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African Advancement in Commerce and Industry

  • D. S. Pearson

Extract

The problem of African advancement has an essentially political side. Since the discussion here is concerned with the overtly economic aspects of localisation, specific mention must be made at the outset of its political implications, especially of the possibility of conflict between economic and political aims. For example, it may well happen that at a given stage of economic development, a country would maximise its rate of economic growth by leaning heavily on imports of capital and skilled personnel, but that this policy is unacceptable on political grounds. Under these circumstances, the country's leaders must decide whether to subordinate economic to political welfare, or vice versa. Economic analysis is not able to offer any guidance on how this decision should be made: except to ensure that if political considerations are to be regarded as paramount, the full economic cost of a politically-oriented decision is known and appreciated.

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Page 232 note 1 Nurkse, Ragnar, Problems of Capital Formation in Under-Developed Countries (Oxford, 1953), ch. 3.

Page 232 note 2 For a discussion of the effects of economic development on the demand for imports, see United Nations, Processes and Problems of Industrialization in Under-Developed Countries (New York, 1955), ch. 5.

Page 234 note 1 The ‘replacement ratio’ is the number of local employees divided by the number of expatriate employees whom they replace. The ‘labour-cost’ ratio is the total labour cost (wages plus cost of fringe benefits) of an expatriate employee divided by the total cost of a local employee who wholly or partially replaces him. More formally, if we define the ‘stimulus to localise’ (S) as the labour-cost ratio (C) divided by the replacement ratio (R), then S= C/R, and localisation is only profitable if S > I. This does not necessarily imply that localisation will take place if S > I, or that it will not take place if S < I, since factors other than short-run profits will influence the final decision.

Page 234 note 2 I.e. as more experience is gained by local employees, R will tend to fall more rapidly than C. This assumes an elastic supply of educated local personnel, an assumption which is valid for only some of the developing countries. If, on the other hand, the supply of educated local personnel is inelastic, C may fall more rapidly than R to the extent that localisation may reduce short-run profits.

Page 235 note 1 In Southern Rhodesia the opposite effect is caused by the dislike evinced by some nonAfrican customers of dealing with African employees.

Page 236 note 1 For a detailed study of manpower problems, see Harbison, Frederick and Myers, Charles A., Education, Manpower and Economic Growth: strategies of human resource development (New York, 1964); also Hunter, Guy, Education for a Developing Region: a study in East Africa (London 1963), and U.C.R.N. Department of Economics, The Requirements and Supplies of High Level Manpower in Northern Rhodesia, 1961–1970 (Salisbury, 1964), and a similar study for Southern Rhodesia.

Page 236 note 2 Both points of view were given full expression at the 1964 Cambridge University summer conference; cf. Robinson, Ronald (ed.), Industrialisation in Developing Countries (Cambridge, 1965).

Page 237 note 1 Geiger, Theodore and Armstrong, Winifred, The Development of African Private Enterprise (Washington, 1964), pp. 40–1.

Page 237 note 2 Brandenburg, Frank, The Development of Latin American Private Enterprise (Washington, 1964).

Page 238 note 1 This view has been criticised by Professor J. C. Mitchell and other sociologists on the grounds that it does not adequately reflect the findings of sociological research. The comments in the two works quoted above are clearly open to this criticism, but they do adequately reflect the views of expatriate employers, which are the relevant ones in this context. Their views, as has been shown above, can be derived from the basic economic relationships between cxpatriate firms and local personnel, and it is to these that attention in this section has been principally directed.

Page 240 note 1 McClelland, David C., The Achieving Society (New York, 1961), pp. 6479 and 108–14.

Page 240 note 2 See in particular Samuels, L. H.(ed.), African Studies in Income and Wealth (London, 1963).

Page 240 note 3 McCleIland, op. cit. p. 85.

Page 240 note 4 Ibid.

Page 241 note 1 For an up-to-date survey of growth theory in economics—in pasts highly technical—see Hahn, F. H. and Mathews, R. C. O., ‘The Theory of Economic Growth: a survey’, in The Economic Journal (London), LXXIV, 296, 12 1964.

Page 241 note 2 McClelland, op. cit. pp. 116–17, 129–30, 136, and 151.

Page 241 note 3 Ibid. pp. 17–18.

Page 242 note 1 See, e.g. Processes and Problems of Industrialization, especially ch. 3.

Page 242 note 2 A good example of the more enlightened approach is provided by recent policies of Unilever Limited in West Africa. See United Africa Company, Statistical and Economic Review (London), 09 1959, p. 39.

Page 242 note 3 See Bauer, P. T., West African Trade (Cambridge, 1954), ch. 9.

Page 243 note 1 Thus, if C′ is the labour-cost of a local non-African divided by the labour-cost of an African who may wholly or partly replace him, R′ is the number of Africans divided by the number of non-Africans whom they may replace, and S′ is the stimulus to Africanise, then S′ = C′/R′. Since, generally, C′ < C while R′ = R, then S′ > S. Under these conditions, the stimulus to Africanise when there is a sizable and permanent non-African population will be reduced.

Page 244 note 1 In an extreme case, C′ < I <R′ and S′ < I.

Page 244 note 2 National Accounts and Balance of Payments of Northern Rhodesia, Nyasaland and Southern Rhodesia, 1954–1963 (Salisbury, 1964), table 163.

Page 245 note 1 Cf. Pearson, D. S., ‘Employment Trends in a Developing Economy: the case of Southern Rhodesia’, in East African Economics Review (Nairobi), XI, 1, 06 1964.

Page 246 note 1 Based on the findings of unpublished market research reports.

Page 247 note 1 Based on correspondence and discussions with the African Loan and Development Company Limited.

Page 248 note 2 This does not apply in the case of loans to African farmers, where A.L.D.C.'s policy has met with considerable success.

* Lecturer in Economics, University College of Rhodesia and Nyasaland, Salisbury. This article arose out of a discussion paper presented to the Social Studies seminar at the University College of Rhodesia and Nyasaland in the series ‘National Plurality/Unity”.

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  • EISSN: 1469-7777
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