'¥I-Ps;s

•

all the more.

•

. iTiJ .'.^~

...

'-:, .L!

.

^"

,15.,_.' .'.~,.",:MOr~oyep", thl'l"qu~sti.., " . , '- ' .- ' . ~' , - " " " On of pil.YJll;eni!;'gi>'gtje ememt:scttB pO:: Lfidicatio" . ni·d'!"'<"c',;, the_';V9;L~~'b;of,cdcntra~Af~tcan,trade oO'ndLfdted' bilaterally" "c1\jccor(},1'hg·tO"';

onei!,s;t:i"ma,:;t;I'>I,9.ThlY·:,~1Jo",t)'10P@jt'.()".nt,O'f.Tecorded"intra...Afk>i:(lan:'t!'ad!eo~n<

be s",~d,.Jt;O,,~ d@Xlllt b;i:;J.at,e~Jly,,,.:. A.,oo;ns:i:derab1 e' nUIlIber:'Ofh,'tiiMee agreEl';:':!j F

mep,W,~eip,. if,ap:;t;:,;~J;l,OM:r;","t£i:Y8s,stlichiil<a' 't!ios:",' 'be:j;ween.'tho::,.:UkR; and

Dalimn'ey'"

ii the UAR and Guinea or between Ghana andjhri.nea .• ""Th" pr.oJ"ife,ratiol1i of

.ci::,Lc.~\': -:,,:;,,[."; 1;cI,,'3j·-~.r.~<'m i3"II.DG ;::.L!.~L .:..r '",.:-,'.::;f!.rF,~ .-::' - -"'"'-,' ',::.',,5.:".";..<' -~'>"./,!.. " ' . " /

exchange restri9tipns parip?ssu wi tha;prolif\l:r", tip,\),

or

;l>it!1ter",l agree-

;;[1').,[;:;-,; ;)~'C'.' j.i~(r.i::<; ._-1. '::;.'..:._~~':_:_ -'._',;:;:, .. ,.:J."""j. . .--.".' " ...., ... ", "",." ._ . .

ments is also inimical to the stimulatiDll or i!DprOViZment or,.in.tra-African -;D '''~';; 1:1,'3['" ,.' :':,:::cn:.c ~('J,S~,~-SC1':;'~;'> ,-' :,'o"'=:'(::~8~-:"; " ",~,~ .. '.".' ""J.--

trade,

tit'i ^t

..

~'" ' j ~':3..,e(,,:::'«An

E!CN.llJ-!WP .2/4 E!CN.14!AMA!12 Page 9

•

,~ '16. Intra-,African trade is chara terized and affected by alack of com- , 'Itlementa:ri ty inthe"Afrioan eoonomi.as thems~ives.An extremely' narrow

. . ; .

range of commodities ,,(particularly when bonsidered in the light of domestic produce and' ,not of re-exports,

()f

imports )isac tuallyexohanged between 'itl'lYtwo Aferican countries. Each one imports only a few fbddstMfs and SOI!l$,o,ther primary products not' pr-oduced domestically ornct produced

"in suffioi"rj;tquantiti"s. Trade in manufactures

i~'

stillv"ry limited.

Not onJ;y Jstb:is,th" case blj.talso,becau3eof'{t i:',!'a-Mrican trade becomes ~x'tiemely uns table overt,,ime.

.. ^"-;'",;',""~,'",,' " " ' " , " '.., '. . . '

pr-oduo ti'On ,with ·weatl;terconditions may

The f'Luc tua.td'ona of agricultwal

I" " ',- ' j ;

in factriJiietly account:foT this.

But pc'licymaY,'\ilso,bea contrHlJ,ltoryfactor;'

riLUS;

for example;'

any

' " t .

.movemerrt towards-alit&J;'cby'may block the flcw,'from old sources of supply with all its ,ripple effe¢ts'on the 'exports of the autarchic country.

li/'::Thi~'h~'kseri6us'implications

not only for th,e pr-eaerrt s tr-uo ture of

:intr~~Af;'icantrai1e

but for its fU:tu:re development. Thus at present

1Il0~t bi1atel'~l

relations are marked 'by eitremeimbalallce bet';een the 'supply and the 'demand

po~sibi1i~i~sin

^th"

~arkets~f

the,partners in-

volv"d. Consequently th" accumulation of trade defioits 6f a country

,,~ends to be out of harmony ,with total export by a ><fide margin. For examp.l,e in 1958..:.61 Morocco exported to Algeria more, than five tiIlles as muohiJ,6.sh... imported from the latter and three times as much from,the_{, ,,'} "

-;':

,,}test,African Cus toma-Urid.on , Etfiiopia has had a 6 to 1 export surplus

"with the UAR since 1958 and a Ito 3 _irr~''6rt surplus '",i th KenYa.

18. ' The accentuat tonbr- proliferation of bilateralismw.ot;.ld greatly

:'''''Y,'':''',,' ,," '"', ' " .:-- '" '

aggravate' these' structuralimba1tmces and cont rnuous'Ly jiandfcap intra- :Afx1bahtr&'de.' 'Not 6illythat, but this tendency might Lead to a further ,'reductibl1'- 6f intra-Afrioan trade. On the other ha,n,d, the possibility -- of:ina.liY'largebi1a teral balances within Africa coupLed with the possibi- -,' litybf 'f:inancing tliein with clearing oredi t SUPpli"E; by other African

,,"

tradiri~ ~1irtnersco~id

give a significant push to intra-African trade.

And this

i~~

poss:ibility

whi~h

a payments union

~ouldopen

^{up. And}

., planned industria:tizat1on oouidrectify the

lOPsid~dness

in the res- pective balance of paymSrits'position inside Africa and enlarge the opportunities for mutually profitable trade.

•

E!CN.14!WP.Z/4 E/CN.14/AMA/IZ

Page 10

"

19. It is an obvious and generally known fact that Africa is perhaps the most politically fragmented continent. Some of the units, e.g., the Gambia, Rwanda, Burundi or Swaziland are so small that they are hardly viable entities. This political fragmentation is matched 'by a monetary fragmentation. There are some seven monetary zones or areas in the con- tinent each with its own system. They range from the

£

Sterling to the

Fr~

Franc, the Belgian Franc, the US$, the Spanish pesetas, the Portuguese escudo, the Guinea franc, the Mali franc, the Ghana

£

(and now the Ghana cedis), the Nigeria

£,

the South African rand and the Sierra Leone leone, the East African Shillings, the Rhodesia £, the Ethiopian $, the Sudanese £, and Zambia

£

and Malawi

t.

Although the bulk of intra-African trade is conducted through the medium of convertible currencies yet some trade has to be conducted or is being hindered by the fact that it has to be conducted in the others. A payments union with its built-in exchange rate guarantee should have a catalytic effect in this regard and so promote the growth of intra-African trade. It might ultimately help

to rationalize the mosaic into a single unit of account system for the continent.

20. The impression left by the foregoing description of the African trading background could be tempered, however, by the consideration that plans have recently been put forward for industrialization on a broad front and for the promotion of large-scale agricultural and otheracti- vities. There are, for example, the projects for an integrated iron and steel industry in West Africa, for iron and steel in East Africa, for cement and fertilizer plants in East Africa and the development of a meat industry in West Africa.

Th~re

are the proposals for the develop- ment of the Senegal river basin which are under active consideration, there are the proposals too for large-scale communications development, particularly in East, Central and West Africa and of a continental tele- communications network. There are also the proposals for establishing sub-regional common market arrangements and free trade areas in the region. The realization of these projects should carry implications for

the expansion of intra-African trade as well.

•

E/cN ,....14.

I.wp. •2/4

E/cN.14!AMAj:1.2

'~~~gG; 11' ' ..

-;)-,. ','"

CHAPTEJR .. :III. .-- ^", .'.

, , ;.

Tf\EPROLIFERAT+(?J:'J" 9F :BIliA.TEEALAGREElJIENTSiN.l\fI1JCA. . '

.~i

•

2q'J:f±1aMral _:t!.rade between' nat.i.ons red1;lOes, the 'to tal amount ofP<eB"ible . exc'hihlge'

between;th,em.Lessec01iom~cw~'lfarec.q;lles

irito 'Bxisfencethan

-.'

^{. .}

with_. "'~"'--specialic,.tioli~.

·..inder a systemdfm~ltil~:J;eral ^exchange

~is~J~e're~elribered~b:at bi~ateraltraq.ealidp,.yrnen-'tsa;greemehtseltahlish

~ . _.

'~~'~.' ~:~~

^t

~xtr(~i~:

formof'S"'scriminatiohbetween;:l;Tading'Watioi'iEThes e bilaterli\lagreeme nt" .speoify .;for. instance' tlie .. 0bhga.'tii:,'iiii;O gran\import

:,::,>:;,,,,,'·";"',,'7'.:..C:;",C>:,, ".' ,. ,i; -.,' .. ,-,- .. - . , , - - ' . ' , . _ ._ ,,"'>,;:,: -' ,', _c';:' -.:,_~i:;~

li()erices:only to one other natton andalsQ,J;Qgrant tJ;w right tortlll'up

"

'deb-~~,~n:i;;':tOo;ne(rl;~er

na1(io11• Bil",ijeJ:'a:j.isin, ,ther<eeore

idei!lt~9ys'tlie

i '•

~. -

t; ,.

comii;y ofnatiOlls, Eg(momic

deoi.~i;~~

a"l, tc)'/l!!"t,.,herB

,:"i~heri;;;{ho~

^'ail'd

-'~t~h;t ~~ice.to

^{buy are}

';epres~n~ed

^by

~rbi

trary ;Oli tical'ai1di'bllreau'- crat.~c deQisions such as import and export licensing, permissiq;tl;,tobuy f'o,,$iglf .

.,Xqhan~e

^fOT 'oer-tadn purposes;_..

perni:i.~sion t{'tDaii~;~~cCq,~it~f~

_{J .,'!_ ; •.~ .;.,,' .' . . . ,} I

;;.',":

"\,'

^{',-, ,}

22._{•• '} It musta'ls(i. poj; . be.. forgotten that_{. . , ' ,,'t-~' :" ." ' . ." . . ',." . _:'i.e"} _.,0' ,}

~,l;1e

desii'etq,col,'lclJ.1JJ.e .

:bii'la't~~al

agrElements.oomes . from nations. whi.ch_,::~. :..i::-:;:' ;,:;::. . -'." f,t,-: -,-,::. ',.:..~).".-." .

.a:re,e90l:1qJiJi'oally.,eak,~on~6inP~j;:tti

^ve and have inoonvertible currencies" The. de s i.r-e comes al,?of;r'om.ce·ntrq,4;ty pj,iinri$&

~';6nbirii~~;;hleri

^."

iin~o~ts'

and exports' !"re.state acti

v;tiee~;

^.

", ,.-

':;:3:~" In th~$(,on6mi6

e'i"erience' of the world₁ bil!"j;eral.trail,ea'edp'i";y'nients

a~eementi'tiiifae

_{, '} ^..

'tfie:i.;ra:p~ear~nce alw~y.s

_{" '." -:,} ^{in times}_. " ' , : " , ... ,'.i.',: ... .'

.6·~.gro"'teco~cmiC

~' ',. -.'.,,";0: ,", , ..',;·,co_: .:,dU"",.; -

fio~lti~s

and'distress. The firs't big batch of b i.La uez-a.l ago;-e;ementscame

,.' .. .- . '. ,_. '. " - ,_ " . - - .. ' .' " , .'.' ." . ,:: - ;''- /.: .';' ;:"i .'.: .:',. _ ,-! )

.~Rtoe.~ietel:1P~,..•.duririgtAe;greai; .depreesionof .:th<e,193DIS ' .Inlil.te.. _l~37,

~b.~ut

17D b,il!"rteJ:>al"l;llBarihgiuniorls 'were ino'pera:tion., ' , 'C;: •." ' . '< ," , _ " " - . .

A;ft'e~ Wor-ld.W~;

: , .~, ^'.;"",.'t", . ^II

;i!lii"~SP7

wasf.'stpl ravaged .ands11britof^r

:go;b'asarido.foollv~~:tibie

fs>reigl'$~ohange'iano;t~~r l=~e:ba

_: .·· . . .1 ' . :tb}lof'bila.. " " , ; " .. "

'Ge:r!,,~ agTe~ments ~a~~

. ". - - ' , . ' : ' .(";"}:,·v' _',:^ints>

e;x:!s;tence".The0:BankOf, IriteriiatioiJal"settlemepts _~ej;imated in the.17t)l

. ' ' ,- _ , .. _ ',_. ~,^{__ ';.} '.,'<,',,',.: - - -"',_ ': ." __':"'~,:'-'-':,' ~'.-': j:;~;,C'(,J"r·.>T

!nnu,!-l ,R§1!()rt ,0:f.l,1941·:tha~'by":Jui1e1947 about ,209 bi.lp:teralagreementf;!"

- . ' ; __ ~" ^{.':" , -} ,'~:-^{__ ., .:} . : :", '.:' __ ~_ ;'."l',," . , " _~,,,:-<,,,:'_>:,:_,,_ ,.', _-,~!";_: -.;~.'/',~~,H

l,epe :i,llfQJ:'ce. ,Thisappearsto

be

^,!-higl:l

^figu:re

bptis'a,~IiiahP'e:rdem:::

_Cl,gEl qf,:,the. .tCital number- of .agreemenps "

th~t"d~J+a, h~Y<eb~e~.

^iJietis

i.~:b:c~:

..' { ::!.!.:.

f', .;.

..".,":.,

" .! 'I')

, t

24. In 1947 there existed 87 inde;pendent states which could havecohclu- ded 87 x 86=1'7482. bilateral agreemeri'ts. The 200 bilateral payments a-greements are, therefore, only 2,67 per cent of the maximum possible ntinlber 'of bila;·i;eral agreements. In October 1954 there exa s ted over 400 bilateralOpaymentsagreements. Of these, about 235 were between pairs of European: countriesincludingm6re than 90 bet.ween pairs of member-a 6.fthe EUropean payments Uhion,Y l n 1954 the total nulriber of iriiiepel1- dentStiites wa,s 94. I f each One of them had c.onoLuded bilateral agreements wJith all t)le other. in(lj3pen(lentStittes,the total number ofbilatrqralagree- merits would have been 94 x 93 = 8742 •.: Therefore the 400

bilate~~l:pay.,.

ments agreements' were only 4.57 per cent of the total possible biTatet-al , agreemehts.

25., Information·Was collected about bilateral agreements conoluded

by

eaoh of the 52

Afric,Etll

st';' tes or area!' , and the 42 riori.;Afrii:an

6ouhtri~s;

;"ith~hich atl~~stoneA:frican

State had coi!cluded abi;j.ateral treaty in 1961. Altogether there were 107 non-African countries but chly·42 of these had bcJhcluded bilateral treaties with the African countries.

26; The available ·information is summed up in the accompanying ·table.

27.

The first. two rows in the first column of tjle table state the humber of bilateral trade agreement!' and bilateral payments agreements whidh Af,rican States concluded with eaoh other.

28. In the hext three rows of column 1 are stated the number of African c6unt:rieswhich had some sort of stipulation about payments i1' thei:r trade

..

agreement:;!,.. The third row states that there were 9 trade agreements which stipulated. some sbrt of payments procedures. In the fourth row are men....

tioned three countries the trade agreements of which stated payments in . sterling, and in the fifth row there are six courrtr-t.es i.n respedt of

:Wh:i;qg.i;he.trad~ agreements .stipulated payments in dollars. The second coIumn of ,the table give:;! information about the.samefiv~ types of agTee'"

ments or stipulations contained in, treatie'ibetween thep2 African co].l1l-- tries and the 42 non--African countries •.

11

See article by de Looper inIMF Staff Paper, August 1955, page 340.

..

'TQC- S"'irilrE""-m~T-- - ,t31%, r-"?)P , .

..

E/eN. ^14!wt.·.. ~

²

^{1 ..•.} 4'..'

E/CNa4/.AJl/lA1

¹

?': ; .

Page 13 .'

.li.fri~an

countries and other African coun;ries and .,

:Nu~~er

ofbila teral agreelIlen ts concluded

between~l

r: ; .'., I

nbn~African countries

•

~---=~--"-"""',.--'-i'"

.'

Agreements between an

'African country and Both types of " ,.

.'--'-.'

·a

Non-African country

-. .i,

AgreelIlents

T ^{, f}

179

P

", "I'

28 67 95

9

^{18 .'.~}

t,' " ,,,.,'

14 17

154

333

46

108

100

:', '

All agreements Paymen:!;s, -. "

Agreeme'U''fs' only

-"."..,.,~====--

...-=----=-=..,...===-...

^~.,.,

===~~~j~~~====~~======~=====§============2===============:=~~===~===~ ^'"

233

!!1,;;(~y.= ,A ;p,aym,entorclearing agreement concluded. between twocoUlltries;

T" ".':~(

=

. Tra.de a,greellll\l:nt concluded 1Jetweenthe two respective countries.-,.,-.

=, Trade, ,a,greelllent corrtadrring some elements, of a payments agr-eement,•.

This means the absence of the formal trade on payments agreements,

':'butth~spe~ification

in, a trade agreemerrt or some other agree"

ment that all balances are to be settled in transferable Sterlj"

';ing.. ,"":',-

$,'';; ,Means similanly that non formal trade or payments agreement

existed but some contractual obligation was iuforee that .bala-n.;.

ces have to be settled in US$

.. j:: ,Of;' '" t-"

"

! )

E!CN.l.4!WP. 2j4 EjCN.14jAMll.j12 Page 14

29. From the table 'TO obtain t:,O j.nformation tha,t altogether

333

trade or payments 8JEP-':'eemG?'ts and, payments stipu.Lat.i o n» ~'iere. in." force among the

' .." . : .. :. •";,:::r:.:,-. ' " ' . " "

52 African countrIes andhetween tho 52 Mrioan ·ooirifils·s·and·ihe 42 non-

1 "1,."+'_, ",::,.:-'- _._" ::J.!":'

African courrbr-Lec, Ph'G'"+,'o{a"l number of bilateral a:gr'eei~!lenfs-"a:mo'ngthe African countries. "\'18,8 100 and the' tota.l number of "bilateral agr-eemen bs between'

"the'

].'fiicail"~oO"ll!.iE~:':1.e ~3 ^alld the 42 lJ.o':n·_.Afrfcan^{c, , '}

cO"tintri'es "wa's""'233

~-~._

...

30 .. ',... -The-...,:W~t&l. ,num.h2:r""of"bila.teral

.ag:r(;etneidi:b..

,p"IDong·.the· 38 -·:fpee· ,Af-t--iean··,·

countries could havo (sen JS. x 37 o:c 1406 ;:~g:\:'eemen·ts.. The nuniber of

..

actual.·ag.r:-eqi}cn"bg:e.:;QJr8SE,G';::

'-', ',:,':",>;.•,.,::';'''',c. '.',.,.:,., ..;";,,.,,;:;~·,c:·-'.:':<.,..:.,..:,.,....,:.::...•.;

of agr-eemen ts ~was t~J.eI'efore

as ro, pei'CGnt(J,g<, 6.fthe total, POS,sil:11e number-_{. . ... . ," .' . .'. "}

,T:~:':-'.'.. """·,ol· .. '; .,." •."._~",",••.~.",... < , , " . '

100 or 7⁰1 per cent.

1~6~·.

31.

.Similarly,the ..total rnnuber cf. b,Uateral agreements. ·beetw,een :·the·

38 froe African l)o·,mtrieu and the 42 nOl1"Ai'rican countries could have

..'.^-~_...

_-

^._.., -,^._~,.-._...

_

^...".,-"""_...

_--- _

^....~•..

been 38 x 42,.or :.':,O'S, hence the :p~:rcon'Lago of the actual bilateral,c agree- menis'''D"tⁱ

li" ori 1;)" , j 8

iJ':rJca,n iJi)Llnii"les:lDcl tho 4?-"non-African counfries-'

32^(> liVe can notr ma.ko the aame ca.Lcu.Ia tion for the bi La teral.paym~!l~s

agr-eemerrtc...QI' s tipuLa.t...wn5J....o.ll,l;y-~ .!In.e-J.a st ^J:'0\7 of. bhe -.Table·-g,ilOli·s·..that-·

there lTe;re 46 intra·~~.African a.nd 108 110n--A:f'ri-Gan agreements of this kind ..

The:: irit:fa:l....Afr£e:3.n.'>l)jj~:3.t·e:c·at,;:)pc':,jhi~t;l-:it.-~·E',groE;ffib'll'bs and...Li2;tipulatioris expr-ea...

sed' as the: pGrb~.~j;l'tiig.s

"Of" tli.G maiirc--Llrri,'

p(r[~~sj~blB'

iTu.11ber

^r

'of

_agreemeht~ was the bila-eer~l payrrients'agreerrie~ts

0;

expr-ec sed e~G: .n. pGl"'C£~11t;F1.t';8 of~ the;: mo.x.lmum po asi b l o number of such agree·- ments Has 108 ~

I59'6~

with th.,s imil,,:s

]?3l'Centages should be compared as ,a wholein.l947 and 1954,

33.. It j.B c Lear- thct the Gor:l:;J2.lable 'African pe:rcentagBS are

much

higher~

The 200 and 400 b iLatera~ I'~'~"I'.en-c:·; e.g:rscmsnts e xi.sti ng in the world as a whole in 1947 and

195P,

rec'cJ8ctivcly, WGo-'e considered alarmingly many.

One is, therefore, ent:l.tled tD bpsak of the oonpaz-ative proliferation

',',^,

~jg~:i1jr~~~

Page 15

34. As stated at the beginning oi"'this 'chapter, these bilateral agree-

•

theyshqUld be liquidated

as soon as possible. One essential prerequisite for such a Li.qut da ticn

•

' - q . - '

rr.: ..•...,

i. ,""

-» -.r~ ~;.''-

'..;.-:.

.:::'~;

,.

,.

'.' i

"

^{:.: '-.' <}}

'_c, ,

.·,11

;',,..~-

.: ^:

,.' :,'~'" -,",

.:< - . ' "';;'

..., i:

'.~".

. t: '" '·7 -:;. '-r,

.:;'. '-".:

.:'1.t,

t·.:

;', r '

'T,' ,

.•.,

':.:;::

c.: -.""

•

:-;"

...^"." ^",I..--.: ^,"i'

,\..^;

«:

'. v

.J;:

CHAPTER IV.

'. HULTIPLICIT)';0~;)i~4G~GER,BS.TRICTIO:NSIN,A$R:I'GA

35. ~le

Annual Reports on Exohange

R~~tr{~~ions

published by the Inter- national j,[onetal'y Fund state the system of exchange restrictions in force principally in those count~ies which joined the Fund in the year of report- ing. The eleventh to the fourteenth annual reports for the years

1990

to

1963

ccntain reports of the system of eX9hange restrictions in force in the following countries,

36.

~thiopia, Ghana, Ivory Coast, Libya, Morocco, Niger, Nigeria, the

Federation of Rhodesia and Nyasaland, Ruanda-Urundi, Senegal, Sierra Leone, Somalia, South Afrioa, Sudan, To.nganyika, Togo, Tunista, UAR and Upper Volta. This is '" total of twenty oountries, If Rwanda. and Burundi,and Northern Rhodesia, Southern Rhodesia and_{, -} ' " - ' Nyasal~nd- are counted as separate. . ' , ' . . ,-, ' ;

countries, the total number of countries would be 22. This is a large proportion of all the 39 independent Dr nearly independent countries in Afrioa (Southern Rhodesia is regarded as nearly independent). There are no exohange restrictions of any kind in Liberia. There exist eXchange restrictions in the

16

oountries of which the four of the 11W reports referred to above do not contain any surveys of exchange ~estricti6ns~

37. The reasons for the foreign exchange controls in luric~n oQuntries do not differ fun~amentallyfrom the reasons for foreign exohange oontrols elsewhere. The reasons may be divided into two oategories. They are,

(a} monetary and fiscal policy reasons (b} trade policy reasons.

38. These are discussed item by item.

A. Dffonetary and fisca,l policy rea,sons for excha,n/}e control

(a) Shorta,ge of hard currency ea,rnings. This is the most common reason for exchange control. It. applies especially to those African countries which do not produce agricultural and mineral products and petroleum for sale to the wcrld markets.

•