“Ever Something New” POLITICAL, ECONOMIC FERMENT IN AFRICA

Press, Volume XCIX, Issue 29342, 22 October 1960, Page 12

“Ever Something New” POLITICAL, ECONOMIC FERMENT IN AFRICA

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"LYNCEUS"

* a) tn* "Economist"!

(From IM "BconomUt” InteUigcoc* Unit)

London, October 11.—Seldom has this remark of Pliny, "From Africa ever something new ; been more apposite than it is today. The African continent is living up to its promise of being the problem child of this second half of the twentieth century. The Congo may seem to be settling down in its swamp of chaotic independence—but there are still troubles ahead. The Union of South Africa has just held a referendum in which the answer, determined by a tiny majority, is in favour of becoming a republic. Rhodesia is already torn asunder by the well-authenticated rumours of what the Monckton Report on federation will contain. Ghana is engaged in a major refashioning of its economy to give it a socialist pattern, and certain factions appear to be in favour of nationalising some 200 foreign firms in Ghana, including 70 British. In South Africa the deed is done and it would be wrong to exaggerate its importance. There are precedents for the constitution of republics within the Commonwealth. The real tragedy would be if South Africa were, as a result of this decision, to be ousted from the Commonwealth. But there is every reason to believe that this is not the intention of the present Government. Flight of Capital

The main cause for regret is that at a time when the Union of South Africa is facing so many other and graver problems it should have engaged in this vehement political struggle about an issue which is utterly remote from the reality of the Union’s difficulties. It is a dangerous thing to alter the constitutional fabric, which is the focus of so much loyalty in the country, and to have done this not on the basis of the broad will of the people, but on that of a party political majority, and in a bitter party political fight. The shift to a republic in South Africa must, unfortunately, have the effect of further discouraging the inflow of foreign capital, which had already been reduced to a trickle. Capital is now leaving the country as a result of the racial disturbances earlier this year. The check on investment from Britain will have one important technical result: if South Africa becomes a republic the sterling bonds of its Government will lose the character of a trustee investment which they possess today. Apart from this the British. American, and. more recently. Swiss and German capital on which South African enterprise has in part been dependent, will be more reluctant to make its way to a republic than to a dominion under the Crown. Much of this damage can, however, be averted if South Africa remains a member of the Commonwealth, as it should do. both for its own sake and for that of the Commonwealth as a whole. The prospect of its remaining within the family is in some respects improved by what is now happening in Ghana, a country which had taken the lead in the campaign against allowing South Africa to remain a member of the Commonwealth. Ghana Moves Left

' Fot- some time Ghana has appeared to be moving decidedly leftwards, both in its politics and its economic techniques. That political orientation has been clearly apparent in recent relations between Ghana and the Congo and in the intervention of Ghanaian representatives in the United Nations debates. These few straws in the wind had not, however, prepared the world in general, and Britain in particular, for the shock of the report (since denounced by Dr. Nkrumah) that Ghana was soon to nationalise all firms, whether domestic or foreign, engaged in the import, export, and distributive trades. The disclosure that the Ghanaian Cabinet was planning to “socialise” such enterprises within three years from next May has undoubtedly embarrassed Dr. Nkrumah, ■ who returned from the United Nations last Thursday. In squashing this economic coup. Dr. Nkrumah stated: “I wish to reaffirm beyond doubt that the Government’s economic policy is 'one of building up Ghanaian co-operatives, which must develop. side by side with private enterprise, either overseas or Ghanaian-owned, in a freely competitive manner.” However, whatever internal discomfort has been caused by statements on Ghana’s economy by “unauthorised persons,” the effect of this move must be to handicap Ghana in its efforts to secure foreign capital for the major programme of industrialisation which has recently been launched.

That programme is based on a‘ plan for harnessing the waters of the Volta. This scheme alone is estimated to cost the equivalent of £lOO million. For some time financial negotiations have taken place with Britain and the World Bank to finance this plan. If the West has second thoughts on this matter it could well induce Ghana to turn, as Egypt did. to Russia as provider of the finance required for its hydro-electric power scheme. Without consciously wishing to do so. Ghana, having set its feet on its own "path to socialism,” may find itself inextricably entangled in the net of communism.