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Nigeria

Increasing Oil Revenues
Accelerate Development

As the world's sixth largest crude oil exporting country, Nigeria has profited immensely from the escalation in oil prices. Current production at a rate of 2.5 million barrels of oil a day is expected by Rodney P. Rydlun of the Bureau of International Commerce to bring in about $9 billion during 1974. Increased imports of essential capital goods and a wider selection of consumer manufactures, as well as more capital investments, are being fostered by increased government spending, trade and payments liberalization, and serious efforts to minimize effects of imported inflation on Nigeria's real growth.

Crude oil production and real GNP are expected to continue a 10 percent annual rate of growth. However, with a population of 80 million, estimated real GNP per capita remains around $120 and places Nigeria among the world's poorest countries.

Foreign business confidence in Nigeria has been boosted by the apparently smooth implementation of the Nigerian Enterprises Promotion (Indigenization) Decree of April 1. Under the terms of this law, Nigerian equity and management skill is being developed in 55 categories of small and medium, non-technical service, manufacturing and assembly operations. The new Nigerian managers are favoring new sources of supply, offering U.S. firms the opportunity to penetrate this market.

The naira has been revalued in terms of the U.S. dollar from $1.52=1N to $1.61=1N

within the last three months. Also, inflation has eaten away at the cost advantage of

many of our competitors. Therefore, where U.S. products were always favored for their quality, many U.S. products now compete favorably price-wise in the Nigerian market-place.

U.S. sales of electric power machinery, wheat, and iron and steel tubes and pipes led advances during the first four months of 1974. U.S. exports to Nigeria in 1974 appear headed toward $230 million, a considerable increase over the $161 million of 1973 or the $115 million of 1972.

Upcoming U.S. trade promotions proposed for FY 1975 are especially tuned to opportunities in Nigeria for U.S. sales of printing and graphics arts equipment, transport and construction equipment and services, airconditioning and refrigeration equipment, business machines and office equipment, and materials handling equipment. A catalog show featuring U.S. hospital and medical equipment and services in June in Lagos was very successful at turning up viable contacts for 169 firms exhibiting.

All foreign business must incorporate locally or retain a local agent before

operating in Nigeria. Foreign capital, however, is welcome, especially in non-oil sectors. The training of Nigerians in business and industry is an important consideration in any U.S. joint venture proposals.

Compulsory universal primary education will be introduced nationwide by 1976. This will call for an estimated $2.5 billion of expenditures on teacher training systems, facilities, and classroom essentials for 17 million students. Government decisions are imminent also on LNG, iron and steel, and truck plants, infrastructure projects, and improvements in Lagos, all of which could mean U.S. sales of more than $1 billion over the next two years.

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South Africa

Growth, Gold Earnings
Building Import Demand

Aided by high gold prices, South Africa is becoming one of the world's largest importers of foreign manufactured goods. Ralph Edwards of the Bureau of International Commerce believes that U.S. sales to this market could reach the $1 billion mark in 1974. This would amount to an increase of about 35 percent over the $746 million sold there in 1973. U.S. exports to South Africa in the first four months of 1974 stood at $335 million-more than double their value during the same period last year.

South Africa's purchases are expected to remain high as the economy, bolstered by the government's expansionary fiscal policy, continues to recover from the difficulties of the fuel crisis. Although economic growth remains below that envisaged in the development plan, the rate of increase in the real gross domestic product rose from 3 percent in 1972 to about 4 percent in 1973. The country's Finance Minister recently predicted a further increase to a real growth rate of between 6 and 8 percent in 1974.

The foreign reserve position of South greater Africa is registering even improvement. This is due to rising export prices for the country's rich mineral assets, particularly the bullish outlook for gold. In addition, sales of diamonds exceeded $1.3 billion last year. Expanded mining and production of platinum and titanium is also planned.

Much of this newly acquired foreign exchange is being spent on capital goods for industrial development. The increase in imports of machinery and electrical equipment from 1972 to 1973 led all other sectors, growing by 27 percent to nearly $1.2 billion. U.S. suppliers are likely to remain very competitive in this field. Machinery and transportation equipment have accounted for more than half of recent U.S. shipments to South Africa. Sales of U.S. crops, such as milled rice, may decline as the agricultural sector recovers from last year's drought.

Specific foreign products that will continue to be in strong demand include organic chemicals, textiles, machine tools, construction and mining machinery, power generating machinery, and mechanical handling equipment. South African importers are buying a wide range of U.S. transportation equipment.

Inflation heads the list of continuing economic problems in South Africa. The government has relaxed import restrictions, adopted voluntary price controls, and recently raised the bank interest rate from 6.5 to 7.5 percent. Nevertheless, last year's inflation rate of 10 percent threatens to worsen.

Rational labor utilization also remains a problem and is a factor in the inflation picture. Many South African businessmen appear to feel that continued restrictions on their access to the whole of the South African labor force tend to increase labor costs of production and inhibit expansion. Although South Africa has taken some modest steps toward greater training and employment of black South Africans, racial barriers continue to have serious economic (as well as social and political) consequences.

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Tunisia

Growth, Exchange Gains Push Foreign Trade Up

Impressive economic growth and expanding foreign exchange reserves are boosting Tunisian foreign trade to record levels in 1974. David P. N. Christensen of

the Bureau of International Commerce expects Tunisian imports to reach $750 million this year.

This Tunisian economy is gaining momentum, continues Christensen. Agricultural production will approach record levels, the industrial base is expanding, and prices on Tunisian export items are climbing. Tunisia's current Plan includes major projects which require substantial imports of capital goods.

In 1972 Tunisia's GDP climbed 18 percent to $2.4 billion, or $420 per capita. It reached only $2.5 billion in 1973 but moved up sharply in early 1974 and is now approaching $3 billion. Continued GDP growth appears likely. The growth in 1974 will come from increases in agricultural production, three-fold price increases in petroleum and phosphate exports, and the impetus to the growing industrial base provided by the current $3.5 billion FourYear Plan (1973-76).

Tunisian political stability and a shift from state socialism to strong support for private investment have inspired business

confidence. Generous investment laws and

preferential access to the European Common Market are attracting foreign investors.

Tunisian imports, which rose 19 percent in 1973 to $648 million, should climb 15

percent in 1974 to $750 million. U.S. exports leveled off at $60 million in 1973 while the U.S. market share slipped from 12 percent in 1972 to 9 percent in 1973. With a projected increase of 25 percent, U.S. exports should hit $75 million in 1974, or 10 percent of the market. Leading U.S. exports are wheat, flour, soybean oil, aircraft, computers, pipes, and construction and mining machinery.

Promising prospects

Tunisian undertakings in agricultural modernization, industrialization, expansion of petroleum and mining activities, and infrastructure projects in telecommunications, roads and dams will open new markets for current categories of U.S. exports plus agricultural machinery, oil field equipment, heating and cooling equipment, scientific equipment, telecommunications equipment, consumer goods, and U.S. technical and engineering services.

Tunisia is liberalizing trade regulations and easing exchange regulations. However, France and Italy are likely to remain Tunisia's principal suppliers.

Tunisian foreign exchange reserves,

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Copper Revenues Climb, Import Market Expands

U.S. exports to Zaire reached a record $115 million in 1973 and should better that level during 1974. Zaire's demand for

capital equipment and engineering services will grow, adds Frank A. Ocwieja of the Bureau of International Commerce, although orders for consumer goods may lag behind last year's pace.

Several major projects will lead Zaire's market growth in the second half of 1974. These include mining and metallurgy expansion plans of the state-owned GECAMINES and construction by a U.S. firm of an international copper mining operation, SMTF. Progress on the second phase of the Inga hydroelectric complex and the Inga-Shaba transmission line will continue to bring U.S. equipment and services into the country. Petroleum drilling, highway and railroad improvements, and expansion of the telecommunications grid are also planned for the coming year.

Zaire's gross domestic product (at $2.6 billion) grew by a 5 percent real annual rate in 1973, led by increased copper production. High world market prices for copper and other minerals helped Zaire to balance its international payments as exports grew by about 45 percent. While import growth was a moderate 11 percent in 1973, it will pick

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up quickly during the next few years as large orders of capital equipment are delivered. Export receipts should also continue to climb as mining output increases and Zaire's goal of 100 percent incountry copper refining is reached.

The U.S. share of the Zairian market reached about 15 percent in 1973 compared to 6 percent the previous year. Half of these sales were of commercial aircraft, and several more will be delivered this year. Other leading U.S. exports were automotive vehicles, wheat, construction and mining machinery, and tobacco. Demand will continue to be high for these products, while U.S. suppliers will also find sales opportunities for communications, electrical switching, health care, materials handling, and vehicle maintenance equipment and building materials.

The exploitation of Zaire's forests will require new sawmill and woodworking machinery. Unification of the country's four railroad systems will generate significant purchases of rolling stock, rails, signalling and maintenance of way equipment. Special opportunities also exist in Zaire for firms willing to participate in joint ventures in power-intensive industries, such as metallurgy and metalworking.

An important new element in this market is the take-over early this year of most foreign-owned import, wholesale, and retail firms by Zairian nationals. The principal short-term effect of this Zairianization program has been disruption of the internal distribution system and reduction of orders for imports, especially consumer goods.

U.S. exporters, however, could well benefit from Zairianization in the long run as Zairians replace the former owners of businesses that had established ties with

European suppliers. U.S. firms can make use of the Commerce Department's World Traders Data Report service and Agency/Distributor Services in identifying new representatives for their products in Zaire. The United States will participate in the Fourth International Fair of Kinshasa the following June.

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due to their own expanding activity bolstered by Eximbank financing and AID funding, reports Mary L. Manley of the Bureau of International Commerce.

The 2 percent rise in Zambia's GNP to an estimated $2,014 million in 1973 was due primarily to improvement in the terms of trade. From an average of $1,246 per ton in January 1973, copper prices soared to $2,283 per ton later in the year. Income from exports (95 percent copper) increased over 50 percent while imports declined. With achievement of a $600 million trade surplus, the balance of payments improved dramatically. Imposition on the mining companies of a system of special deposits into the Bank of Zambia has mitigated growing inflationary pressures. The money supply increased by 26.4 percent in 1973 and bank liquidity was consistently over 50 percent.

A landlocked country, Zambia is very vulnerable to transportation difficulties. An access route to the sea through Malawi and Mozambique has been developed, air freighting of imports has been stepped up, and the Benguela rail route to Lobito, Angola has proved capable of handling more than 50 percent of Zambia's foreign trade volume.

7 DAY USE

The slowdown in economic development in 1973 has been reversed in 1974. The new budget calls for expenditures of $247 million, 62.3 percent over the amount actually expended in 1973.

With sufficient funds available, projects stalled since 1969 are likely to go forward. These include a compound fertilizer plant, truck assembly plant at Kasama, battery plant, and expansion of a sawmill. A U.S. firm has won the contract for the Lusaka telex system. A planned major expansion of the telephone network into rural areas and a microwave relay system to the Tanzanian border hold promise for U.S. business.

Other export prospects relate to the following projects under consideration: a 200-ton a day iron and steel mill; a hydrocarbon cracking plant; a new mining and concentration project for low-grade ore in Northwestern Province; and a 450megawatt "Stage 3" for the Kafue hydroelectric power station. In addition to equipment for mining expansion and for major transportation and communications projects, chemicals, medicaments, medical equipment, farming and irrigation equipment, food processing and packaging equipment, and data processing systems are areas in which the U.S. is competitive.

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General Library
University of California

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U.S. DEPARTMENT OF COMMERCE/Domestic and International Business Administration

UNITED

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All articles prepared by the Office of International Marketing, Domestic and International Business Administration. Reprinted from Commerce Today, July 22, 1974.

OVERSEAS BUSINESS REPORTS; $28.50 a year ($7.25 additional for foreign mailing); 30 cents a copy. Order from any of the Department of Commerce district offices or from the Superintendent of Documents, U.S. Government Printing Office, Washington D.C.20402. Single copies also available from the National Technical Information Service, Springfield, Virginia 22151.

3 1975

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