RESTRICTEDFILE COPY Report No. AF-22a

This report was prepared for use within the Bank and its affliated organizations.They do not accept responsibility for its accuracy or completeness. The report maynot be published nor may it be quoted as representing their views.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

THE ECONOMY

OF

UPPER VOLTA

September 22, 1964

Department of OperationsAfrica

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CURRENCY EQUIVALENTS

Unit: Franc de la Communaute FinanciereAfricaine (CFA Franc)

I CFA Franc = U.S. $0. 004247 CPA Francs = U.S. $11 million CFA Francs = U.S. $4, 05150 CFA Francs = 1 French Franc

CONTENTS

Page

Basic Data

Maps I and II

SUMMARY AND CONCLUSIONS

I. INTRODUCTION ............... . . , ... 1

Country and People ................ .1.......... 1The Government ......................... . 2Political Situation ............................ 3

II. ECONOMIC STRUCTURE ............................. 4

Labor, Wages and Salaries . . .................... 4Agriculture 5. ..... ....Cotton ................ 5Groundnuts .............. 6Sheabutter ....... 6Tobacco ............. ... ......... 6Livestock ... 7Forestry 8.. ... 8Fishing ...... .. , , * 8Industry ... 8Communications . ................ . . .. 9Railroad ...... ... . . . .. . . 9Roads .. 9Power and Water ......... ......... .. 10Education ... 10Health . .. 11

III. FINANCIAL STRUCTURE ............................ 12

(1) Monetary Sector ........................... 12(2) Public Finance ............................ 13(3) External Trade and Payments . .16Balance of Payments . . ................. 17Economic Development . . ................. 18

IV. CONCLUSIONS AND RECO14ENIDATIONS .. 20

STATISTICAL APPENDIX

APPENDIX - The extension services of Upper Volta

BASIC DATA

Area: 105,900 square miles; 274.200 square km.

Population: Total 4,400,000 (as of January 1961)

Rate of Growth 2% (1960-1961)Total Non-African Populaticn 3,0CODensity of Total Ponulation 16 per sq. km.

Political Status: Independent since August 5, 1960

M'embership: Bank May 2, 1963IDA May 13, 1963IFC -

Total GDP as of 1959 43.0 billion: (in local currency)170 million: (in 4 equivalent at current

exchange rate)

% of GDP from mining and manufacturing 2%% of GDP from agriculture 58%% of GDP from subsistence 66%Rate of growth of GDP, 1954-1960 at

constant prices 3.76

% of GDP (as of 1959)

Gross Investment 8%Savings 5*Exports 8%Total Government Current ±.evenues 9%Total ivioney Supply (including sight deposits)l)$

Per Capita GDP (as of 1959): $40 at present exchange rate

Currency: CFA Franc

Value in dollars U.S. 40.004Total currency and coin in circulation

(October 30, 1962) 2.990 millionTotal money supply (including sight

deposits) (October 30, 1962) 4.594 millionRelationship to any larger monetary area Part of CFA Franc

zone - Banque Centraledes Etats de l'Afriquede l'Ouest

Public Finances:In million CFA francs

Latest Budget as of 1963:Current Rleceipts 6,691.9Current Zxpenditures 7,992.5Current Surplus or Deficit _1,300.6

Foreign Subsidy to Current Budget 1,762.0Total Budget Investment Expenditure 461.4

Total External Debt (as of December 31, 1S62): 25.0 million US + equiv.Total Annual Debt Service: 1962 0.7 million US i equiv.

Debt Service Ratio as % of Total Exports l0N

Balance of Payments (as of 1962)in million U.S. g

Total Exports (in U.S. $ equiv.) 7.9Total Imports (in U.S. $ equiv.) 34.9

External Assistance (in U.S. $ equiv.)

Since 1960, as of December 31, 1962: in million U.S. $

Source Total MadeAvailable

France 33.3-CEE 26.0U.S. 1.8Germany 3.0Ghana 11.0

Technical Assistance Personnel:

October 1963Source FranceNo.: In administration and general

government 73In teaching 123In production and infrastructure 77Total, including other 337

Foreign Exchange Reserves (as of Nov. 1963): $13 million?!'

IMF Quota and Position (as of Dec. 31, 1963): $ 7.5 millionUndrawn

1/ Including all forms of aid: FAC, budget subsidies, technicalassistance.

2/ Held on behalf of Upper Volta by Central Bank of West AfricanStates.

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FIEBRUARY 1964

IBiRD-1304

SUMI1ARY AND CONCLUSIONS

1. Upper Volta is a poor country. Its development is severely lirm-ited by natural factors. The country is badly located, landlocked, and anaverage distance of 520 miles from the sea. Soils are poor, climatic con-ditions hard. There is a shortage of water and a lack of known mineral re-sources. The most encouraging factor is probably the population itself,which is hard working and relatively well organized.

2. The main economic activity is agriculture. Most of it is of asubsistence nature. Agricultural output is low, and the principal activityof the bulk of Upper Volta's population is devoted to the cultivation offood crops - millet and sorghum - for the subsisternce of the cultivators.Production for the market, mainly cotton, is still at an early stage, butincreasing slowly. Livestock is the principal soarce of wealth and probablyone of the most promising economic activities. Exports of cattle representmore than fifty per cent of total official exports; in addition Upper Voltais the cross-roads for relatively important trade in cattle between ;Ialiand Niger, on the one side, and Ghana and the Ivory Coast, on the otner.

3. So far, the budget has been balanced only withl financial aid fromoutside. Since independence, Upper Volta has had to assume the burden offinancing such new services as foreign representation, defence, and otherservices previously financed by tne former French West African Federation.Government receipts have not increased in proportion to these miiounting ex-penditures. The difficulty in balancing the budget has comDelled the gov-ernment to reduce certain essential serv-ices to a level which is probablyinsufficient for normal maintenance. The balance of payments in recentyears has been favorable to Upper Volta, but only because of important for-eign public capital transfers, primarily French economic aid.

4. Investment has been largely financed with foreign aid; before in-dependence with French aid exclusively, and since independence primarilywith French and Common Market (FED) aid. There has also been, since indeperi-dence, a small anount of U.S. and lWJest German aid. Upper Volta has receiveda relatively large amount of economic assistance. Most of the aid has beenon soft loan terms or outright grants.

5. The external debt is relatively small, but the moderate prospectsof the economy, the low level of internal goverrment revenues and the country'sbudget deficit, generally would make it difficult for Upper Volta to bear theburden of servicing any debt on conventional terms. It seems clear that inter-nal capital formation will not in any sense be adequate for the developmentof the country. External aid will certainly be required on non-conventionalor grant terms.

TEIE ECONOeff OF UPPEPR VOLTA

1. INTRODUCTION

Country and People

1. Upper Volta covers an area of some 105,900 square miles on theAfrican plateau, and is situated in the tropical zone of Wiest Africa. Thecountry is completely landlocked, far frorn the sea. The nearest ports,Abidjan and Takoradi, are eacn 500 miles away. The country is traversedby the three Volta Rivers and by tributaries of the Niger River.

2. The tropical climate is marked by two main seasons, a dry season,of 8 months from November to June, and a rainy season from July to October.Rainfall ranges from an annual avera.g-e of hO inches in the South to lesst'han an annual average of 10 inches in the North and North-East. The ext-reme North and North-East have an arid desert climate. Soils are poor anderoded by the concentrated heavy rainfalls during the wet season. Exceptin the W!est, thae length of the dry season often means exhaustion of watersupplies by the end of the season, and limits the possibilities of profit-able agriculture.

3. Population is estimated to be around 4.4 million including some3,000 Europeans. The average density of population is 40 per square mile,but most of the inhabitants are concentrated in the center of the countryand the South, where the density can attain a rate of 60 per square mile.The Eastern and Northern fringes of the republic are sparsely populated.Ethnically, the population can be divided into three main groups: the Vol-taic group, (comprising the Mossi, Gourounsi, the Bobo and Lobi), the l'liandegroup, and in the North the Peuls, who are nomads. The strongest and mostinfluential sub-group is the Mossi, established in the center of the country,around Ouagadougou, and along the iihite and Red Volta Rivers. The popul-ation is young with 40% being under 15 years of age. The annual rate ofpopulation growth is estimated to be almost 2A. The main urban areas areOuagadougou (63,000 inhabitants), the capital, and Bobo-Lioulasso (45,000inhabitants) which has long been the economic center of the aepublic as aresult of its proximity to both the Ivory Coast and MIali.

4. Probably since the eleventh century the i4ossi people have domin-ated the largest part of the area which now constitutes Upper Volta. TheMossi, as a well-organized and hard-working group, succeeded in maintainingthrough some nine centuries a relatively strong and conesive empire. But,when the French arrived on the scene, the iviossi empire was on the verge offalling apart. A French Protectorabe was established in 1896. After variousadministrative changes, in 1947, Upper Volta was reconstituted as an overseasterritory in the French Union. Since then, the political development of thecountry has been rapid. The loi cadre of 1956 gave the Upper Volta directuniversal suffrage. In 1959,7Upper Volta became an autonomous republic with-in the French Community, and on August 5, 1960 achieved independence.

5. The unity of the country is built around the presence of the strongMossi group. The location of Upper Volta, and its meager resources make itdependent on its relationships with the surrounding countries, mainly those

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to the South. The economic growth of Upper Volta is largely tied to thestrengthening of its links with its neighboring countries. Thus, the Gov-ernment has attempted to build close links with its neighbors, while atthe same time preserving its own independent personality. Along theselines Upper Volta first agreed with Senegal, Sudan (now Mali) and Dahomeyto form the Federation of Mali, but then, along -iith Dalhomey, withdrewshortly thereafter.

Upper Volta then joined with the Ivory Coast, Lahomey, and Nigerto form a loose association: the Conseil de lthntente. The associationprovides for periodic consultations between the chiefs of state of the fourcountries. A "Solidarity Fund" nas been set up to provide economic assist-ance to the less wealthy memaber states. The Fund is supplied by contribu-tions of each country, but in fact is largely financed by the Ivory Coast.

In 1961 Upper Volta entered into negotiations with the Governrmentof Ghana, which led to an agreement providing for the free movement of bothpeople and Droducts, and the abolition of customs barriers. However, therehave been recurring difficulties in implementing the agreement and customscontrols have been re-established along the Ghanaiain-Voltaic border, and avariety of taxes on goods, entering or in transit through the two countries,have come into or remain in effect, although not characterized as customsduties. Differences of political ideology make the relations between Mialiand Upper Volta somewlat distant. Nevertheless, production of eastern ;Maliis exported toward the Ivory Coast through UJpper Volta; in addition, as aconsequence of the dissolution of the Federation of Mali and the break inrelations between Mviali and Senegal, the bulk of the traffic between iMlaliand overseas countries has gone through Ivory Coast and Upper Volta insteadof over t1no railroad from Mali to Dakar. How!ever, wJith the recent resumptionof Mali-Senegalese relations this has partly changed. W;iith Niger, rulationsare good, the two countries being members of the Conseil de l'Lntente.Relations with France remain close; Upper Volta has consistently maintaineda policy of close economic co-operation with France, which is now governedby an Agreement signed in Anril 1961.

The Government

6. Upper Volta has a republican form of government with a presiden-tial system. Legislative power is exercised by the lNational Assembly, com-posed of 75 members, elected for a term of 5 years by direct and universalsuffrage. In addition there is an Economic and Social Council composed of24 members, which only has consultative functions.

The Executive Branch is headed by the President of the Republic,who is elected by nation-wide vote for a term of five years. The Presidentis not responsible to the Assembly. He appoints the ministers to head eachministry. Ministers are solely responsible to him. Mr. Maurice Yameogowas elected President in 1959.

The country is divided into 39 subdivisicns. According to a newlaw these subdivisions will be grouped into 4 departments headed by a pre-fect appointed by the President. In each department there will be a "ConseilDepartmental" which only has consultative power. Each subdivision

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is divided into "collectivites rurales" lieaded by a council which is electedby direct and universal suffrage.

7. Upper Volta has been having difficulties maintaining, staffing andfinancing the structure, which appears to be disproportionate to its needand financial resources. Sore 11,000 civil servants, equal to 0.20; of thetotal population, receive salaries totaling 5,753 million CFA francs, i.e.13p- of GDP. Moreover, the lack of skills maize the management and operationof the administration difficult.

Political "ituation

8. Upper Volta has the familiar African one-party system, witln the"Union Democratique Voltaique, RDA", headed by President Yaneogo, the onlyparty in the country. Before independence, there were multiple parties,the most important of which were: the local section of the "RassemblementDemocratique Africain (RDA)", the party led by ivi. houphouet-Boigny, present-ly President of the Ivory Coast, the "Parti du Rassemblement Africain (FRA)"the local section of the former French iJest African federalist party, led byM1. Leopold Senghor, presently President of Senegal, and the rIlviouvementDemocratique Voltaique (I;iDV)t1, headed by President Yazm~eogo.

9. In the elections of March 1957, the .iDA and the ;DV won almost allseats, and agreed to form. a coalition government under Juezzin Coulibaly,one of President Houphouet-Boigny's closest associates. Some months later,some of the MDV deputies led byr President Yameogo joined the RDA, and lwhenOuezzin Coulibaly died in 1958, Mr. Yameogo was elected Prinme 1'iinister. Inthe elections of 1959 the ADA urder the new title of "Union DerriocratiqueVoltaique_RDA" emerged with practically all of the seats, and PresidentYaw;neogo formed a "homogenous" one-party governriient. In 19u0, the UDV-RDAbecame the only party after the dissolution of the major opposition Party:the "Parti Republicain de la Liberte", the leader of which, Nazi Boni, wventinto exile, first in Banako and then in Dakar. Through the one recognizedparty, which he leads as General Secretary, and througn the Governmunt,which he heads, President Yameogo pla7js the leading role in the couintry'spolitical life.

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II. ECONOMIC STRUCTURE

10. The econony is based almost entirely on traditional agricultureand the raising of livestock. Most agricultural and animal husbandryactivities are of subsistence type, production for the market is of littleimportance. All otner traditional activities are related to agriculturaland pastoral life. Industry is unimportanit.

11. Some attempts have been made to set up the national accounts, butthe lack of reliable statistical data only allows for limited estimates.Although not too much weight should be placed on these estimates, it may beuseful to cite them. They give a broad view of Upper Volta's economy. in1959, Gross Domestic Product was estimated at 42.6 billion CFA francs, i.e.,about U.S. $170 million; on this basis, the GDP per capita is about 10 000CFA francs or U.S. ;40 equivalent - probably the lowest in French speakingAfrica. GDP increased moderately, by about 20% ,rom 1954 to 1959. Takinginto account an increase of about 10% of the population dur-ing the sameperiod, the increase of per capita GDP has been about 10%. About 60% oftotal GDP is subsistence uroduction. Local trade is relatively weak, andthere is a great difference between consumption in rural areas, estimatedat 8;300 CFA francs per annum cr U.S. 033, and consumption in towns, estim-ated at 32,000 CfiA francs per annum or U.S. ,132. The rate of investment islow: about 8% of GDP, a large part of which is being financed by foreign re-sources; ti-Lere was no real increase in the rate of investment over the lastsix years.

Labor, Wages and Salaries

12. ,IMore than 90° of the population derives its livelihood from agri-culture. However, because of the length of the drl season and the shortageof land- there is a widespread underemployment problem in the country.Moreover, the normal agricultural production cycle imposes almost completeinactivity for the greatest part of the year. These factors to a large ex-tent are responsible for the important annual emigration of the Voltaic pop-ulation. Each year about 400,000 men work outside the country, mairly onthe plantations in Ghana and the Ivory Coast. Consequently, almost haLf ofthe adult male population is away from the country much of the year, and athird or more is away all year. These migrant workers have been well receiv-ed in both Ghana and the Ivory Coast. About 100,000 of the 400,000 stay awayfor three to six months, and return for the cultivation periods to Upper Volta.About 200,000 stay away for one to five years, and the rest apparently do notreturn at all. These workers constitute important settlements in certainareas, mainly near Kumasi in Ghana. The remittances of these migrants rep-resent a not negligible part of Upper Volta foreign resources. The incomesof the migrants have been roughly estimated to be some 10 billion CFA francs,of which about 2 billion CFA francs are estimated to be sent to Upper Volta.

13. Permanent wage earners number about 25,000, half of them in publicadministration. In 1961 wages and salaries were estimated at about 7 billionCFA francs. The average daily wage is low, between 25 and 35 CFA francs foran unskilled worker. Salaries and wages in the private sector have remainedstable during the last fifteen years, but have increased markedly in the pub-lic sector.

According to official data, prices have generally increased overthe last six years, especially during 1963. The index of prices (100:1958)

was 140.8 in December 1962, 143 in April 1963, and 148.8 in lHay 1963. Theincrease in prices is due in part to an increase in transportation costs ofimported goods, and in part to an increase in indirect taxes.

Agriculture

14. As already noted, agriculture and cattle raising are the mostimportant sectors of Upper Volta's economy. Agricultural production isestimated to account for about 58% of Gross Dormestic Product. MIany factorscombine to limit the deve7opment of agriculture in Upper Volta. Soil ispoor, except in the south of the country and along the rivers, but in theseareas tsetse fly and other insects do not readily allow settlement. Rain-fall io concentrated in three or four months of the year, and as a result,the periods during which cultivation is possible are very sihort. I4oreover,short dry periods may occur after the first rains in May, in which case itis then necessary to plant twice. Due to the poor quality of the soils andthe lack of manure and fertilizers, extensive fallowing is required to avoidthe exhaustion of the soil. Consequently, the acreage available at any onetime that can be devoted to cultivation is severely limited, and in certainoverpoDulated areas, there is a shortage of cultivable land. Less than2,000,000 ha,. are generally under cultivation. At any one time 6,700,000 ha.are fallow, 2,300,000 ha. are forested and 14,000,000 ha. customarily devotedto cattle raising. In practice, each farmer cultivates about 0.80 ha. (about2 acres) yielding about 400 to 500 kgs. of millet or sorghum. At the begin-ning of the rainy season farmers plant millet or sorghum, also some othercrops such as maize, rice, niebe beans, to meet their family's consumptionneeds, and, then if atmospheric conditions allow enough time, they plantcommercial or cash crops such as cotton or groundnuts. Hence, production ofthese products for the rmarket depends largely on climatic conditions, andremains small.

15. Agricultural production was estimated in 1962 to have been: eorgimum508,000 tons, millet 261,473 tons, maize 78,000 tons, rice 45,000 tons, niebebeans 95,000 tons. This production is entirely used for local consumption,none is marketed. According to official figures it has not been increased,while, with the grovrth of population, consuaption lias been 'ncreasing, so thatsometiaes it has become difficult to meet local needs with the local production.Shortages of food often occur in certain poor areas at the end of the dry seasol.

16. The methods of cultivation remain largely traditional and crude.Land tenure customs as well as other tribal customs make the modernization ofagricultural methods difficult, and little has been done in this direction.Nevertheless, the government is more and more aware of the problem of modern-ization of the methods of cultivation, and various efforts are now under wayto develop the range of activity of extension services. Thie results alreadyreached seem promising enough to encourage the efforts of the government alongthis line. (See Appendix.)

Cotton

17. Cotton production is characterized by the parallel existence of twomain sectors, the traditional and the modern. The traditional sector, inwhich Africans cultivate old types of cotton, has a more or less constant out-put estimated at 2,000 tons per year. Cotton from this sector is sold om thelocal market to local weavers. A high-yielding variety of cotton whichAfricans cultivate in the modern sector with the guidance and assistance of

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the "Compagnie Frangaise des Fibres Textiles" (CFDT), is intended for theexport market. The company advises the peasants, provides them with sel-ected seeds and fertilizers, and buys their production on the basis of pri-ces which are in relation to world market prices. Until recently despitethe efforts of the company, results have not been striking. Productior hasnot increased rapidly. As a practical matter, local weavers offered betterprices than the CFDT and have bought much of the production. In addition,before independence, peasants were reluctant to cultivate cotton under theCFDT scheme for political reasons. Only when the government started to sup-port the CFDT effort, some years ago, and the local demand was saturated,did production of exportable cotton begin to increase. In 19>1152 localcotton production sold by CFDT was 123 tons; in 1962/63 it increased to6,000 tons, and in 1963/64 it is forecast as 8,500 tons. The outlook foroverall cotton production is for an increase over the next few years. TheGovernment has had some success in inducing the expansion of acreage undercotton and with its program of technical assistance to increase the yieldper ha.;taking into account the relatively small quantities of exported cot-ton at the present time, there are no serious problems of marketing.

Groundnuts

18. Groundnuts are cultivated mainly for consumption; the part o° theproduction sold commercially by Upper Volta is very small. The yearly ex-port average has been about 4-5 thousand tons. MIarketing of such small quan-tities does not raise any problems. France agreed to buy 3,000 tons in 1964at a price of FF1050per ton. Despite these low export figures, estimatedproduction has grown greatly over the last few years, increasing accordingto recent estimates, frcm 50,000 tons in 1957, to 113,000 tons in 1962. Re-cent experiments carried out by the French "Institut de Recherches desOleagineux Tropicaux" (I.R.H.O.) suggest that it is possible to increase lo-cal production by relatively simple changes in methods, provided that thepeasant cultivators are properly trained and aided by an appropriate extensionservice. The Government apparently intends to have these services provided,and if it does, it can be expected that production will increase by 50-80%over the next five years. Such an increase in production would make it pos-sible for peasant cultivators to meet their own food needs more readily anddevote more effort to the cultivation of groundnuts for export and of cotton,and possibly other crops.

Sheabutter

19. In fact production is the result of gathering nuts from wild shea-trees. There is no plantation cultivation. Only small quantities of shea-nuts or sheabutter are marketed, and these vary greatly with the cycle ofproduction, which extends over a three-year period. iliarketed productionamounted to 12,000 tons of nuts in 1961, compared with IL1,000 tons in 1960.Production is likely to fjucti::te, but with no definite departure frompresent levels of production.

Tobacco

20. Tobacco is cultivated on about 4,000 ha. located in many differentareas. Production is estimated to be about 1,000 tons. All of the production

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is sold on the traditional market. A small factory is now planned for con-struction in Ouagadougou to make cigarettes, by blending local and foreigntobaccos. Local production of tobacco may increase but not markedly.

Livestock

21. Livestock is the most important economic activity in Upper Volta,and possibly one of the most promising. Livestock represents 50$O of knownexports, and probably exceeds this level, if unregistered traffic acrossthe borders could be computed and taken into account. In addition, UpperVolta is the center of important transit traffic of livestock from lNiger andMali on one side to Ghana and Ivory Coast on the other. According to recentestimates the Voltaic animal population is:

2,000,000 ....... cattle2,750,000 ....... sheep and goats

300,000 ....... donkeys and horses

In 1948 comparable figures were:

1,000,000 .......... cattle1,426,000 .sheep and goats

This represents an increase of 80%, in cattle population and 90,1 in sheepand goat population. The principal reason for the growth is the improvementin herd sanitation due to the consistent effort of the country's sanitaryservices. Generally s?eaking, epidemic diseases have largely diminished,vaccination is widely in use, and as a result no large losses have occuredin recent years. Nevertheless, from the marketing point of view, the herdis still in generally poor condition. Cattle raising has not yet reached acommercial basis, and the full potential of this activity as a source of in-come for the country has not yet been fully realized. Moreover, the neces-sity for long drives over insufficiently serviced areas and routes does notallow producing animals of good quality. Despite efforts already made roads,waterholes and wells, feeding points, and slaughter houses are still insuf-ficient.

22. The rnain problem at present is not to multiply the number of headof cattle, but to increase the rate of production of the herd and to improveits condition and quality. Indeed, owing to tAe lack of land, an absoluteincrease in the number of head of cattle would probably result in over-grazing. Besides the growth of livestock exports, to a large extent, dependson the improvement of the marketed products. Upper Volta has to take intoconsideration the fact that other countries such as iviali and Niger are planningto develop their exports. In addition the main imoorting countries, Ghanaand the Ivory Coast, have plans for increasing their own production of cat-tle. Despite these facts, taking into account the development of the con-sumption in Ghana and the Ivory Coast, it is possible to expect an increasein Upper Volta exports to these countries over the next years, on the con-dition that Upper Volta succeeds in modernizing its methods of breeding andmarketing. The government is well aware of these problems and plans to in-stitute programs to meet them. Efforts have already been Pmade by increasing

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the number of wells, by the extension of stock raising to regions hithertoconsidered unfavorable, and by improving methods of husbandry. However, suchprograms will require a long and sustained effort of education and will notbe easy. Methods of breeding and marketing will have to be modernized, andin the process modify and change the customary habits and interests of thestock owners. U.S. AID is providing assistance to improve cattle productionin the North East, with the objective of increasing the value of cattle pro-duction by 25% during the next few years.

Forestry

23. Upper Volta has no real forest. The country's primary forest wasdestroyed by fires, and in its place there is now a poor type of woodedsavanna. - The forest acreage which remains is estimated to be about2-300,000 ha. The Government is trying to restore the forest over an arealarge enough to supply some timber for internal needs and to improve thecountry's climate. At present timber production is practically non-existent,

Fishing

24. Fishing in pools and rivers is very limited and inefficient. Itprovides about 3,500 tons of fish per year, which is sold entirely for localconsumption. Efforts are being made to develop the production by trainingfishermen in more modern methods of fishing and by developing fish farmling innatural and artificial pools. The Government hopes to increase fish produc-tion from 3,500 tons to 5,100 tons per year over the next five years. Suchan increase would help diminish the shortage of protein in local diets.

Industry

25. Upper Volta has few manufacturing industries. Enterprises whichoperate along modern commercial lines are about 40 in number, of which only3 have more than 100 workers. Most industries are foreign owned and accountfor about 12% of domestic output. The most important industries are con-cerned with the processing of agricultural products, mainly cotton, fats andoils. Known mineral resources are limited. The only mineral deposits ofany importance are too far from existing lines of transportation to be com-mercially exploitable. Generally speaking, the location of Upper Volta f'arfrom the sea, limits the prospects for developing a mining industry. Never-theless, the Government has undertaken a geological survey in the hope offinding commercially-exploitable deoosits of gold or diamonds. BetweenOuagadougou and Bobo-Dioulasso, at Boromo, the "Societe des Nines de Poura"operates a small gold mine, the capacity of which is around 300 kg. of goldpa.giving a value of 70 million CFA francs. Production began in 1961, but thereserves are small, and the production is expected to last only three orfour years.

26. The "Compagnie Fran9aise des Fibres Textiles" has built two cottonginning plants: one in Bobo-Dioulasso, the other in Ouagadougou. The capacityof these two plants is 15,000 tons of cotton per year. The company has had

considerable difficulty in getting enough cotton to use the full capacityof the two plants. In Bobo-Dioulasso there is a fats and oils processingplant with 6,000 tons capacity, and a beer bottling-plant owned by a firmdomiciled in the Ivory Coast. The remaining industry is largely handicraftmanufacturing, of construction material, traditional textiles, and light metalgoods. Cotton w,eaving is the most important of these industr-_es.

27. The present situation is not favorable to the development of in-dustry. The absence of raw materials, the very small local arxket, highcosts of imported materials and equipment, all limit the prospects for theexpansion of industry. The development of agriculture may increase the pur-chasing power of the internal market and pernaps encourage the establishmentof some small manufacturing enterprises. The Government would, however, liketo develop local industry. A rFrench firm is now studying the induscrial pos-sibilities of Upper Volta. In the offing is the construction of a textileplant with German economic aid. The German Government has agreed to furnishthe machinery and personnel, during a >_year period, to train local people.But Upper Volta has to finance the buildings and has run into financial dif-ficulties in attempting to do so. The Government also plans to build, withGerman economic aid a groundnut oil press near Fada N'Gourma. The project isstill under discussion. The Government also contemplated the extension ofthe two cotton ginning plants of C-FS, anticipating an increase in raw cottonproduction. The local bottling company, began the extension of its instal-lations in Bobo-Dioulasso. Other projects in the offing or in process aremainly very small manufacturing or processing projects.

Communications

28. Communications are an important factor in the econol,y of Upper Voltabecause of theremoteness of the country and its role as a transit area betweenMali and Niger, and the Ivory Coast, Ghana and Dahomey.

Railroad

29. The railroad connects Ouagadougou with Bobo-Dioulasso and Abidjan,a distance of 1,146 kms. The railroad is Upper Volta's main link with thesea. The part between Bobo-Dioulasso and Ouagadougou, called the`.Tossi rail-roadc', was built after World War II and was the major French investment inUpper Volta after the War. The railroad is jointly owned by the governmentsof the Ivory Coast and Upper Volta. Traffic has increased markedly in thelast few years, in part, due to the diversion of liali sihipments from Dakar toAbidjan as a consequence of the dissolution of the Federation of lMali. In1961, freight traffic for the whole line was 753,410 tons and 338,360,000tons/k. The traffic originating in or destined for Upper Volta was estimatedat 276,000 tons and 71,590,437 tons/k., i.e. about 1/3 in volume of the totaltraffic. It appears that even without transit transportation to lviali, trafficto and from Upper Volta has also increased since last year.

Roads

30. The road network is important. For reasons already mentioned re-rnotenessfrom the sea and the role of Upper Volta in transit traffic, efforts

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have been made to build a road network which facilitates the links of UpperVolta with neighboring countries. The road system consists of about 16,000kms. of roads, as follows: 2,400 hm. of interstate roads, 3,100 km. of stateroads, 2,700 km. of local roads, and 7,3O km,. of rural paths. Compared withthe size of the population, and the acreage of the country, that neant 1.3km. of roads per 1,000 inhabitants, and 20 km.. of roads per 1,000 kmi. . Thisfairly extensive netwYork by and large provides sufficient geographic coveragefor the present needs of thie country, except in certain regions wihere feederroads are needed for transporting cotton. But its present state requires im-provements. The roads are in poor condition. There are no paved roads. inter-state roads are generally classified as "all-weather roads'1 , but after heavyrains, even on these, traffic can be interrupted for weeks at a time. Theother roads are not classified as "all-weather". The poor condition of theroads makes transportation expensive. Roads tjere apparently often built tostandards which were too low, and has resulted in increasing deterioration.This has meant increasing maintenance costs to keep the roads operational.

Power and Water

31. Water and electric power are distributed in Ouagadougou and Bobo-Dioulasso by the "Societe Africaine d'Electricit6e". The capital of the Soci6tehas been provided by the governments of Niger and Upper Volta, and by theFrench Governmental Caisse Centrale de Cooperation Econotique and private share-holders. Since the company began its activity in 1955, production has increasedby about four-fold in Onagadougou and twice in Bobo-Lioulasso. The productionin 1961 was 5,332,000 Kwh. in Ouagadougou and 4,236,000 KT;h. in Bobo-Dioulasso.Demand is expected to continue to grow. The cost of electricity is about26 CFA francs per Kwh. in Bobo-Dioulasso and 27 CFA francs oer Ki7h. in -Ouagadougou. This is largely due to the high prices of imported gas-oil.The Society has begun the electrification of Uuahigouya. liost of the invest-ments of the Society have been financed by the Caisse Centrale de CooperationEconomique. Projects are now under study for electrification of Koudougou,Dedougoun, Gaoua, Kaya, Dori. The low level of estimated consumption -s ex-pected to make the unit cost high in these sectors. There are two water sup-ply systems, in Ouagadougou and Bobo-Dioulasso, and both are operated by the"Societ6 Africaine d'Llectricit6". iiater consumption has increased three-foldin Guagadougou and doubled in Bobc-Dioulasso since 1955.

Education

32. Educational development is still at a low level. In primary schoolsthe rate of attendance is 7% of the eligible primary-age school population.In 1961, there were 63,977 pupils of about the 900,000 children eligible toattend primary schools. In secondary schools, the situation is more serious.In 1961, there were 1,900 pupils in secondary schools. There are no insti-tutions of higher education. About forty students attend universities inSenegal or in Europe, mainly in France. In the technical field, there are veryfew institutions. Technical schools were attended by 450 pupils in 1961-62.In addition, there are some specialized centers, attended by about 150 p.,upils,and a school for civil servants. The latter school Dreparea civil servantsfor the various echelons of adrdnistration, but, in fact, up to now, civil

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servants for the higher echelons have been recruited from among universitygraduates. Education is provided by thle Governient and by private bodies,mainly Catholic I4issions. The Govermnent allocated 1.2 billion CFA francsfor education in 1963, or about 13/ of the total buidget.

33. Desoite the efforts made to date, muchi remains to be done. Thegeneral level of education is low and tends to limit the development of thecountry. There is a shortage of skilled peoole to fill the low and inter-mediate echelon positions in all sectors of the nationa.l activity, mainly inagriculture and puLblic administration. The government is aware of the needand has formulated plans to meet it, but shortage of f'inancing liijLits theefforts along this line. ror that reason the goverrmnent is trying ani experi-ment in exonanded rural edlucation. The object of this experiment is toprovide children who are not able to attend regular primnary schools some basice7ements of primary education, and some fundamental knowledge in agriculture.The prograin is now urder way; 130 schools, sometimes built lZ the localpopulation are now open. FEDOM has financed another group of these ruralschool building;s.

Health

34. A serious effort has been made to better the health situation inthe country. The main problem remains the control of endemic diseases:sleeping sickness, river blindness, etc. These diseases make certain areasurfit for human habitation, aninal-raising, and cultivation; and theseareas unfo:tunately are mainly along rivers where good soils are to befouLnd. New efforts are nocw being made with the help arid under the management,of the "Organisation de Coordination et de Cooperation pour la Lutte Contreles Crrande Endemnies" (O.C.C.G.E.), an inter-governrnental organisation, tosuppress these diseases in areas along the Volta Rivers.

III. FINANCIAL STRUCTURE

1. Monetary Sector

35. The monetary sector is small. The barking siystem is closelylinked to France. Upper Volta is member of the Frarc zone and, togetherwith Dahonmey, Ivory Coast, Mauritania, Niger and Senegal, a memberof the "Unicn tMonetaire Guest Africaine". This Union was created by theagreement of May 12, 1962 between France and these African countries.According to this agreelwent, member countries have a comaon currency witha common cent-al Bank, the "Banque Centrale des Etats de I'Afrique del1Oaust". The common currency, CFA francs, is fully convertible intoFrench francs at a fixed rate, at present 1 French 7ranc for 50 CFA francs.This rate can be charged only by the agreement of all member countries. Inorder to assure full convertibility between the two currencies, the CentralBank has a credit accolnt in French Francs with the French Treasury calledthe "Compte d'operation". Thus, the Bank always has at its disposal FienchFrancs which can be drawn to meet all transfers from its monetary zone tocountries outside the zone. In cases of deficit in this account, Francecan request the Bank to increase its rediscolnt rate and lcwer its redis-count ceiling. The new agreement gives the six members a fair degree ofautonomy in the formulation of credit policy. Comnittees established ineach of the member countries set ceilings for rediscounting by local banksat the Central Bank within global quotas for the whole Union area. In add-ition the Goverrnent may it--lf borrow at short term from the Central Bankwithin certain limits.

36. The banking system is composed of:

1) The Central Bank;

2) The "Banque Nationale de Developpement Economiqueet Social";

3) Two commercial banks which are both branches ofFrench banks: "Banque de l'Afrique Occidentale"(B.A.O.) and "Banque Nationale pour le Commerceet l'Industrie"(BNCI);

4) The French Government's "Caisse Centrale de Co-operation Economique".

The "Banque Nationale de Developpement Economique et Social" is a publicagency in which the Governrnent and the French "Caisse Centrale de Cooper-ation Economique" are shareholders. It specializes in nousing, smallindustrial equipment loans, and agricultural loans. Sin-ce its establish-ment in 1957 up to December 1962 the "Banque Nationale de beveloppement"has extended:

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Agriculture 138 loans 164 million CFA francsTrade 22 loans 146 million CFA francsHousing 459 loans 293 mldlion CFA francsSmall equipment 3,479 loans 1012 million CFA francs

Total 4,098 loans 707 million CFA francs

of which: long term loans 181 million CIA francsmedium term loans 212 million CFA f'rancsshort term loans 314 million CPA francs

Dofaults of repayments are few. As of December 1962 the amount of sums dueand still unpaid was about 40 of the total amount of instalments. The Govern-ment plans to use this Bank to promote industrial development. So far, therole of the Bank in the industrial development field has been limited mainlybecause of the lack of projects. The Caisse Centrale de Cooperation Econcniqulehas made certain loans relating to the development of economy, primarily inthe power sector.

37. At the end of 1962, total deposits in the country were 2,700 mil-lion CFA francs, compared with 2,505 million at the end of 1961. At the endof 1962 the amount of credit was extended to 1.852 mi'lion CIA f'rancs, com-pared with 1,738 million at the end of 1961. Almost all of these creditsare short term for financing exports and imports axid their amo-nt followsthe trade cycle of agricultural production, usually reachning a peak inDecember-January. At the end of 1962 the distribution of the credits was asfollows: short tern, credits 1,588 million CFA francs, long term 264 miillionC'A francs, mainly for one enterprise.

2. Public Finance

38. Comparing the budgets of the last five years is a somewhnzat haz-ardous undertaking as independence brought many important changes in thefinancial structure of the country. The development of lpublic expenditureand revenue is shown in the table below:

in million CFA francs

actual budget estimate

1959 1960 1961 1962 1963

Current expenditure 4,714.8 5,238.9 6,025.3 8,054.5 7,992.5Current revenue 4,059.0 5,232.0 5,757.0 7,223.7 6,691.9Current budget deficit -655.8 -6.9 -268.3 -830.8 -1,300Co6Capital expenditure

in budget 467.8 942.2 1,492.3 347.2 461.4Total deficit -1 123.6 -949.1 -1,760.6 -1,178o0 -1 762.0Foreign aid in budget 1,135.9 811.4 3,050.0 1,178.0 1, 762.0

oI' which- Subsidies 1,135.9 811.4 270.0 500.0 1,000.0- Fonds de Solidarite

(ConaeiI de l'Entente) - 180.0 678.0 762.0,ean from Ghana - - 2,50000 - -

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39. Government Expenditure increased from 5.1 billion CFA francs in1959 to 8.f---illiozu CP'A francs in 1503. Budreted canital expenditure con-sists of government investment, primarilyv in the admi-nistrative and socialsectors: school buildings, administrative buildings, etc. in fact, budgetedcaoital expenditure represents only a small part of total government invest-ment. In addition to budgeted capital expenditure, the govertnment financesmost investment outside the budget with financial aid from public f'oreignsources: "1Fonds Europeen de Developpement Econorijique", French "Fonds d'Aideet de Cooperationt, U.S. AID, etc. These investments are finatnced directlyby f'oreign aid, without local financing, and hence are not included in thebudget.

4o. To a great extent, the increase in current expenditure can beattributed to t'ie fact t.iat, with its indeperndence, UJpper Volta had to assumethe cost of gcvernmental functions.which were theretofore finanrced by 'ranceand the Federation of French Vdest Africa, or whlic1h did not previously exist,e.g. cost of diplomatic representation allowances. Lhus, the present levelof current expenditure more nearly reflects the operations of govermgentservices tharn the previous level in budgets before indenendence. France,however, continues to contribute to the cost of recurrent expenises by payingthe salaries of Frencn technical assistance personnel (about 300 people, manyof wt:om occupy operating or quasi-operating positions), and by paying a partof the expenditure relating to certain services such as air nal'igntion facil-ities, meteorology, and radio communuications. The amount of these e:-pendi-tures, which are not included in the budget, is currently esti.aated to beabout 1,000 million CrA francs, or 1/5 of present Voltaic buget expenditures.In 1963 13.4%o of tne total budgeted expenditures wwas for education (comoaredwith 12.5", in 1960), 9.5% for health (11.9% in 1960) 1.8%L for foreign affairs(1.1 ;in 1960), 8.5,. for army (5 in 1960 and 13% in 1962).

41. The total external public debt outstanding at present is 6 3, bil-lion CPA francs or U.3. ;P25 million. In addition, to this amount, Germanyhas agreed to extencd a credit totalin- U.S. .3,000,000 for various indust-rial projects, but owing to the lack of prepared projects, this line ofcredit has not vet been drawn down, and probably will not be drawn down sig-nificantl2r for some time. S3ix:y 2er cent of tne outstanding debt is withFrance, in the form of long term loans. Due to the fact that Upper Voltahas received fo2eign aid mainly itl the forim of grants, the governmient hassucceeded in limiting the debt burden of the country. Debt service paymenzsbudgeted for 1963 were 263 million CPA francs, representing 31O of governmientexlpenditure or 4h of current government revenue, excluding f'oreign publicloans and grants. in 1962, the Voltaic external public debt service paymentswere equal to 9.Q5% of total expor't earnings. This percentage is expected toincrease over t1he next few years. lndeed Upper Volta is due to begin reim-bursement of the loan of 2,000,000 Ghanaian b extended by Ghana in 1961.This loan was used mainly for financing the government current expendituresand some capital expenditures. It is repayable in 15 years since 1961 wTitha grace period of 5 years. The rate of interest is 2-1/2%. At the sametime, Ghana also granted a loan of L2,000,000 without interest as an advancefor the sums due as refund of import duties levied in Ghiana on products ship-ped to Upper Volta.

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42. Go-rernmentreceipts increased from 4.1 billion CFA francs in 1958to 8.4 billion in i963. The ma,or increase took olace irn 1961 with the set-ting up, for the first time, of Vo7taic customs a7ong its borders with theIvory Coast and the other former French west Africa.n territories. ijith Ghana,according to the agreement witi this ccuntry, cuistom dut.ies and taxes on in-portations and exportations were suppressed in 1961 except a smiall "taxe destatistique'". But, as already meationed, there have Leers d-ifficulties in im-plementing the agreemernt and in 1962 Upper Volta re-established tile differenttaxes but not the customs duties. This imoosition o.' customs resulted in achange in the structure of government revenue, with indirect taxes beconincthe major so- rce of7 revenue. The following table ;ives a creak down of gov-ernment revenue since 1959:

Govern.ment Revenues

(in inillion CFA francs)

actual budgetary estiirates

1959 1960 1961 1962 1963

lDirect taxes 1,125 1,253 1,455 1,339 1,317Indirect taxes 810 1752 3,276 3,907 4,523Other taxes 97 147 200 115 128Miscellaneous 2,026 2,080 2,362 723Total from - -

domestic sources 4,G58 5,232 5,757 7,723 6,691

Foreign aid 1,135 811 3,050 678 1,762

GRAND TOTAL 5,193 6,O43 8,807 8,401 8,L53

hore and more, government revenue has relied on indirect taxes, includingcustom duties. The percentage of indirect taxes in the total of domnest.icrevenue, excluding foreign aid had increased from 19jo in 19j9, to 67;, in 1963.During the same period direct taxes increased slowly up to 1961, and sincethen have decreased. The ihcrease of indirect taxes has been mainl>t due tothe setting up of a customs system. Up to 1961, custom control on productsimported from outside the French monetary zone took place waainly in Abidjan.Taxes on products declared as imports for Upper Volta were levied in Abidjanand subsequentlyr reimbursed to Upper Volta. But, in practice, many, if notmost of the imports destined for Upper Volta were imported througr. Abidjanwithout arny clear indication of their final destination. Consequently, theimport duties received by Upper Volta were smaller than what would have beentne case if all the products shipped to Upper Volta had been declared as im-ports for Upper Volta. In addition to obtaining a large share of importduties uider the newly, imposed customs, there has also been an increase inthe rate of custom duties. Thus, as in many other African countries, inUpper Volta taxes on imports are the main source of governmental revenue,the low level of income not allowin;- for a large return from direct taxes onincome.

43. Foreign aid has consisted mainly of subsidies granted to help thecountry balarice its ordinary budget. Before indepe,nde.nce these subsidieswere granted by the French l;Jgest Airican Federation. Tney were on the decre-ase until 1960. dince then Tith irdenendence Upper Volta has received in-cre2sing Euosidies directly from France and the Fonds de Solidarite de l11n-tente. In 1962, the French subsidy amounted to 5o0 millionl CFPA franics, andin 1963, it reached 1000 million CPA francs. In addition, as already men-tioned, certain public expeniditures are paid for directly by France, theamount of vuhich has been estimated at about 1,000 million CFA irancs. Theamount of sums said bv the "Ponds de colidarite de l'Entente" was estimatedto be 678 million CEA francs in 1962 and 762 millicn CFA francs in 1963.

3. External Trdde and Payments

44. Because of the importance of subsistence consumption in the countrythe economic activity of Upper Volta is riot st:ongly tied to foreign trade.Exoorts are equal only to a small part of' local corsnmption, and the pro--portion of imported goods in local consumption remains srrail. Inforrmationon foreign trade is not easily available or reliable, As ment-oned above,until recently (1961) there were no customs between the different territor-iesof the French i;est Africarn Federation, and therefore there is no data avail-able with respect to inter-state trade. In addition, custom duties on pro-ducts imoorted from outside the Federation were paid in Abidjan and suose-quently a share was paid over to TUpper Volta; hence, correspon.Cin6 importdata for this period is essentiallv an estimate derived from the share ofcustoms paid to Upper Volta. Since the establishment of a custom ts'rstemimport-exoort data is more reliable, although still incomplete. ,fe stat-istics still do not record all transactions with neighboring 2ount,Les, asa sign ficant part of the export of cattle into Ghana and the Ivory Coast,goes across the borders without being controlled. Tnere is also an .nrec-orded movement both ways of other commodities across these borders.

h5. According to official statistics, the foreign trade of Urpper vtcltahas been as follows:

Officially Recordod Foreign T.ade

(millions CPA francs)

Year Imports F-T orTt Balance

19`7 1,612 897 -7151958 1,799 1,6Co +11959 2,071 1,121 -9501960 2,027 1,064 -9631961 7,00d 881 -6 1231962 8,5b9 1,9)4 -- 6,621963 (6 mon-ths) 4,404 1,184 n*3,220

46. ImDorts increased from 1Y612 million CFA francs in 1957, to 8,569million CFA francs in 1962. This sudden increase in imports was largelystatistical and accounted for by the custom control imposed along the Voltaicborders. The real increase was undoubtedly considerably smaller. Half of

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the imports come from Frarnce. The other main supplier countries are theIvory Coast (10S), Senegal (5,l) and Ghana (5io). Upper Volta relies on fo;'-eign sunplies for all industrial goods and for most construction material.Food products account for 237o of the total imports, but consist mainly ofitermis consumed by the Euronean population in the country, Consanption goodsrenresent 40' of imlports, of which a large part is textiles.

47. According to official statistics, exports increased from &97 mil-lion CFA francs in 1957, to 1,944 in 1962. iMlost of the exports go to Ghanaand the Ivory Coast. Exports to then.e countries represent nmore tLan 60, oftotal ex'orts. Livestock is thie cointry's principal export. It re?resentsabout half of total exports. according to official statistics, aid probablyequals even more if unofficial exports were to be taken into consideration.These exports consist entirely of cattle and stieep sold on the hoof. Ghanabuys about two-thirds of this livestock export, and Ivory Coast, Togo andDahcmey the rest. Duruing the 'as-t five years these exp>orts have increasedfrom a level of55 million CFA francs to the 1°62 le;rel of 819.3 million CEAfrancs. The increase has been continuous, and the outlook, as already noted,probably is for the trend to continue. The othier exports, groundnuts, shea-nuts, cotton and gold are all relatively small.

Balance of nayments

48. The balance of payments statistics established by the governmentcovers only transactions with countries outside the Franc zone. The lack ofdata concerning monetary relations inside oi the i ranc zone does not permitfilling in this gap. Moreover, even with resnect to foreign ccuntries out-side the Franc zone, certain transactuions are not taken into consideration.In theory, all export and import transactions must oe authorized by the"Office des changes", and customs must require tinis authlorization beforeallowing a product to enter or leave the country. But, in pract_ce, certainexports and imports, such as cattle, even though controlled by the custcm -services, are exported and imported without this author-ization. So, even ifthese transactions are taken into accournt in the customs statistics; -theyfrequently have not been included in the statistics concernin- the balanceof payments. W4ith respect to relations with countries outside the .ranc zone,official data for 1962 reveals a deficit in the balance of payments, beforetaking account of foreign public assistance, arisin> primarily from a deficitin foreign trade (0.3 billion CPA francs in 1962) and from the new governmentexpenditures in foreign courntries (0.1 billion CPA francs in 1962). Thedeficit T7as, however, more than compensated for by aid from fore-ign countriesand international organizations (0.9 billion CFA francs in 1962). Thus, thebalance of payments with countries outside the Franc zone showed an excess infavor of Upper Volta in 1962 of about 0.5 billion CIPA francs. Iithin theFranc zone, because of the structure of the CFA zone, it is not nossible tcobtain figares with respect to capital flows inside the zone. Nevertheless,it appears from various unofficial estimates that tnere is probably an im-portant flow, of capital transfers from Upper Volta by private companies andindividuals to France, which is more than compensated for, however, by publi_transfers from the French Governaent of various types of special expenditures(financial aid, and payment for services), and therefore helps to financeUpper Volta's import surplus. Basically, Upper Volta remains dependent on

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foreign aid, and is likely to ccntinue to do so for some time to come becauseof the slow growth of its economy and becaase of the limited outlook for in-creases in foreign trade.

Economic Development

49. Since the last war, France through the "Fonds d1investissementspour le developpement economique et social" (FIDES) has made important in-vestments in infrastructure and agriculture in Upper Volta: roads. railroads,schools, health services, and irrigation. F"IDES nas financed virtually allpublic development expenditare in the country. Upper Volta s con-tributionto the FIDES financial program was largely finariced by soft loans from theFrench "Caisse Centrale de Coooeration Economirique". At the termination ofFIDES aid in 1959, the total of this aid was estimated at 3,50J million CFAfrancs, of which investments in agriculture represented 32/, infrastructureL8% (principally the PIossi Railroad), education 12', and health 85.. In add-ition, since 1950 Upper Volta has received soft loans from Caisse Centralede Cooperation Economique estimated at 0.9 billion CFia francs.

50. After independence, the government of Uiper Volta carried out in-vestment proiects with foreign financial aid, but these projects were not inany sense part of a more general 'lan or progranm, and were generally .barriedout on an ad hoc basis, wi-thout reference to the overall needs of the econoim,y.Severai years ago the government prepared, with the aid of irench advisors,a five-year plan wniich was to have been applied over the periods 1963 to 1967.This plan, however, was never Dut into effect. Instead a temporary plan wasnrenared and instituted for the tTwo years 1963 and 1964. This plan is mainlya list of projects gathered from the five-year ;:lan after taking into consiaer-ation the possibilities of financing and managing thema. The total amount ofinvestments is estimated to be about 13 billion CFA francs of which LlA isfor agricultural projects and l1?7 is for industrial projects. The governmentexpects during these two years to prepare a new plan which will be more real-ist-ic in the view of the govermnent tnan the earlier plan which was discardedpartly on the ground of its being unrealistic. Due to the lack of trainedpersonnel, tile government is likely to have difficulties in drawing up a newplan, and in any event, suibsequently in carrying it out. The government lackstrained and skilled staff to carry out a devel9pment plan, and speciflca.lyto develop projects to translate the ;plan into real-it:r, and for submnission tonossible financing institutions. This is one of the principal bottlenecks toeconomic grocrth in the country.

51. IUp to now, financing of government investment has been no problemsince France and, more recently, t'-e European Economic Comnmunity, have madeavailable substantial amounts.

52. French aid to Upper Volta takes various forms: financing certainservices, subsidi g the budget, providing technical assistance and finan-cing certain investment projects. The technical assistance and the finan-cing of investment rrojects are charnelled through the "Fonds d'Aide et deCooperation " (FAC). The total amount of gran-t funds committed bv the FACsince 1959, the date at which it began its operations, througn December 31,1962, was 3,945 million CFA francs or about U.S. 16 million. Out of this

i19-

amount 760 mnillion CFA francs is for general stuiles, 1,598 million CFAfrancs for agriculture, 34 million 0hA francs for infrastructure (raii-road 350, teecomrlmications 230), 843 irillion CPA francs for social equip-ment (health lS91, education 385). All of this aid has not yet been drawn

The European Economic Community has agreed to finance eleven projects. Theamount of its aid sinceT until December 1962 is about U.S. $P26 mlillionin the form of grants, out of this almount U.S. A10.3 million is for invest-ments in hydraulic facilities for agriculture, U.S 0.5 million for soilconservation, U.S. 33.7 million for health, U.S. P2.1 million for schoolbuildings, and U.S. ;J3.4 million for water sunply.

U.S. has financed various projects totaling U.S. 41,887.000 all in the formof grants.

Germany has agreed to extend a 12.000.00C D.M., or U.S. $3 million, loan forfinancing various indLstrial projects. This loan would be repayable in 12years at interest rate of 3%. At the present tine cer-tain projects are understudy but none of themi. have as yet been initiated. The whole loan is stillundisbursed.

The total of foreign aid for investment since independence, notincluding the Ghanaian loans, has been about U.S. -$i5 million.

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IV. CONCLUSIONS AND REC01Q11ENDATIONS

53. With a GDP of U.S. 40 equivalent per capita, Upper Volta is pro-bably the poorest country of West Africa. The 'ack of resources, the harshnatural environment, and the isolation of the country are formidable factorswhich make changing the basically subsistence character of its economy ex-tremely difficult, and hinder a rapid growth of its economy.

54. There are, however, some limited possibilities for development ofthe economy, even though this may be a slow process. Certain products havesome promise, primarily cotton and livestock. The population is, on thewhole, hard wOrk*C and should be able to increase its output, with appropri-ate training and technical assistance. Taking into consideration the gener-ally low yields of present agricultural production, the application of sim-ple, known techniques should result in higher yields. This should be possibleto achieve with the help of an improved extension service. The government isaware of these possibilities, and is trying to develop the role and qualityof the already existing extension services. lHence, there is some reason toassume that the present trend of increasing exports will continue over thenext few years. It is only through the development of agriculture that thenational income can be significantly increased in the near future; and thuslay the basis for expansion in other sectors. The first priority is, andthe government appreciates this, in stimulating agricultural productionthrough strengthening all agricultural services, and particularly the exten-sion services. The government is also laying stress on the improvement ofthe road system in connection with the development ofagricultural productionand certain agricultural areas.

55. The financial situation of the government is a cause for concern.Prior to independence the budget of Upper Volta was unbalanced and neededexternal budget support. Upper Volta has made some efforts to increase itslocal revenues, has cut some governmental salaries (including those of uiin-isters), but because of the limitations of the 0ituation in the country, thegovernment has not been able to mobilize enough resources to miieet all itscurrent needs. Internal funds available for investment are limited. Hence,Upper Volta has relied heavily on foreign aid for financing its developmentprojects. So far it has received a large amount of foreign aid. If UpperVolta is to have much chance of development, however, it is likely that itwill continue to need foreign aid for many years to come. Even though foreignaid has been mainly in the form of grants or soft loans, the burden of theexternal debt is not unimportant, and payments to service it take up 4ho ofcurrent budgetary revenues and 8;g of export earnings. It is clear that withits difficulty in meeting current expenditure as it is, Upper Volta will notbe able to increase the burden of its external debt very much. To the extentit requires external financing it should, as much as possible, be in the formof grants or on unconventional terms.

STATISTICAL APMENDIX

Table 1Ko.

Agricultural Production.. . *,**, 00 . , . 0 Go .. o 1

Government Revenues ............ * * .. 09.000 0-0 0OO 2

Government Expenditures 00 O 0 9 0 C .O C o O 3 3

Fore!ign Trade - Irmorts by Coiui2odit-'es - Inmportsby Mionetary Zones400* 00** 0 0000 0 00 0000000000 h

Exports by Commodities - Exports by Eionebary Zones....... 5

Balance of Payments iathi Countries 3utoide thie F'rancZone.. 4 O * 0* 0 00 0 0000 00 00 0 0000 -00£ 0000 o 0 e e * 6

Public Debt OutstandJng as of December 31, 1962......... 7

Gross Domestic Product, 1 8

Table 1

A%giCuj tural Production

1959 1960 1961 1962 1963Products Production Production Production Production Production

in tons in tons in tons in tons in tons

Sorghuim 425,0GO 555,996 410,725 508,343 520,000

Millet 161,000 293,171 194,90c 261,473 265,000

Maize 70,0co 92,008 74,985 78,306 45,000

Rice 28,600 30,834 20,971 45,220 277000

Niebe 65,000 95,739 41,230 95,768 105,000

Yams 42,000 58,318 22,530 39,820 -

Groundnuts 5c,oCo 95,720 110,350 112,910 125,0C0

Cotton(marketedby CFDT) 2,900 3,900 4,800 6, 000 8,500

Source: Ministere de l'Agriculture.

Table 2

Government Revenues

in nillion CF, Frarncs

1961 1962(a) 1963(a)

Poll tax 965.9 898,0 770,0

General income tax 352.2 34o,8 431.5

Other direct taxes 137e3 99°9 116,1

Total direct taxes 1,455.4 I-338.7 .L3].7Q6

Import duties 1,033.4 1,160.0 1,630,0

Excise tax on con-sum,ption 2,179.3 2,656.5 2,799.2

Ecoort duties 40.0 10.0 8~0

Other indirect taxes 14.6 80.7 5J,8

Tctal indirect. taxes 3,275.3 RsS07.2 Lb,523.0

Other taxes 2003 ll5.5 127,7

Income from propertiesand services -,76.6 Oo.8 6l8 8

Mi.scellaneous 449,4 1,46h-5 10.8

A. Total from doresticsourcea 3 75. 7 023 6,6 _ 9e. 9

r, ForeiRn re,, i;rc3 3-°5°"° 1,178.0 L6 .

of which:- Subsidies (270.0) (5000) (1,000.0)- Fonds de Sclidarit6

de 1'Entente (180.0) (678 0) (762.0)- Loans from Ghana (2S6o0.o)

Total 8,07.O Lo .7 8h5639

(a) Budgetary estimates.

Source: Iinisterc des Fincnces.

Table 3

Government Expenditures

in million CFA Francs

1961 1962(a) 1963((a)

External Public Debt 133.4 168,6 263.2

Current Expenditures 5,131.1 6,445.6 6,161.0of which:

Legislature 118.5 218.1 186,4General Government 287.3 230.2 240.6Interior 894.0 859.9 821.9Defense 12.0 1,138.3 7202Finances 347.0 325.2 370.0Public Works 118.0 113.2 117.2Education 947.0 1,203.4 1,133.7Health 922.1 880.5 8C3.4Foreign Affairs 90.4 181.2 151 4National Economy 375.6 409.6 333 7Posts and Telegraph 217.0 259.8 221.1Others 305.4 235.2 560.4Common expenditure 496.8 391.0 501.0

Subsidies to localentities and localgovernment 760.8 1,420.3 1,568.3

A. Total CurrentExpenditure 6 8,05435 7,99225

B. Equipment 1,492.3 347.2 461.4

Total 7.6 8 401.7 8,453.9

(a) Budgetary estimates.

Source: Minist6re des Finances.

Table 4

Foreign Trade

in million CFA francs

1959 1960 1961 1962

Irmports 2,071 2,027 7,004 8,569

Exports 1,121 161 881 1 9 J4

Balance -950 -963 -6,123 4,625

I. Imports by Commodities

1959 % 1960 % 3961 % 1962 %

Foodstuffs, bev- months)era-es, tobacco 221,0 (11) 237.0 (12) 1,281.7 (18) 1,8430.. (23)

Energy 29.5 ( 1) 149.5 (7) 312.2 (5) 265.2 ( 3)

Raw material andintermediategoods 246.0 (12) 295.5 (14) 1,0490o (15) )

)2,582.7 (33)Manufactured 491.5 (2L) 382.5 (19) 1;067.2 (15) )

Consumptiongoods 1,080.0 (52) 963.0 (48) 3,293.9 (47) _ 92-8 (4i1)

Total 2,0710 2,027.5 7,004h0 7,883.8

I:;iports by Monetary Zones

1959 % 1960 % 1961 % 1962 %(11

months)Zone Franc 1,648 (80) 1,496 (74) 4h,872 (69) 5,570 (70)

of which:

France (1,557) (1,444) (4,204) (4,010)

Sterling Area 251 (12) 281 (1h) 1,510 (22) 853.5 (11)of which:

Ghana n.a. n.a. (1,315) (412)

Others 172 ( 8) 250 ('2) 622 ( 9) ,L)L59tl (19)

Total 2,071 2.027 7,oo4 7,883.0Source -.Idnisttre de l'Econonie liationalo.

Table 5

II. Exports- UOv ollodities

in million CFA francs

1959 % 1960 1961 / 1962 %(11

months)Livestock 555.0 (50) 752.0 (71) 527.0 (60) 819.8 (48)

Fish 240.0 (21) 117.0 (11) 140 ( -) 13M8 ( 1)

Sheanut 21.0 ( 2) 1140O (11) 61.O ( 6) 118.9 ( 7)

Groundmnt 58e0 ( 5) 19.0 ( 2) 7eO ( 1) 27.8 ( 2)

Cotton - - - 38.2 ( 2)

Gold - 700 ( 8) 249.0 (114)

Others 2147,0 (22) 62.0 ( 5) 212,0 (25) !i& 5 (26)

Total 11121.0 11064,0 831e0 1,706..0

Exporjs bv 1ionetary Zoiles

1959 % 1960 /0 1961 % 1962 a

Franc Zone 18140 (i6) 20.0 ( 2) 129.6 (15) 806c4 (47)of wxhich:

Ivory Coast n.a. n.a. (18.5) (387e9)

Sterling Zone 828.0 (74) 891.0 (84) 681.2 (77) 707,4 (42)of which:

Ghana - (680c6) (696.6)

Others 112.0 (10) i53,0 (14) 70.2 ( 8) 192.2 (11)

Total 1,121.0 1,064.0 881.0 1,706.0

Source: iIinistAre de i'Economie Nationale.

Table 6

Balance of PaOents with CounatriesOuts_de the Franc Zone

in million CFY, Francs

1961 1 9 62laecei2ts Payrents Rece- t3 Payments

Merchandise 137.0 75'1.9 235.3 523-9

Freight, Insurance 03 20.2 0.1 13.8

Travel 2103 •.2 2.8 1,5

Incorne from Capital - 3.8 - 1-7

Income from Labor 1.0 1o 009 L.1

Other Services 1.4 1.7 6.2 29.4

Central Government - 53869 1.7 98.9

Foreign Governrient 1,3!46,8 - 61.0 31,3

Public Transfers 276.7 - 764h1 0c5

Private Transfers 82.4 0.3 111.6 0.1

Long-term Capital 0.7 - -

Shlort-term Capital 10.1 - 18.2 ii.6

1P977r7 1,323.6 1,201.9 70C.8

t t

+S54.1 - 493e1

Source: iliniste"re de l'Economile ITationlale.

Table 7

Public Debt %hltstnndinw as of December 31, 1962

in millionin million d.ollar

1. To FRANCE CFA francs ecuivalent

a. Caisse Centrale de Cooperation Economique,on behalf of FIDES 2,808 5 1l. 4

of which part of the debt cf"Federation de l'AOF"with FIDES 2,785.7Repayment in 40 years - rate ofinterest 1%

b. Caisoe Centrale de Cooperation Econormiquie 271L0 1.1

3,079.5 12.5

2. To CHANA

a. Loan of L2,000,000 1,852.2 7.5Repayment in lF5years - rate ofinterest 2-1/2%

b. Advance of L2 000 000 1,321.7 5.4Advance without interest reDayableby means of taxes levied by Ghanaon products imported by Upper Voltathrough Ghana

3,)'73.9 12.9

3. To GERMAI1Y - 48.2 0.2

4. To OTHER LENDERS 43.8 0.2

TOTAL FXTERNAL DEBT 6,345,4 25.9

5. OTHER DEBT (inside the country) 428.8 1.6

GRAND TOTAL 6,783.0 27.5

Upper Volta has also guaranteed loans in the amount of 627 nillionCFA francs - or U.S. 4$12.5 million - made by Caisse Centrale de CooperationEconomnique to indeoendent or quasi-independent public agencies and local com-munities. It therefore has a contirgent liability in the aforementionedamount in case oi default by the borrowing agencies or coanimities.

1/ Not included a new loan of 12.000.000 D.M. undrawn for the moment.

Table 8

Gross Domestic Product, 195)9

In billion % of total Use of In billion S of' totalResources CFA resources resources C2'4 resources

Private consump-Agriculture 20.8 46 tion 39.5 88

Industry,handicraft,electricpow-er 2.9 7

Public consurnp-Construction 5.2 12 tion 1.4 3

Services 2,6 6

Commercial Gross invest-margins 7.3 16 ment 3.6 9

Total GDP 38g8

Imports 9.4

Exports 3.7

Import sur-plus 5,7 13

Total avail-able re-sources 4.5 44,5

1/ Those estimates were worked out by the team of experts which prepared thefive-year plan.

APPENDIX

The Extension Services in Upper Volta

Among the various factors which harper the economic developmentof Upper Volta, one of them is the use of primitive rethods of cualtivation.Talcing into account the studies made, particularly in Upper Volta by variousresearch organizations, it appears that the application of simple but, moremodern methods could result in higher yields. That implies the establishmentof extension services to train cultivators in these new methods. The Govern-ment of Upper Vfolta is well aware of this problemn and is p7annin, to developthe efforts made along this line. The results of the experiments alreadymade seema promising and justifir the Government's efforts.

Although the Government has developed a small extensicn Eerviceof its owm it largely relies on tlhe services of foreign, imainly French.organizations, among them the "Compagnie FranQaise pour le D6veloppement desFibres Textiles" (CFD3T), thae T lnstitut de Rechercl.es pour les Huiles etOleagineux" (ILHO), the "Societe d'Assistance Technique et de Cr6di-t SocialOutre-Xer" (.SAEC). A team of Israelis is training the population in theregion of Bobo Lioulasso, but this experiment is only at a preliminary stage.Fnally certain small experiments are under way by various private organii-ations, mainly Christian lYissions. We now consider briefly some of tneseexperiments.

A. Copagnie Fran gaise pour le De'veboppement des Fibras_Textiles CFDT

This company was established in 1951 to promote cotton cultiv-ation. For a long time the results have not been striking. Farmers werereluctant to cultivate cot-ton for political reasons. The sm.all quanltitiesproduced were sold mainly to local weavers who sometimes offered a betterprice than the company could offer for exports. Only when the aovernimentstarted to support the CFFT effort did the exportable production begin toincrease.

The CFDT gives advice to the farmers, sells them selected seeds,and buys their production, assumes responsibility for the transportation ofthe cotton from the local market to the cotton ginning plants in Cuagadougoaand Bobo Dioulasso, and then exports the lint. The CFDT appoinbs six ad-iserswho each have charge of supervising 7,000 ha. Under these six advisers aresixty extension workers. JZach of them has charge of supervising about 700 ha.

In 1963-64 the acreage cultivated for cotton under the super-vision of CFEUIf was estimated at 40.,000 ha., increasing from 26,000 ha. duaringthe preceding year. The methods of cultivation recommended by the CFDT arestudied in liaison with the "Institut de Recherches Cotonnieres Tropical"(IRCT), which is a research institute specializing in the problen.s of cottoncultivation. Thanks to these methods, the yield per ha., which has beenroughly 200 kilos per ha., has increased in certain sectors supervised byCFDT to 1200-1500 kilos per ha. The CFDT hopes to increase the productionover the coming five years to 27,C00 tons of cotton seed without increasingthe acreage cultivated. The cost of this experiment is estimlated at about12 million CWA francs for the period 1963-1964.

-2-

B. Institut de Recherches pour ls lYuiles et Oleagineulx Tropiraw- 'TRHO)

This organization was establishr.d in 1950 to study shea treecultivation, and also groundrnut cultivation in Upper Vo'lta. Since lY59, theIERO lias tried to trairi faripre w-lth the use of iaore mAdern nmethods of cul-tivation developed by IR-10. In 1960 the IRHO tra4ned l65 farmers in theregion of Banfora, so-uth of Bobo Dioulasso; in 1963 it trained about 2,500.Its objective is to increase tne groadcnut rieldl ner ha, from 4Oo to l,,00kgs. 't he results are encouraging. IfdiO sells to the farmers selected seedsand buys their oroduction. For th-s job thle IidHO has appcinted two directors,one in Banfora, the other in Dedougou. under these directors there aresupervisors (one for 200o4Co trained peasants). 2hese supervisors navetheir priaary school degree and are traine.d on the sotot. In adlditior. thlerOare local extension workers who advise farmers in the village where they live.These workers do not receive a salary but receive a bonus calculated on thebase of the yield o.f production in their sectors.

C. Societ6 d;Assistance Techniaue et de Cr6dit Social, Datre-r4er (SATEC)

The purpose of this society is to advise and train small pro-ducers: farmers, fishe,men, and craftsmen. It wras established in 1961, nearOuagadougou. Contrary to the practice of "CFDT" or "IRTIo" the SATLC doesnot limit its action to one crop: "cotton" or "g-rovndnuts".

After a careful study of the local conditions, 5ATEC began itsprogram, which is based on a ce;'tain number of techniques.

a) 'The use at the outset of a relatively high numberof extension workers to establish a close contactwith the peasants and to train local extensionworkers;

b) The establishment of small cooperatives in order tofacilitate training and to help the peasant to obtainresources for buying small agricultural implements;and

c) The carrying out of a work program with the followingcharacteristics:

1st year - use of a donkey-drawn hoe and row planting;2nd vear - use of fertilizer and dressed seeds;3rd year - improvement and extension of farm crops

with first steps towards introducingmanure in field cultivation; and

hth year - use of donkey-drawn cart and introductionof mixed farming.

In 1962, 32 cooperatives were established with 455 members. In163 there were 148 cooperatives with 1,908 members. In 1964 SATEC hopesthat there will be 4,500 members in about 600 cooperatives. If we coiaparethe results of this program for the first two years, the results are, accord-ing tc very rough estimates, the following:

a) The area cultivated by each oeasant increased batween1962 and 1963 frorti an average of 1.5 ha. to 2.6 ha.

b) The yie'd per ha. incr--ased by about 50S during thesame period.

For the functions above-mentior.ed the personnel employ-ed bySATEC has been: about 220 agents in 1964, of which 100 were trainees. Tilecost of this program will be about 150 million CFA francs in 1964.

Taking irnto conisideration the rather promising resialts of theseexperiments, the Government is pianning to extend the activity of these organ-izat ons. lt decided to assign certain areas to each organizat_on, with eachorganization being the only extension serv-ce in its zone. Iowever, Rhh andCPLDT vrill be s8pervisinr- all cultivation, and not only groundnuts (for IRIIO)and cotton (for CPDT). In addition, thle Governmient is plar,nirg to assignother areas to the same organizations ard to otiier organizationn. Thoobjective of the Government is to train at the end cf the coming five yearsthe population of 1,500 villages out of the apprcxilimately 7,000 vi-llages ofUpper Volta.