lateral negotiation, and shorter reschedulings have been arranged in recent years for India and Pakistan by their respective aid consortia. It is quite possible that aid donors will need to consider reschedulings in Bangladesh and Pakistan after agreement is reached on a division of debt between these two nations.

THE RECORD OF THE PAST 10 YEARS

Developed countries with great natural resources and a history of economic and social progress rarely achieved a sustained annual per capita growth rate of more than 2%, but the average annual growth rate in the 1960s for Asia as a whole was 5.5%, with annual per capita growth at 3%. In the mid-1960s Asian countries adopted new economic policies and undertook new programs which were almost entirely financed with their own domestic savings-foreign aid covered 10% of the total cost of their expanded development effort.

New high-yielding seeds were introduced, domestic fertilizer production increased, more fertilizer imported, irrigation facilities expanded and other water and land development programs initiated.

The absolute amount and proportion of total output invested in development was substantially increased and much more was spent on education and health services. Programs to reduce births were dramatically expanded. Exchange rates were adjusted and other monetary and trade policy reforms were undertaken which had the effect of promoting exports, improving the ability of these nations to finance development from their own resources.

These self-help measures, strengthened with aid from abroad, produced some significant improvements in the lives of Asian people. For example, life expectancy in India rose from 42 in 1962 to 51 today, and in Turkey from 46 to 57 in the same period. Half of the Turkish people are now able to read and write, compared to about one-third ten years ago, and 70% of the Korean and Philippine population is presently literate. Asian government expenditures in real terms for education, agriculture and health services have almost doubled in the past six years. The consumption by ordinary people of bicycles, sewing machines, cotton goods, cheap shoes, kitchen utensils and food, has risen steadily in all Asian countries.

Despite this progress, the absolute number of poor and undernourished landless farm workers and urban migrants continues to grow for the simple reason that population continues to increase. The paucity of skilled people continues to act as a brake on the pace of social and economic development. While there are more of the 5 to 12 age group in school than a decade ago, there are even more who are not attending school. More Asian villages lack sanitation than have clean drinking water. Indeed too many Asian governments would have to say, as the Government of Pakistan recently reported, that half of its people live on an income of 15 cents a day or less.

Strategies are needed which not only produce growth, but involve more people, especially the disadvantaged, in the process of achieving it. Our FY 1974 program, building on our experience of recent years, focuses on key development objectives. As we refine our programs they will increasingly be directed towards approaches which will assist Asian governments in helping to distribute economic growth more equitably among the rural and urban poor.

FOOD PRODUCTION AND RURAL DEVELOPMENT

The number one priority for most Asian countries is the increase of food production. As a result, $167 million or about 36% of our proposed FY 1974 programs is concentrated on helping achieve this target and the related goal of improving the quality of rural life. Of the 230 AID financed technical experts in Asia, about 100 will work in this sector. About 500 of the AID financed participants in Asia are studying in this field.

The economies of the Asian countries are predominantly agricultural. Continued growth and expansion of agriculture, particularly if brought to the millions of small farmers, will benefit everyone-including the consumers. The fifty million acres in Asia now planted with high-yielding seeds covers only 15% of rice acreage and 22% of wheat acreage in the region. Further expansion will require additional investment in research, water and land development, construction of fertilizer plants and the importation of fertilizer, farmer credit facilities, and the development of systems for crop storage, distribution and marketing.

The fact that drought, floods and pests plagued much of Asia last year and reduced food output has encouraged skeptics to question the lasting significance of the "Green Revolution." Although the expanded use of the new seeds has

been hindered by inadequate investment in the areas described above, the evidence of foodgrain output in recent years points clearly to a potential for further substantial agricultural growth. From 1967 to 1971 wheat and rice production in Asia rose faster than population: the most striking increases occurred in Pakistan and India where wheat production rose annually by over 10% and in Indonesia where rice production rose 9% annually.

Our FY 1974 program seeks to make such gains possible on a consistent and continuing basis. Agriculture research, already a high priority elsewhere in Asia, will be an important new area of concentration in our program for Pakistan, Philippines and Korea. Fertilizer imports will continue to be emphasized in Pakistan, Indonesia and Afghanistan. (In the latter case a FY 1973 loan covers not only the foreign exchange costs of fertilizer but also the services of an American management team to help organize and operate a mixed public/private distribution corporation.) Rural works-farm to market roads, water supply systems, and land leveling-will be stressed in Pakistan, Korea and the Philippines.

POPULATION AND HEALTH-$22.3 MILLION

There is no matter of greater importance in Asia than restricting the uncontrolled growth of population. By the end of the century the ten AID-assisted Asian nations will have nearly doubled in population to about 2 billion people if present growth rates are not reduced. Most of the governments of Asia have now realized that a solution to this immense problem must be found if the gains of increased economic growth are not to be lost.

During the past six years AID has contributed more than $90 million to Asian family planning programs, concentrated particularly on the training of large numbers of family planning workers and on the provision of contraceptive supplies and equipment. We have increasingly emphasized the importance of adequate social and demographic data collection and other studies that will permit more accurate evaluation of existing programs and refinement of the basic problem areas.

Looking back, AID's contribution to the growth of family planning programs in Asia has been extremely important. For example, our help was crucial to starting the Philippine program, and now we have before us a proposal for a major new program expansion in Pakistan. But as we look ahead, we will probably see some different emphases from that which dominated our program in the past six years.

Our experience leads to a growing awarness that family planning, which had originally been viewed within a medical setting, should probably be linked with general public health systems. But existing public health systems are inadequate to immediately absorb this task and the creation of a more comprehensive system is too expensive. Therefore, while most countries are continuing to expand health services slowly they are at the same time looking for cheaper and quicker means of providing integrated family planning services. We are considering the possibility of supporting low cost health delivery systems in a few countries which might combine family planning, health and environmental sanitation, and nutrition services. Our financial support will contribute to testing possible new low cost approaches and to evaluating existing programs in an effort to help Asian nations bring about the integrated system that most agree now makes

sense.

HUMAN RESOURCE DEVELOPMENT $12.1 MILLION

In the past we supported a wide variety of educational programs. Tens of thousands of Asians have improved their capacity to understand and deal with development issues because they received training in the United States where they were exposed to new ideas and ways of doing business. Many of these talented people now hold positions of great responsibility in Asian governments, universities and the private sector. Within Asian countries we have financed the reform of primary and secondary school curricula, the introduction of modern techniques of teaching mathematics and science at the secondary school level, the establishment of teacher training schools and in-service training programs, the modernization of existing educational institutions and the creation of new universities and institutes of technology and administration. These institutions are now well established and the main source of trained professional personnel. In addition to substantial support for agricultural education and training. A.I.D. plans to continue to assist in FY 1974 a few general educational institutions, among them Kabul University in Afghanistan and Bosphorus University

in Turkey. We also are helping the Ministry of Education in Afghanistan modify its primary school curriculum and we continue to provide support to the various centers of the Southeast Asian Ministers of Education Organization. The Korean Ministry of Education, with A.I.D.'s help, is testing methods of teaching which recognize the need to find lower cost alternatives to vastly more expensive formal education systems.

While middle-level management and vocational skills can be learned on the job and in local institutions, advanced professional training still must often be obtained in developed countries. Our country programs include "general development training" projects to finance advanced training in such fields as economics, statistics, budgeting, industrial engineering, project analysis, business administration, and accounting. On return participants generally are employed in positions of enhanced responsibility in development agencies.

About 1200 participants will be financed in FY 1974 under the education and training projects; most of them will be going to American institutions of higher learning and other training locations, including state and federal agencies. We will also finance participants at the American University of Beirut and at a number of outstanding Asian institutions.

SELECTED DEVELOPMENT PROBLEMS-$72.4 MILLION

The shortage of power is a critical limitation on the expansion of industrial output, including small industry. When more power is available, particularly in rural areas, many small scale production processes are electrified. Power shortages also limit the use by small farmers of cheap pumps for crop irrigation. As a result, we have undertaken a major power investment in heavily populated Java in Indonesia and a cooperative rural electrification effort in the Philippines. In Nepal AID will finance in this sector labor intensive projects to build a road and upgrade an existing airstrip in Western Nepal, supporting the government's efforts to develop remote sections of the country.

SELECTED COUNTRIES AND ORGANIZATIONS-$156.5 MILLION

If a country is going to provide its population with expanding social services in education and health, as well as jobs for its growing population, a vigorous and growing economy will be a major asset. AID donor consortia have recognized the importance of contributing foreign exchange loans to help key developing countries finance essential imports. Our general commodity loans, which represent 34% of the proposed FY 1974 program, will finance imports of raw materials, spare parts and manufactured goods for Indonesia, Pakistan and possibly India. These imports help maintain the growth of private sector production and investment. In the past such loans have also contributed in Indonesia and elsewhere to a substantial expansion of U.S. exports.

NEW PROGRAMS

It is our intention in FY 1974 to initiate development lending in Bangladesh and Yemen and to be prepared to resume loan assistance to India.

Financing of relief and rehabilitation in Bangladesh, which began last year, will end in FY 1973 and be followed by the proposed $50 million loan program to support enhanced rural development programs. The $5 million loan proposed for Yemen would permit an expanded water supply and sewer system to be built in Taiz.

We have made no loans to India in the past two years. The suspension of $87 million of prior year loan funds was lifted in March. We have completed discussions with the Indians on the use of these funds.

As President Nixon said in his latest report on U.S. Foreign Policy for the 1970's, "Both the United States and India are interested in defining a new basis for a mature economic relationship between us over the longer term." The ele ments of that relationship include the possible role of development assistance. We have included in our request to the Congress a figure of $75 million for possible economic assistance to India. President Nixon has indicated the framework in which we will be considering the assistance question: "The donor must not expect special influence in return; the recipient must acknowledge a mutuality of interest, for only in a relationship of acknowledged common purpose are assistance programs sustainable."

Thank you, Mr. Chairman. I would be happy to answer any questions you may have.

STATEMENT OF HON. SAMUEL C. ADAMS, JR., ASSISTANT ADMINISTRATOR, BUREAU FOR AFRICA, A.I.D.

Mr. Chairman and Distinguished Members of the Committee, I appreciate the opportunity to appear before you to discuss development problems in Africa and the program which A.I.D., in concert with the international donor community, proposes to carry out during FY 1974.

Africa, you are aware, is the poorest and least technologically advanced region of the world. It contains, by a wide margin, the largest group of "least developed" countries to achieve independence since the Second World War. Of the 25 countries identified by the United Nations as the least developed, 16 are in Africa. Several other African countries are barely above the least developed level.

Despite the problems of poverty, Africa as a whole has made considerable sacrifice and self-help towards building nations. African leaders are preoccupied with their countries' survival and development, and the well-being of their peoples. Development is a highly important issue for all Africans.

Nearly all African countries face the basic development challenge of achieving a productive agriculture sector to satisfy increasing need for food, obtaining increased revenues and expanding health and educational services for all people. There are, however, wide technical and economic variations among the countries. Yet generally, if African countries are successfully to achieve a better life for the masses of people, they must have greater productivity, expanded markets with increased revenues, and means to develop job opportunities and better income distribution for the majority of the population. These countries face immense tasks of creating appropriate institutional, social and capital infrastructures to meet the needs of very poor people now largely living at the margin of subsistence. To assist African nations to meet these development challenges an A.I.D. program of almost $160 million is proposed for FY 1974.

The major problems on which our programs will focus are: (1) an insufficiency in quantity and quality of food production, the distribution of which is complicated by excessively high costs, (2) education and health family planning delivery systems which are inadequate to meet the needs of the vast majority of Africans, (3) severely limited basic infrastructure (lack of roads, communication, including negligible investment in soil conservation, water uses, etc.) which increases the costs of services and acts as a brake on agricultural development. Two countries-Ghana and Sudan-require particular assistance approaches for they face severe balance of payments problems that limit their opportunities for development. A.I.D., with other donors, will provide them balance of payments support through program lending.

The diversity of problems faced by Africans, as well as assistance donors, in attempting to bring about development in the rural areas where most Africans live, is almost as varied as are the particular countries.

In Lesotho, an independent enclave of about 12,000 square miles situated within the Republic of South Africa, about 85% of the country is not under cultivation except for a narrow lowland strip on its western border. There is a major problem of enormous soil erosion. Growing pressures place marginal land into cultivation which, along with overgrazing and heavy seasonal rains, combine to create erosion problems equal to or possibly exceeding similar conditions anywhere on the globe.

Pressures on the land have resulted in large numbers of Lesotho's men and women seeking employment in South Africa. If the people of Lesotho are to improve their lot, the basic problem of erosion and land pressure must be dealt with. If Lesotho is going to be able to feed itself, generate income for basic social and economic infrastructure and lessen its dependence on South Africa, the problem of erosion must be met in an imaginative way. A.I.D. has joined the World Bank in a closely integrated dry-land farming project in a 300,000 acre area involving some 13,000 participating farmers. This effort, designed to increase the production of staple crops such as maize, wheat and beans while instituting vitally needed soil conservation practices to curb erosion, attempts to deal with the cluster of problems involving erosion, food production, employment and institution of new methodologies and skills training.

In a different setting across the continent, the development problem of the countries of Central and West Africa immediately south of the Sahara has been made urgent by periodic droughts and the deterioration of the subsistence base over an area almost as large as the United States. The process of further encroachment of the desert on land that was once productive renders almost

the death knell of traditional ways of survival, customary life styles for 25 million subsistence farmers and nomadic herders, in an area practically void of roads, or irrigation even where major rivers flow. The current drought in the Sahel region, (Mauritania, Senegal, Mali, Upper Volta, Niger, Chad) can only bring destitution to human well-being and an overwhelming handicap through losses of cattle in the drought regions. The margins between life and death for millions of African people are indeed thin. While there are no easy answers to problems of this magnitude, it is clear that fresh thinking and full commitment from donors is required if we are to even approach a first step in the solution of this problem. The U.S. response to the immediate requirements of the emerging disaster situation is about $24 million in food and non-food aid.

About 80% of the people in the region of Central and West Africa earn their livelihood from agriculture, especially through foodcrop and livestock production. Stimulating increased food production is the most critical challenge facing this region of Africa. Increased productivity means not only more food to meet growing consumption requirements, but also more income for the vast majority of African farmers, and is required immediately as a hedge against the droughts which affect this region. The urgency of the program has increased as cities grow, as droughts recur and the complexity of modern agriculture— contrasted to traditional farming--makes more important the effective use of scarce budget and manpower resources.

We are now on the threshold of some new departures in regional as well as broad sector approaches. I refer to the bilateral and international agency donor group consultations, for example, which are looking at the problems of livestock development in Africa south of the Sahara and the general problems of the transportation sector. In addressing development problems, we consult with other donors, mainly the French, British, Canadians, West Germans, Belgians, the IBRD, and the European Common Market Community. A specific instance of A.I.D. multidonor cooperation is a regional program for the Francophone countries of the 5 Entente States, Ivory Coast, Upper Volta, Niger, Dahomey, and Togo, which embodies a three prong approach to the food production problem, to the need for increased revenues, and the ever pressing requirement to expand job creation and employment. In this region, dependence on livestock production for income and for nutritional reasons is a key to development. In a grain deficit region, where grain is essential both for human nutritional need and for support of livestock production, stabilizing the marketing situation and stimulating production of improved cereal varieties can make a critical difference to the well-being of the people. Throughout this region one can see hundreds of thousands of petty traders-they have the aptitude, there is the need, and certainly they can be assisted towards greater entrepreneurial productivity. Our efforts in improving livestock and grain production open new opportunities for supporting industries and activities and now our new programs to help small entrepreneurs may give them the ability to benefit from these opportunities.

Let me emphasize that the diversity and the magnitude of the development problems Africans face, as well as the widening gaps which separate Africa's progress from other regions of the world, requires flexible combinations of assistance resources. The development of agriculture in Africa in a manner which brings the benefits to the poor rural population will require substantial inputs of both technical and capital assistance. Technical assistance is required to train Ministry of Agriculture personnel to give effective advice to small farmers. Research is needed on new seed varieties, soil management and fertilizer requirements. Farm policies need to be developed which will insure that the earnings from increased production are equally distributed among small farmers. Marketing systems must be developed and personnel must be trained to provide required credit. Capital must be furnished on concessional terms to maximize utilization of water supplies, furnish credit for small farmers, make available supplies of fertilizer and farm implements, develop farm to market roads and provide the necessary storage and distribution facilities for improved marketing systems. African nations came into independence with decidedly less infrastructure than many LDCs in other regions and continue to require large investments of manpower and capital. These inputs must be provided in an integrated fashion to assure the maximum returns from both capital and manpower investments. It is essential that our assistance programs in Africa allow