On the Order Paper there is a Motion, standing in my name and the names of some of my hon. Friends, which can be divided into two parts. The first part welcomes proposals for increasing African participation in the main banking houses and other financial institutions in the economy of Africa, and the other part refers to
a project for the establishment of a bank in which Africans as directors and shareholders will take the lead.
I want to address myself to the last part of the Motion.
The project, which is known as the "Project for an African Bank", is still in the formative stage. It emanated from African nationalist leaders, and, of course, it is subject to modifications when negotiations and arrangements proceed. As at present envisaged, the project is that a pilot bank should be created in Salisbury, that the capital should be some £250,000, and that the issued share capital should be provided, and if necessary must be provided at this stage, from European sources, but that half the share capital should be held, so to speak, on option, for Africans to subscribe when the project has succeeded. If, as is envisaged, early success should come to the bank and its banking operations, the proposal is that the shareholding should be more or less 50 per cent. European and 50 per cent. African.
It is proposed that the board should be divided between Europeans and Africans, with the chairman an African so that it will represent to the Africans an African bank. Necessarily at this stage, the know-how will be provided by Europeans. The project must not be confused with any idea of Africanising the personnel who run the bank. The bank will be training Africans to take over positions of responsibility, but that will probably take a considerable time, during which Europeans will exercise their know-how in running the bank.
At the present stage of the training and capabilities of the African personnel, there would undoubtedly be more reason for Africans to make their deposits in this bank than if the bank were completely African from top to bottom, and that is recognised by the African personalities who have put forward the project.
To begin with, the bank would use its share capital and the deposits which it hopes to attract from Africans for discounting good bills of exchange and in general using its finance in a very conservative way. There is a parallel proposal that a similar type of bank should be established in Kenya, and the fact that these proposals have been made by the nationalist leaders and that this opportunity of a debate in the House has been secured have been widely welcomed in Kenya.
I have listened to the hon. and learned Member with some care and I have seen the Motion on the Order Paper, but the Question before the House is, "That this House do now adjourn," and the hon. and learned Member will be aware of my difficulties. I see the Parliamentary Secretary upon the Front Bench, although he appears to be rather diffidently remote from the Dispatch Box at present. If the hon. and learned Member could explain to me where and how there is Ministerial responsibility for all this, I should be grateful to him.
Ministerial responsibility is established in this way. I submit that in respect of dependent territories the responsibility of the Government, through Ministers, is much wider than in the United Kingdom. Where there is something which is of benefit to the African people in those territories, the Government have a responsibility for creating a climate, if they approve of the project, which gives it a favourable wind, so to speak. They could give it publicity and the local instructions in small townships or villages could be such that the African bank would not meet with any unnecessary administrative difficulties. In addition, there is a responsibility on the new Department of Technical Co-operation. It was said that that Department would make available information as to where finance to assist in the territories could be found and how it could be obtained. If the Government view this project with any kind of approval, the Department of Technical Co-operation could help in this matter.
I am much obliged.
The bank, which will have this European know-how, will aim at attracting African deposits throughout the territory. One of the advantages which will accrue through this project is the indication that prominent Africans are anxious to adopt a European banking system. Some of their followers inevitably put forward wild schemes for expropriating everything that is European. We know that the African leaders do not share that extreme view and if this scheme for an African bank gets a favourable response and the capital required, the more extreme followers would be shown that the only way to economic progress and stability in Africa is through the adoption of European banking institutions.
I was saying that the project has received a great deal of publicity in Africa, and the fact that it has been debated today has also been greatly welcomed. I have a copy of the East African Standard for yesterday, Thursday, 3rd August, in which the headline is:
Kenya Plan for Bank of Africa".
It says that a branch may be open within the year. Reference is also made to my Motion, which is also welcomed.
It may be asked whether the existing banking institutions, mostly English banks, would not be confronted by competition which they would not welcome. It is undoubtedly the fact that existing banking institutions have been going ahead developing the African side, if we can call it that, of their banking operations. They have been opening branches further up-country and attracting African deposits, but the fact remains that many Africans have savings which they keep in their homes and do not entrust to banks. It has been accepted by many banking institutions in the City, to whom this project has been mentioned, that if those unfruitful deposits could be deposited in the bank in order to fructify for the Africans, it would be welcome to the banks of the territory as a whole.
This debate shows that the House recognises the importance of the project, and recognises that these African leaders have produced a plan which is nonpolitical, in the sense that the bank is meant to attract a deposit from Africans and non-Africans equally. The only political element is that it is envisaged that there should be African directors and African shareholders. If it is successful, it is contemplated that in time Africans should take over many of the posts of responsibility for which there are not at the moment a sufficient number of trained Africans. In East Africa, the fact that this project has been put forward has already very much improved the climate of the attitude of the Africans who are politically conscious of the financial institutions which already exist.
Thanks to our policies and to the general economic upsurge in Africa, it is an undoubted fact that the standard of life of the Africans is rising. It is calculated that in the Central African Federation about £17 million to f18 million of African deposits exist in the existing institutions. There is more to come out from the homes of the Africans, and if the bank is well run it will undoubtedly help the economy of Africa.
If the Africans have a 50 per cent. shareholding, they will be very intent on the bank achieving the success which its sponsors hope it will. It is undoubtedly true, too, that the Africans will look on this as a test of their ability to come into the general financial system of the European and make a success of a bank which will be predominantly African in the sense that it will have at least 50 per cent. African shareholding, and in the end perhaps a majority of Africans on the board, and from the inception of the scheme an African chairman.
For those reasons I warmly commend this scheme to the House. I commend it on the grounds that this scheme has been thought out and composed by the African leaders. Mr. Chitepo may be said to be one of the originators of the scheme, and Mr. Kaunda has given his approval to it. Mr. Chitepo drafted perhaps the first memorandum when it was regarded as a scheme very much in the future. However, it appealed to the imagination of the Africans in Central Africa, and since then the project has assumed a much more concrete form. Dr. Kiano also helped with the preparation of the Memorandum, and Mr. Gekundo and Mr. Nkomo have assisted with suggestions.
That is one of the reasons why I commend this project to the House for its approval and to the Government for their approbation. It shows that the Africans, by putting forward a project of some imagination, and one which can only be of benefit to the economies of the various countries, have assumed a responsible attitude and one which recognises that the European financial system of banking operations is necessary for the continued progress of the economies of these countries.
I support my hon. and learned Friend the Member for Northwich (Mr. J. Foster) in putting forward the important concept of a bank for Africa. I believe that the Government have a degree of responsibility both direct and indirect, and I hope that when my hon. Friend replies he will be able to set the seal of general approval on this whole concept.
The purpose of the bank is both economic and political. It will undoubtedly encourage the African to invest his savings. If we get increased African investment in the rather difficult situation which exists in certain territories in East and Central Africa, we will obtain a greater degree of political stability, which in turn will attract further investment and so raise the standard of living of the people in the area.
Starting a bank which is 50 per cent. African will mean training a large number of Africans directly and associating an even greater number indirectly with the scheme. This will tend to bring before them the economic facts of life. Not long ago I was talking to one of the African political leaders in Northern Rhodesia. He was telling me of his ideas for improving the standard of living, the standard of education, and so on, in his country. I said, "Yes, it is all very well, but it will cost money and where will that come from?" His reply was, "Oh, that is easy. We will ask the Americans to open up more copper mines." He said that quite regardless of the fact that there had been a 10 per cent. cut-back in copper development in the territory due to various international factors. I believe that this concept will increase awareness of the economic facts of life among many African people, and that it will bring the political stability which will be of importance in the difficult years ahead.
First, may I adduce some of the economic reasons why I support this concept? These have been ably covered by my hon. and learned Friend, so I will keep my remarks brief. My hon. and learned Friend pointed out that this was a pilot scheme. It was intended to start it in Highfield, the African quarter of Salisbury, and presumably if it is successful it will be extended to Kenya, Northern Rhodesia, and other African territories. My hon. and learned Friend also pointed out that the idea was to encourage deposit banking, and particularly to encourage African co-operatives both in industry and agriculture.
In the memorandum submitted to Members of this House by the sponsors of the scheme, they point out that the average income of the Federation in 1959 was £28 per head of the African population, and about £540 per head for Europeans. I give no guarantee of the correctness of those figures, but I think it is certain that both those figures will rise, and obviously the African income will rise faster than the European. There will therefore be a big scope for African investment in this bank, and indeed in any other bank operating in these territories.
Again, the sponsors point out that their estimate of African moneys in deposit, in savings and in African businesses in Central Africa alone is about £15 million to £18 million. There is, therefore, certainly plenty of scope not only for the existing banks but for the new one.
My hon. and learned Friend said that the concept is that the new bank should be shared fifty-fifty between Europeans and Africans; that the directors should also be equally shared between each race, but that it should always have an African chairman. What particularly interested me in the memorandum which the protagonists of the scheme put forward was the way in which they continually stress the importance of a close relationship with the Commonwealth, and the importance of efficiency and integrity.
They point out in one paragraph that the mere Africanisation of the staff of an international or British bank does not necessarily endear it to the African, because he feels that in the present state of education in Africa it may well lessen its efficiency. On the other hand, if a substantial proportion of the equity of a banking institution is Africanised the African shareholders will be determined that it shall be run on the soundest possible lines and conform to the highest code of administrative discipline and integrity, because they will have a personal stake in that bank. I understand that promises of financial help have come from countries such as Germany, Japan and America. I hope that the desire of the sponsors of the scheme to get real backing from Britain and the Commonwealth countries—backing not only to the extent of financial support but also in know-how and personnel training—will be fulfilled and that this debate will go some way towards publicising these views.
Finally, there is the question of competition with existing British, Commonwealth or international banks in the area. Hon. Members on this side of the House believe in competition, and with the growing amount of investment in Central and East Africa there is plenty of scope for competition, and, as I have said, this expansion of investment will encourage political stability.
It is to the political background that I want to address the rest of my remarks. I wish to make a number of very short quotations. I do this deliberately, because it is important for the House to understand the background to this project. The quotations I wish to put before the House are those made by Africans in Africa. They were made during a conference attended as observers by the hon. Member for Cardiff, South-East (Mr. Callaghan) for the Labour Party and by myself for the Conservative Party. This was the Third All-Africa People's Congress which took place in Cairo just before Easter. It was a conference of African political parties from independent and also dependent Africa.
The keynote was set by the Secretary-General, Mr. Abdoulaye Diallo from Guinea. I am now going a little beyond
the purely economic terms of the question, because I want to describe the background of the Conference and bring forward the economic arguments advanced against that background. In his opening speech the Secretary-General said:
Today there are two forces existing in the Congo; forces which represent the imperial interests, and forces which represent the interests of the Congolese people.
He went on to deal with the dangers of European bases and alliances and the danger, as he put it, of neo-colonialism. He advocated one trade union and one political party for the whole of Africa. What he said on the economic subject was this:
What has taken place in the Congo characterises in an obvious way the danger of neo-colonialism. The many attempts at the regrouping of influence in the ancient and new capitals is also obvious. Neo-colonialism can also be seen in several fields, in particular the economic field. As long as the old structures are not modified, domination will continue.
The feeling of the Conference was that the colonial nations were on their way out, but that neo-colonialism as exemplified by the American dollar was the new danger. In this connection the Secretary-General said:
As for economic development, we have already said that it must be carried out in the interests of the populations. The means of foreign and domestic communications, the means of production must be organised and orientated in that sense.
From those brief quotations the House should be able to appreciate the trend of the keynote speech which was certainly liable to the West.
I now want to make two or three brief quotations from African leaders from British Africa at that Conference, referring particularly to the economic aspect. One of the best speeches—because it was an economic and not so much a political one—was that delivered by Mr. James Gichuru, from Kenya. He is Vice-President of K.A.N.U., and he said:
After independence we face new and perhaps greater challenges, problems and dangers. The challenges are those presented by our age-old enemies: disease, poverty and ignorance, challenges that are still very much with us although they were supposed to have disappeared under the so-called 'civilising mission' of Europe. By the new dangers that face us today I mean the menace of neocolonialism operating mainly through stooge governments that control our economies—invisible and, therefore, more dangerous.
Later he amplified those remarks, and said:
Lest I be misunderstood let me make it clear that when I refer to economic imperialism I do not include the normal commerce of one country with another or disinterested aid without strings attached from any country.
It can be seen that the African leaders of British Africa are pleading for economic aid for their own bank and their own way of investment in their own country. They are asking for help from us, and are asking us to look at the problem not through British eyes but through African eyes. That point was emphasised by Mr. Tom Mboya, who said:
At the moment there are people who look at us with glasses on which is written pro-East or pro-West, anti-East or anti-West. Let those glasses be changed into an African looking-glass that will portray the African personality that will be recognised the moment an African is seen or the moment he pauses to speak.
In other words, we must look at the Bank of Africa from the eyes of Africa. I believe that this project will come off. I very much hope that this country will be fully associated with it, because if we do not support it, it will come off without our support.
There are dangers in this scheme—dangers that this finance may be used to support political and nationalistic moves. We must be clear about the dangers. As far as I recall, there were only three direct mentions of the Bank of Africa at the Conference. The longest and most direct—and in some ways perhaps the most politically dangerous—was made by Mr. Moton Malianga, Vice-President of the National Democratic Party of Southern Rhodesia. He said:
We have seen that imperialists in many respects have cooled down some of our leaders. All this has been traced to financial strings. With the establishment of a Bank of Africa, economic freedom and independence would eliminate the possible dangers of some of our leaders becoming economic prisoners. The Bank will also help young independent African States which have been dependent on imperialist banks, to ensure that the situation in the Congo, when the Belgians froze the banks, will not repeat itself.
That may be a quite legitimate point of view, but it emphasises the fact that if we do not help and offer financial aid and economic know-how this scheme could be used against the interests of the Commonwealth and those of Britain.
In this matter we should all work together. The resolutions emanating from this Conference were all short ones which advocated the setting up of a Bank of Africa, and I should like to see the Commonwealth countries make the start.
I hope that I have not wearied the House with too many quotations from this Conference, but it struck me as being an extremely important one, showing that Africa wants to work for itself, and that besides providing finance we must also help the Africans to work out these things in their own way. There is a strong feeling about the dangers of "neo-colonialism" in Africa which we generally find associated with the threat of the American dollar and used for political reasons by our political enemies.
But there is also a great wish among the Africans to follow British tradition, and the tradition of integrity of the City of London. There is a great wish that the City will help in providing know-how and financial assistance. I hope that when my hon. Friend speaks he will be able, so far as it is possible for him, to set the seal of Government approval on this concept of a Bank of Africa, so that it may go forward as a partnership, as envisaged by my hon. and learned Friend, with a 50 per cent. African and 50 per cent. European control, for the betterment of British territories in Africa and for the betterment of the Commonwealth as a whole.
I realise that a number of other hon. Members wish to take part in this debate and that the time for it is limited. Therefore, I shall be brief.
By raising this very imaginative suggestion at this time, I believe that my hon. and learned Friend the Member for Northwich (Mr. Foster) has done a real service both to the cause of African advancement and to modern Colonial Office policy under my right hon. Friend the Secretary of State. For that reason, I hope that my hon. Friend the Under-Secretary of State will be able to give official endorsement and blessing to my hon. and learned Friend's idea when he comes to reply.
When I was in Central Africa last year I encountered again and again in different forms the basic idea which my hon. and learned Friend's Motion embodies. I found it among many of the progressive, enlightened younger businessmen in great cities like Salisbury, and also among thinking African nationalist leaders, which I had not really expected. Probably, when we come to think of it, that is not surprising because naturally they are as anxious as we are to see the expansion of the economies of their own territories for which very soon they will themselves be responsible.
As my hon. and learned Friend said, the sum of money needed to start the African bank project is so small that it would be rather tragic if men like Herbert Chitepo, Joshua Nkomo and Kenneth Kaunda had to look elsewhere for this limited sum of money to get the project started. If we want, as we do, the East and Central African countries to remain in the Commonwealth after they achieve independence, then it is projects like this, combining European and African capital and under European and African direction and management, which help enormously to create an atmosphere of good will between the races and to encourage the spirit of partnership between the races to which so many people pay lip-service but to which, in practice, relatively few people actively subscribe.
I agree very much with my hon. and learned Friend that African economic standards are advancing, certainly in every decade and probably in every year. I am sure that there is a very large potential for African investment in a Bank of Africa once it is clearly seen to be both a successful and efficient concern and to be serving Africans and identified with African interests. It must be both. It must be run efficiently and it must be directed, at any rate in part, by Africans, in the interests of Africans. That is why I believe that it is important that the management as well as the capital should be shared by people of both races and responsible to shareholders of both races. It is important gradually further to Africanise the management as soon as, but not, of course, before, that can be done without any loss of efficiency.
The financial and banking institutions in the City of London are not being asked to run a very great risk. They are being asked to be pioneers and adventurers, but on so small a scale compared with the enormous sums of money with which they deal, in something which may well turn out to be a very good investment, that it would be the greatest pity if they missed this opportunity. If they are dubious about the risk and doubtful about investing money in this part of Africa at this time owing to the political climate, the best encouragement to them to do so is the very fact that it is the leaders of the nationalist African parties who are sponsoring the project. The fact that they want an African bank of this kind, financed as to 50 per cent. by Europeans and 50 per cent. by their own people, is evidence of the sense of responsibility of a number of these men. Just as politically a federation stands a better chance if it grows up from the people, as the idea is growing in East Africa, than if it is imposed by the United Kingdom or the Europeans, as in Central Africa, so I believe that in the economic sphere a project like this has a much better prospect of success if it is suggested and wanted by the African leaders. We shall make the greatest mistake if, because of lack of imagination or excess of caution, we in Britain fail to give the lead which they have invited us to give.
I congratulate my hon. and learned Friend the Member for Northwich on bringing this matter to the attention of the House. I wish him every success when, as I imagine and hope with the blessing and support of the whole House, he brings it before those interests in the City who, at very small risk to themselves, could bring it swiftly to fruition for the benefit of this part of Africa and of both races who live there.
My hon. Friend the Member for Surbiton (Mr. Fisher) said, quite rightly, that the financial institutions of the City of London are not being asked to take very much risk in supporting this project. I go further and say that the institutions of the City of London would be taking a very great risk if they did not support this project. We can well imagine the leaders of the newly emerging African territories being very unfriendly and suspicious towards the institutions of the City if they do not co-operate enthusiastically in this sort of project.
The theme of the suggestion of my hon. and learned Friend the Member for Northwich (Mr. Foster) is one of great importance which should be considered with some urgency. Unless in the very near future we are able to train African personnel to play their full part in the financial institutions of their countries we can well imagine those countries becoming very sympathetic towards the financial entanglements of the Communist world.
I should like much more to be done in training African personnel in the know-how of running financial institutions. As someone who spends his business life in the City of London, I am rather disappointed at the efforts which have so far been made to train African personnel in the financial institutions of the City. The number of Africans undergoing training in the offices of insurance companies and banking houses in the City is far too small. If the City is to continue to enjoy the insurance and banking transactions of these very important areas, without which the economies of the Western world would collapse, it must make a much more positive attempt to train and educate these people. I should like to see Africans being trained on the floor of institutions like Lloyds and the Stock Exchange, but I never do. Yet many of the companies associated with these institutions are doing a great deal of rewarding business with the countries concerned.
I ask my hon. Friend the Under-Secretary of State to consult those educational institutions connected with professions such as the Chartered Insurance Institute and the Institute of Bankers, which do a very important job in training people in this country, to enable Africans to take the examinations of those organisations. For example, I can see no reason why one of the contributions of these major financial industries should not be to ensure that the correspondence courses of those institutions are provided free for Africans who wish to undertake them. In financial terms, this would be a relatively small contribution, but, in terms of enabling Africans to acquire the necessary know-how and to learn the principles of these financial industries, it would be a very important and worthwhile contribution. There is no reason why the powerful banking and insurance industries of this country should not financially support the establishment of insurance colleges and banking colleges in the emerging territories of Africa on the lines of those which exist in this country. I hope that my hon. Friend the Under-Secretary of State will be able to support the important theme raised by my hon. and learned Friend and that he will do all in his power to influence the institutions of this country to play their important part in training Africans to take their place in these Western institutions on which we are so dependent.
I wish to echo the congratulations offered by my hon. Friend the Member for Surbiton (Mr. Fisher) to my hon. and learned Friend the Member for North-with (Mr. J. Foster) on his initiative in introducing the Motion before the House. I hope that my hon. Friend the Under-Secretary of State will take note of the fact that the project has had very wide support from both sides of the House.
I am very sorry indeed that my right hon. Friend the Secretary for Technical Co-operation is not on the Front Bench today, because I think that if ever there was a "natural" for this new Ministry this is it. I was particularly struck in the Second Reading debate by the very great interest which the House took in the matter and by the occasional strictures from the benches opposite as to whether or not this new Ministry ought not to be responsible for finding finance for suitable enterprises overseas. This, to my mind, is one of the most suitable kinds of enterprise that the new Ministry could consider.
My hon. Friend the Member for Worcester (Mr. Walker) made an appeal to the banks and financial institutions to do more as a deliberate policy to help to train Africans in the field of finance. I echo that appeal very much, but, to my mind, this could be done much more effectively by the new Department of Technical Co-operation because there are immense resources in this field, and, in fact, in so many different fields. Therefore, it is perfectly natural that in the prospectus they seem to appeal again and again to the Commonwealth for help in this project. That is entirely natural because the whole of the knowledge and background of all the Africans who engage in trade and commerce and in any kind of technical job has come from United Kingdom sources.
I feel that this project for an African bank is of particular significance at this time. Speaker after speaker, including my hon. Friend the Member for Haltemprice (Mr. Wall), has referred to the importance of such a project as a stabiliser. We have probably the best banking system in the world in our older Commonwealth countries. It is noteworthy that in the 1929–31 slump some 2,000 American banks went bankrupt. Not a single bank or insurance company in the British Commonwealth went bankrupt in that period. The importance of this project as a stabiliser has, as I have said, been emphasised. We all know that next to owning money owing money is a strong inducement to responsibility. Those of us who have had a very wide experience of banks know that sometimes we owe an awful lot more to the banks than just money.
This is one of the most fundamental institutions which every evolving country must have. The whole history of the early days of the British Commonwealth is that after a certain stage someone started a bank. Sometimes in those early days it was successful and sometimes it was not. It is perfectly true that this particular service is one of the things most necessary to an expanding economy, and I am very glad to read the memorandum and to hear my hon. Friend emphasise the fact that the politicians in Africa will leave the bank strictly alone and allow it to develop on its own lines.
Very briefly, I wish to call attention to something which happened during the Committee stage of the Department of Technical Co-operation Bill. I was very attracted to the suggestion made by the hon. Member for Birmingham, Northfield (Mr. Chapman) that the new Department should not confine its activities to technical aid but should also give guidance and advice on how to raise money. It seems to me that the functions of the new Department, which is to help people to get things started, provide it with a unique opportunity for such assistance. If the new Department is willing to provide technical aid this should not make it too difficult for the money to be raised for the new project.
In reply to the hon. Member for Northfield during the Committee stage, the Financial Secretary to the Treasury seemed to miss the point. He said:
One question that was not raised by hon. Members opposite but which I include for the sake of completeness is whether the new Department should provide information not only about the sources of finance available in this country but about what other countries are doing in the way of technical assistance and where it can best be sought. That is a point that we would like to examine further."—[OFFICIAL REPORT, 10th May, 1961; Vol. 639, c. 543.]
I sincerely hope that my hon. Friend will examine it further and that we shall proceed with this magnificent idea and do everything we can to influence the appropriate sources of finance. It is not a question of setting up new institutions and machinery but of making use of the existing resources in the form of technical knowledge which the City of London already has in greater measure than any other country in the world at the present time.
I conclude by asking my hon. Friend the Under-Secretary of State to make it quite clear to the new Department of Technical Co-operation that the House wants it to look into the matter and to tell my hon. and learned Friend the Member for Northwich whether or not it is prepared to offer to the sponsors of this new bank the technical aid and machinery which they are bound to require and also that the new Department should give all the assistance it can to provide the necessary finance either from this country or, perhaps, from institutions elsewhere in the Commonwealth.
I wish to add my support to this very worth-while proposal and look to the active support of Her Majesty's Government in getting the Bank of Africa started. As my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken) said, one of the very best things that we have sent out from this country to the Commonwealth has been our banking system. But it is also true, and rather unfortunate, that very often the banks in countries in which there are many illiterate and ignorant people get a sinister name, because a man without much learning finds it hard to understand how the banks get their money. Quite often, there is a stupid prejudice against the banks which we open up in different parts of the world. This is unfortunate because, I believe, these banks have done a thoroughly good job.
It is essential that we should encourage the Africans to start the idea of banking by adopting our system of banking institutions. If it is found that there is any dog-in-the-manger trying to prevent this, the Government should take action to quash those activities as soon as possible. In Africa, which is an expanding country, there is ample room for more banks to be set up. I think that our own banks in Africa can do with a bit of competition so as to encourage them to push their branches further. I know of a town which could be considerably expanded if the bank could be persuaded to open another branch, even if it were an uneconomic branch. I think that one of the important aspects is to see that an effort is made to support not only the idea of this bank, but also the British banks which are already working in Africa.
I believe that some people—not necessarily hon. Members of this House, but perhaps some people in the City of London—may doubt the possibility of raising money in Africa. But that possibility is not quite so fantastic as it may seem. We often hear statistics regarding the income of the African which is stated in Southern Rhodesia to be £28 a month and in Tanganyika £16. I once carried out a survey and found that in one district the figure was under £10. But these figures are absolutely meaningless by the standards we set in this country. To an African they represent spending money.
It is hard to illustrate this clearly, but it is worth reminding the House that it is usual in Africa to pay monthly because Africans like a lot of money in one lump; not like the British working man who may find it impossible to make the money which he receives weekly last beyond the Wednesday or the Thursday following pay-day. The Africans carry a surprisingly large amount of money in their pockets. One may note from thefts which take place on the railways that the victims may be Africans who had as much as £100 or £200 which was being carried round in a wooden box when it was stolen. As I say, the money is there in surprising quantities.
I was connected with one small scheme for the selling of the maze crop in a village. The sale was carried out by co-operation in bulk and amounted to 100 tons. The money for the maize came to over £1,500, which went to that village. Had there been proper banking facilities available, instead of the Post Office Savings Banks which are common but which are not sufficient, a great deal of that money would have gone to swell the assets of the country. The standard of living of the African is so low that most of the money he makes represents spending money, and I have no doubt that if such a bank as is envisaged could get going with the right sort of support, it would prove a great success.
One aspect which appeals to me about such a project is that it would link the African territories together right from Southern Rhodesia to Kenya, and perhaps West Africa also would join in. Anything which has the effect of linking these Commonwealth countries together is to be recommended. There is nothing which the emergent people of Africa want more than status and the respect of other people. I feel that a successful banking system, backed by the City of London and by the Government here, would give the people of Africa the sort of status which they desire.
The House is indebted to the hon. and learned Member for Northwich (Mr. J. Foster) for raising this subject. It has been interesting to listen, as I have been listening with a perfectly open mind—not so far having studied carefully the documents on the subject—to all that has been said by hon. Members opposite. Hon. Members on this side of the House approach the subject of banking generally in a manner which is rather different from that of hon. Members opposite.
Our approach leads us more than does theirs to an emphasis on the necessity for public control over banking opera- tions through the law, and to the desirability of having a substantial measure of public ownership in banking operations either through nationally owned institutions or through co-operatively owned institutions. But that does not alter the basic fact that there will, of course, always be the need for short-term banking operations, the sort of job which the commercial banks undertake, raising their money from depositors. I am distinguishing here between the commercial bank operating short-term credit provisions and the investment bank which is concerned with long-term investment, and what I have to say will not be related to the long-term investment bank.
There is a need to finance the movement of commodities. Goods are carried over the oceans and for long distances on land by rail. While these operations go on there is ample need—and it is sensible to provide it—for capital to finance the holding of commodities during transport and other commercial operations. We recognise the need for short-term banking operations and appreciate particularly the great importance of the provision of short-term capital in countries like those of Africa where it is necessary to provide the means to tide the farmer over during the long period between the sowing of his crop and the sale of it.
These are necessary institutions, and all over Africa there are commercial banking organisations run on the joint stock method which provide capital. They raise their finance from depositors. This is unexceptionable. It is necessary and it must continue. Whatever kind of society these emergent African territories may eventually decide to operate they will have to have within their economy provision for short-term finance of this kind. Whatever degree of control they may eventually decide to operate they will have to consider what kind of short-term capital provision they intend to set up.
Undoubtedly it is true as has already been said, that Europeans particularly possess a great deal of the know-how about the conduct of such operations. There is a technique and a know-how which has to be learnt. One cannot just walk into a bank and start to run it. One must be trained in the operation. There are many Europeans in Africa, and no doubt also some Asians, who possess this technique, but there are far too few Africans who have had the opportunity to learn it. I agree with the hon. Member for Worcester (Mr. Walker)—who speaks no doubt with a greater knowledge than I of the banks in the City of London—in regretting that more training was not given by these banks to African employees in their branches so that they might understand more of how this system works; and even how the great financial nexus in the City of London operates as the headquarters of this vast ramification of banking systems throughout the world. I hope that commercial banks will think about this and pay some attention to what the hon. Member said, even though they may attach little importance to what I say, because if what he said is true, they should be doing something on those lines on a larger scale than at present.
I do not think that anyone has suggested that commercial banks already operating in Africa should cease their operations. The suggestion is that their interest might be roused by this debate in the general idea of bringing Africans more closely into participating in the work of the banks. I welcome the interesting suggestion which has been advanced regarding a bank for Africa and I think that it needs careful and sympathetic examination. I find it particularly interesting, because it is associated with the names of leading and highly qualified Africans.
The names which have been mentioned include those of Mr. Chitepo, Mr. Malianga and Mr. Kaunda. I was particularly interested in the project because I saw the name of Dr. Kiano, whom I happen to know fairly well. He is an economist and was a lecturer at the Nairobi college before he became a Minister; and, of course, he is a political leader of considerable status in Kenya. The fact that such men are associated with this idea makes it particularly valuable and one which deserves careful consideration.
I agree with much that has been said about the interest that ought to be shown in this project by the new Secretary for Technical Co-operation. I said in the debate on the Bill to establish that new Department that I hoped that it would be a forward-thinking Department and one that would be interested in new ideas, would inspire them and follow them up. I have no doubt that the Under-Secretary of State will take the opportunity of saying that he will consult his right hon. Friend about this idea.
The Colonial Office can be directly concerned with this matter, I imagine, only at a later stage. For the time being, it certainly seems to be one which the new Secretary for Technical Co-operation might explore and his Department is well staffed now with persons who have experience of Africa—particularly its Director-General—so that between them they ought to be able to help this idea along.
I am not in any way committing myself, nor I think is anyone else, to a detailed endorsement of the plan which has been put forward, but I am saying that it is interesting, it has the sponsorship which we can recognise as both responsible and well-informed, and it deals with the provision of services which will be necessary whatever form of society the Africans eventually decide to establish in their independent territories. We have listened with great interest to what has been said, and I feel confident that the Government will do what they can towards forwarding this idea.
I am sure that we shall all join in thanking my hon. and learned Friend the Member for Northwich (Mr. J. Foster) for having raised this subject. We have had a well-informed, swift and important debate.
This matters falls into two parts: to encourage British companies and financial institutions to make an even wider stake in the development of Africa, and then turns to a specific project for an African bank which is to have its centre in Salisbury. My remarks, as I am sure my hon. and learned Friend will understand, must be general. Not only is the main proposal put forward outside the territorial scope of my Department, but I think it is only proper that Ministers of the Crown should speak in general terms and not particularise on individual commercial projects unless, of course, there is a direct Government participation.
In general terms, may I say at once that I welcome, and I am sure that the House does, the general spirit and objective of the speeches which have been made this afternoon. In the few remarks that I propose to address to the House, I think that it would be appropriate to deal with four main topics—the general economic conditions in East and Central Africa; the need for further capital; the action already taken by British financial institutions; and the desirability of further African participation.
I think that it is interesting for those who are having doubts or are rumoured to be having doubts about the economic future of these two areas that, in spite of political uncertainty and some loss of confidence and the fall in raw material prices, purely from an economic point of view a very considerable advance has been made in these territories since 1957. In Central Africa, there has been an increase in copper production, in Nyasaland a rise in tea exports from 20 million lb. in 1958 to nearly 24 million lb. in 1960. There has been an increase in the production of cotton in Nyasaland from 3·6 million lb. in 1957–58 to well over 8 million lb. in 1959–60.
Turning to East Africa, although in the five years between 1954 and 1959 there was a very heavy deterioration in the terms of trade in this area, Kenya deteriorating by 19 per cent., Tanganyika by 10 per cent. and Uganda by over 30 per cent., the average real income per head is estimated to have risen in Kenya by nearly 40 per cent., in Tanganyika by about 20 per cent. and even in Uganda, where there has been a catastrophic fall in coffee prices, it has risen very slightly The export figures also have continued and are continuing to rise.
Last year exports from Tanganyika rose by nearly £9 million to a total of some £56 million in that year. Even in Kenya, despite the drought, the worst possibly in recorded memory, and the loss of confidence that undoubtedly has taken place in part of the private sector, but only in part of it, development expenditure there this year will probably be the highest ever recorded.
I mention these facts because I think that they are vital to show to people in this country that in purely economic terms the rate of expansion, even in those difficult years, has been great and rapid. If it is to be continued, we must look for new capital resources in every field, through Government savings, whether they be in this country or Government savings in the local territories, from Government institutions, the Post Office Savings Bank and other local institutions, or overseas banking resources, and, of course, there are the indigenous savings of the local communities.
Here I am sure that a well-run, sound African bank would have a part of great importance to play, in no way conflicting with the already well-established British and other banks which have helped in such an excellent way to "father", if I may use the word, the expansion we have seen over the last few years. These resources are necessary and more resources are necessary, not merely for the continuation of existing public or private programmes but to meet the aspirations of the peoples of those territories.
I believe that the character of African nationalism is changing. It is ceasing to be the simple chauvinistic, emotional and, if I may say so, economically purposeless nationalism which distinguished that movement so often in 19th Century Europe, and not so very far from here. African nationalism, whether it be white or black, is under pressure not merely to produce independence but also a standard of living and of education compatible with modern social aspirations.
Africa needs money far beyond what it itself can generate. To put about the ideas which some people may have thought of at the Cairo Conference with this foolish talk of neo-colonialism or the equally foolish talk of rivalry, which comes from our own people, between African and European institutions, is to throw away the substance of advance for the shadow of political promotion. I think that over the years ahead there will be room for growth provided we can achieve political stability—room for growth in which many sorts of financial institutions can participate.
It is worth while for a moment to turn to the kind of help already given by British financial institutions. Even here there is a limit. I welcome very much the new interest of West European and American bankers in the development of East and Central Africa. There is the example, which I think an excellent one, of the expansion of existing British and Commonwealth banks in East and Central Africa. There has been a threefold expansion in the number of branches over the last ten years. We should remember that those have not been easy years, although sometimes the difficulties have been exaggerated by people not resident in those countries. It is still remarkable that in ten years the number of branches has been more than trebled.
The scope of enterprise in Kenya and East Africa generally is shown in that on 31st March this year in Kenya loans outstanding to agriculture and industry by the two overseas banks with their headquarters in London amounted to £11·3 million. In Tanganyika the amount was £5·3 million and in Uganda it was Over £8 million. Their total advances in East Africa were no less than £69 million. In addition, these banks are catering for more long-term capital needs—here I do not want to cross swords with the right hon. Member for Middlesbrough, East (Mr. Marquand), on purely doctrinal grounds—in the development corporations they have set up apart from ordinary banking services. In one case investment and loans already outstanding in East Africa total £4 million. In addition, there are large development sums invested by building and insurance companies.
The point made by my hon. Friend the Member for Worcester (Mr. Walker) is of great merit and value. Training and Africanisation for the banks in East Africa is taking place and it is also taking place in Central Africa. Contractors of British banks have sought to bring people from the African territories back here. I shall certainly draw to the attention of my right hon. Friend the point the hon. Member made about the Department for Technical Co-operation. On the training side there may be scope for the Government to endeavour to be of assistance.
There is, however, a tremendous demand in every field of advance not merely in banking, but in education, Government services, the Forces and all these developing institutions. The demand for trained African manpower is colossal and overwhelming. It is worth while looking to see if we can be of some assistance in that sphere, Africanisation in itself does not wholly meet the aspirations of those whose activities and interests my hon. and learned Friend has this afternoon so eloquently described. We should welcome any progress stemming from African initiative as a valuable contribution to the general economic health of the territories with which my right hon. Friend and I are concerned. It may be that in the richly variegated economic pattern of Africa there is scope for development along the lines indicated by the speeches made in this debate.
I am sure that what those going into the African bank, or whatever institution it may be, want to find is not the old ways of established banks but new lines of business. The model we have to look at is the Bank of America, which is the biggest commercial bank in the world, or one of the biggest. Its progress flows from the backing of the small immigrant, especially of Italian origin, going out to the new lands of California and so on at the end of the nineteenth century. One of my hon. Friends spoke of the difficulties of American banking operations in the catastrophes of the twenty-nines and the thirties. It is important that in this developing field new institutions should look for new ranges of activity rather than the old ranges which are already catered for.
I am sure that the enthusiasm we have seen this afternoon is of great importance, but I am also sure that any scheme put forward should be initially of a modest and sound sort. No banking system has ever sprung into being entirely armed without a degree of training and expertise and a sound basis. Although we should like to see an indigenous banking system develop on traditionally sound lines and catering for the special needs and circumstances of each territory, any attempt to force the pace would undoubtedly do more harm than good, as experience, alas, has shown elsewhere.
I am sure that the general aspirations put forward this afternoon will be of real benefit. I trust that all the ideas which have been suggested here and in Africa will be soundly based. This is an expanding field for every form of economic institution. In this I am sure the Africans will take their rightful and proper part.