Continued from last edition
The Lieutenant-Governors of the Southern and Northern Provinces prepared their respective estimates and all changes are carefully acrutinised by and discussed with, the Governor-General more especially the programme of capital expenditure, which is adjusted to the available ha lance. The Heads of Central Departments submit their estimates through the Central Secretariat, and the Governor-General personally goes through all changes and the programme of capital works, with the General Manager and with any other Head when necessary. The three Budgets are printed separately in a single volume, the Revenue and Expenditure of each being shown under each head in parallel columns and totalled in the Central Secretariat. The Revenue forms a single fund to meet the aggregate expenditure. The Financial Statement and Appendices, &c., are added by the Treasurer. The financial unification is thus complete.
When, in 1912, the Imperial Treasury was consulted regarding the proposed Amalgamation of .Nigeria, it was pointed out that the combined deficit- (or excess of expenditure over revenue) of the two Governments in that year was estimated at £357,000, and that the average deficit of the last four years stood at £229,000. The Secretary of State considered it evident that for some time to come, and even with the most careful economy in Administration, the Revenues of Amalgamated Nigeria would not suffice to meet the expenditure. He-proposed that the grant in aid should be fixed at £100,000 for five years, after which it would cease, and with this limited assistance he anticipated a deficit of about £200,000 in the first year, which he proposed should be met from the Colonial reserves of Southern Nigeria. These in the previous year (1911) stood at £1,007,625. The proposal was accepted after scrutiny by the Lords of the Treasury, and the reduced grant commenced on April 1st 1913.
On Amalgamation I was able to effect considerable economies in the expenditure of the Southern Provinces, which much more than compensated for some increase in the Administrative Service of the North. But the outbreak of war threw unexpected burdens upon the Budget. Customs receipts fell by £267,000 is 1914, owing to dislocation of trade, and the cost in 1914 of the Cameroons War was estimated at £167,000. Excluding, however, an advance to the new Eastern Railway, which was met from Colonial reserves, the first year of Amalgamation closed with a- credit balance of £80,500 instead of the anticipated deficit of £200,000 which, owing to these unexpected burdens, might have been expected to have increased to £634,000. The balance of surplus assets of the combined Administrations stood at £1,273,000 in spite of the advance to the railway construction of £629.000. These were astonishingly satisfactory results.
The Secretary of State had decided that the new railway should he completed to the colliery (150 miles), but that all further construction should be suspended. To effect this and carry on the Administration to the end of 1915, it was estimated by the Colonial Office that we might require a loan of one and three-quarters million from the Imperial Treasury. By the close of 1916 the whole of the reserves had been absorbed in financing the Eastern Hallway, and there was actually a small deficit of £124,411. But Nigeria has not »ad to ask for any loan whatever. The first 150 miles of the Eastern Railway has been completed at a cost of about £2,000,000, including purchases of material for the remainder of the line to which the Government was committed.
Additional expenditure incurred on account of the War amounts to about £700,000, with approximately an equal sum in payment of salaries of officers lent to the Imperial Government, and similar charges borne on the estimates (£705,000 to end of 1918). The revenue has meanwhile lost a sum of £1,120,000 (receipts in 1913) from duties on trade spirits which have ceased to appear on our estimates. The recovery in the last two years is indeed surprising, and shows the error-receipts for 1918 were £4,014.189, viz., £652,085 over the estimate. On the other hand the restoration of the normal staff, the rehabilitation of the railway and buildings (upon which inadequate expenditure for maintenance has been incurred during these years of stress), the necessary expansion of several departments arrested for four years, the increased salaries or war bonuses, the enhanced cost of all materials and of prisoners1 food, will involve increased expenditure. There will also be the interest and sinking fund on the £6,000,000 of the Imperial War Debt, which Nigeria has declared her readiness to undertake, commencing six months after the termination of the War, via a sum of £13,250,000, spread over 36 years. Towards the debt charges on this War Lain, the Native Administrations will probably be able to contribute a sum of £70,000 per annum. I have no fear that the expanding revenue will not be able to bear this burden. The estimate of revenue for 1919, large as it is, was prepared when the duration of the War was still uncertain. With the expansion of trade duo to increased imports, and of shipping, with reduction of freights, it may probably be exceeded, for it is certain that there will be a strong demand for all the produce the country can export. It exceeds the estimated expenditure for 1979-by no less than £288,000.
The realized revenue in the first year of Amalgamation (1914) was £3,048,381 (including a grant -in-aid of £100,000). The conservative estimate for 1919 is, as I have said, £4,070,525 without a grant, in spite of the loss from trade spirits, and the war conditions, which I have.
It is difficult, without an analysis of figures which would be out of place here, to describe how these results have been obtained. They cannot be ascribed to heavy war taxation for the only war taxes imposed were (1) an export duty on three staples (increased in 191b to six) which affected the art des so slightly that the control price in England was not altered from that obtaining for other West African Colonies, while the local output was greater than ever on all imports except spirits, unmanufactured tobacco and cartridges, and a surtax of 30 per cent, on railway freights. The former yielded £108,000 only in 1917. The latter was not more than was necessary to meet the increased cost of fuel and other necessaries of the railway. That it had no adverse effect on the development of traffic was proved by the fact that the receipts rose from £632,130 in 1913 to £1.267,000 in 1918 just double.
Increased revenue was obtained by steady increase in the yield from direct taxation in the North, by the development of the colliery, by the high prices (and consequently increased royalties) on tin, by larger receipts in fines and fees owing to the increased efficiency of the Courts, and larger railway receipts from the volume of produce carried. Decreased expenditure was affected by the unavoidable reduction of the civil staff, and the absence of part of the military force, by the reduction to the lowest possible point of all capital works, and by general economy in every detail.
The total debt of Nigeria amounts to about eight and a half millions (chiefly incurred by Southern Nigeria), viz., about two years’ revenue. Of this about six millions has been spent on railways, for which, in the South, Major Waghorn considered an inadequate mileage had been constructed. On the total sum an annual debt charge of £448,400 accrues, which is more than met by the surplus earnings of the railway after paying all working expenses, and by receipts from harbour dues. These receipts may be expected to increase largely am’ rapidly, especial!) from the Eastern Railway, the earnings of which are at present chiefly confined to the carriage of coal from the colliery. Since it traverses one of the richest districts in West Africa with a dense population, its commercial prospects are immense, and with the return of normal conditions and the completion of wharf facilities at Port Harcourt, there can be no doubt of largely increased revenue.
The service of the existing debt is, as I have said, fully covered by the receipts from the remunerative works upon which it has been expended. The war debt assumed in relief of the Imperial Exchequer, deducting the share borne by the Native Treasuries, will probably involve an annual expenditure of about £200,000, and & new loan, say, of £3,000,000 will be required, making in all a total new annual debt for loan service of £470,000. We must look to the Colonial reserves for the capital outlay for rehabilitating the railway, for the new capitals, and for the large housing programme.
The new loan should be devoted to (1) the completion of the Eastern Railway, including the Benue Bridge, and the short branch line to the mines, together with its share of the Kaduna. workshops. (2) Wharves and harbour improvements at Lagos and Port Harcourt, including the molo-works and dredged channel, for which only about £154,000 remains from the present loan. (3) The terminal at Apapa. (4) The repayment to Colonial Reserves of the advances made for the Eastern Railway, as may be required for the purposes just enumerated. ‘ The completion of these works will no doubt cost more than double the loan I have proposed, but before a further sum is required the portions of the works completed will be bringing in revenue.
The profits on coinage in the hands of the Currency Board amounted at June, 1017, to £1,700,000, and must now be over two millions. The larger portion of this belongs to Nigeria, and should be available to save borrowing.
It is worth while to examine these forecasts of revenue and capital for 1019 in order to judge how far they represent normal conditions. The estimate of-revenue is £4,070,523, of this, £28,700 is non-recurrent (sale of S.S. ” Dakar ” and refund from Cameroons Province). Customs and Harbour receipts may ‘both be expected to increase rapidly under peace conditions. The Direct Tax, only recently instituted in a portion of the Southern Provinces,-may be expected to yield a much larger sum in a future year when more universally applied. The yield steadily increases each year in the Northern Provinces. The profits on the Colliery by sales to shipping, &c.( may be expected to increase rapidly. In illustration it may be noted that the receipts from the following items show an increase in the estimates for 1919 over the receipts for 1913 as follows : Railways by £750,870, Colliery by £147,000, Direct Taxes by £283,022, Royalties on tin £34.000. Thus, deducting the non-recurrent items, we have a Revenue of £4,041,000, which it is reasonable to expect will increase very rapidly.
The estimated expenditure in 1919 is £3,782,648. War bonuses have been increased by £170,000 (included in the estimate) and will be replaced by a permanent revision of salaries. If to this be added the filling of vacancies and the increase of staff, especially in the Political and Education Departments, it would be advisable to add not less than £200,000, but this would be greatly affected by the adoption of the proposals made in paragraphs 207 to 223. The provision for the West African Frontier Force amounts to £292,974. The normal cost of the Force should not exceed £176,000 (paragraphs 38 and 243); decrease £117,000. The £25,000 provided for interest on temporary loans disappears, and also the charges for Eastern Railway Construction and Harbour Works in all £88,000. The debt charges will be increased by £470,000 (see paragraph 114). The 1919 estimate of capital expenditure on railways and public works is fairly liberal. The British Staff of the Medical Department, though reduced by 45 per cent, during the War, has, with the aid of motor cars and additional native staff, worked very successfully. ” The actual pre-war cost (1914) was £123,300; the estimated cost in 1919 for a somewhat depleted staff is £127,500. The normal cost should not, I think, exceed £100.000. These adjustments would add £412,500 to the 1919 estimate, bringing the expenditure to £4,195,000, as against a minimum revenue of £4,041,000, a deficit of £154,000.
These calculations are necessarily based on mere guesses, and assumptions, but they will serve to show that the prospect is reassuring. They take no account of the expansion of revenue, which may be expected from a large increase of imports and of harbour dues and railway freights which will accrue from the liberation of shipping and the rapid increase of trade. Duties on spirits for sale to natives are entirely eliminated, but, as will be seen from the section on Liquor, I hope that the Revenue may derive a substantial sum from the excise on locally-brewed beer. The incidence of indirect taxation is now, as I have shown, much reduced, expenditure, on the other hand, should be further reduced by the use of local timber, lime, and tiles, &c., and it may reasonably be expected that the present abnormal prices for supplies of all kinds imported from England and America will decrease. Generally speaking, there are grounds for anticipating a rapid increase over the four million pounds which I have assumed as the present normal revenue, and ample justification for the loans proposed, without recourse to any spirit duties.
In my original report I observed that the financial position presented two unsatisfactory features first, that nearly two-thirds of the Customs’ revenue was derived from trade spirits; and secondly, that the exports were not sufficiently diversified, so that if any disease attacked the oil-palm, or for other reason palm products were to fail, the prosperity of Southern Nigeria would collapse. Both drawbacks have, I trust, now been removed; ground-nuts, cotton, cocoa, skins and hides and tin may now all be regarded as staple exports.
The Treasurer’s financial statement anticipates that the Colonial reserves will at the close of 1919 stand at £871,000. This calculation will, of course, be altered by the changes I have outlined but it is justifiable to assume that the reserves will be in the neighbourhood of a million sterling.
In view of the progressive increase of revenue and the encouraging outlook, there is no good reason for maintaining reserves at anything approaching this sum. Liquid assets should be devoted to rehabilitating the railway, to a large programme of house-building, and to the completion of the two Capitals.
Not only are houses for Europeans desirable in order to implement the promise of free quarters and advantageous to Government from a health point of view, but they would effect a financial saving. A sum of approximately £6,500 is spent yearly in erecting temporary houses, and a further sum of between £5,000 and £6,000 is disbursed to officers us compensation for quarters. This aggregate annual expenditure is equivalent to the interest on the capital sum required to build from 150 to 200 houses, together with depreciation and maintenance charges. The most pressing railway needs are for rolling stock and workshop equipment especially at the new centre at Kaduna Junction, already sanctioned but postponed by the War. Large orders have already been placed. The renewal of rails on the southern section will also soon be a pressing matter. Regarding the new Capitals I have written elsewhere.
No special reference has been made in this brief review of the addition to Nigeria of the occupied territories of the Cameroons. except in so far that this province would participate in the increase of staff and the capital expenditure which has been included. The separate estimates, which have been prepared annually, show that with economy its normal revenue should nearly meet its normal expenditure.
The Native Administrations in the Northern Provinces are in a very prosperous condition arid well able to contribute the sum named to the Imperial “War Debt. Their aggregate revenue has increased from £70,895 in 1906-7 to £441,070 in 1917; the total in 1913 was £324,449, an increase of over 35 per cent, in four years. They had at the end of 1917 £255.600 invested, and are increasingly able to undertake provincial capital works, roads, &c. The Native treasuries in the Southern Provinces will also, I am assured, soon be in a position to contribute between 1897 and 1901, viz., before Northern Nigeria was transferred from the Chartered Company and while it was mainly employed in Ashauti, the total grants-made amount to £4 261 000. Even if “the cost of the West African Frontier Force be added while it was employed on Imperial Service on the trench frontier and Ashanti (where otherwise British troops would have been required at far greater cost) we have a total of less than £4,900,000 To this may be added the sum paid to the Royal Niger Company for expropriation, £865,00, On the other hand a great part of the grants was transmitted to Nigeria in silver com on which the Treasury admitted a profit of 58 per cent. On the most liberal calculation, therefore, the cost of acquiring Nigeria has not exceeded, say, £4,700,000.
The Uganda Railway alone cost a much larger sum, and since Nigeria has already incurred an expenditure approximating a million, and proposes to accept a further six millions on behalf of the Imperial War Debt, it will be seen tot this vast country, which affords an increasing market for British industry and commerce, has been acquired at no cost whatever to the British taxpayer.
The total sum expended on railway construction in Nigeria to the end of 1918, whether from Loan Account or from Colonial Revenue and Reserves, is shown at £S,670,145. The expenditure on the existing railways (whether recurrent charges or Capital Account) is estimated in 1919 at £825,363 (actual in 1917 £757,700). The earnings in 1919 are estimated at £1,383,000 (actual in 1917 £1,009,323). If to the 1919 expenditure be added the full charge for Interest and Sinking Fund on capital cost (whether from loan or advances from revenue) it will be seen that the railways are not only paying these debt charges, but show a margin of profit of about £60.000.
It is true, as I have said elsewhere, that an inadequate sum has been spent on maintenance during the War, and a-considerable sum must therefore be added to the capital account for additional rolling-stock workshop equipment, and in some section? for renewal of rails, but considering the increased cost during the War of fuel, and of all materials, and war bonuses to staff the financial position of the open-line railways may be considered eminently satisfactory. There is, moreover, every prospect of a large increase in earnings as soon as the removal of war restrictions, and an adequate supply of shipping, render the expansion of trade possible.
The length of the extension from Udi to Kaduna, which was under construction until arrested by the War, is 430 miles, making a total mileage open or under construction of 1,540 miles. Much economy was effected when the system was unified prior to amalgamation.
The Eastern Railway to Udi is laid with rails 60 Ib. to the yard. The first 60 miles of the Western Railway from Lagos the stone quarries at Aro should be re-laid with 80 Ib. rails. It is worth considering whether it would not be worth while to relay the remainder of the Western Line with 60 Ib. rails, using the present 45 Ib. rails for new extensions.
A reference to the map of Nigeria which forms Appendix 1 shows that the railway from Lagos running N.E. to Kano, serves the western portion of the Southern Province and at Kano is roughly midway between the French frontier on the west, and the Cameroons on the east. The Niger waterway, fed by the Benue, serves as an outlet for the produce of the central portion of the Southern Province and is connected with the Lagos-Kano Railway line by a branch from Baro, a port on the Niger, to Minna. The Cross River, towards the extreme east, affords a means of transport for those districts for a distance of about 100 miles northwards from the sea. They are navigable only for a few months in the year. Between these two rivers, with their ports at Forcados and Calabar, lies a belt of country about 100 miles broad, which is probably one of the most densely populated in Africa, and also one of the richest in palm produce. It naturally strikes the eye when looking at the map, that the great Bonny estuary, situated in the very centre of the coast line of this area, would form an ideal port. When, however, questions of general railway policy were discussed some 15 years ago, Sir ft. Moor stated that it was altogether impossible to make a port on this arm of the sea. or to obtain railway access to it, by reason of the extensive mangrove swamps by which it was bordered.
The actual Revenue of the Railway in 1917 was £ I 009,323 and in 1918 it was £1.267,(KW of which the Western Railway earned £1,077.146 and the Eastern £189,858, the profit per mile of open line being £485 10,” The increase on the Western Railway over ]9!7 was £129,513. viz. 13-6 percent, and on the Eastern Railway £128,168, viz. 207-7 per cent. Total increase £257,681.
To be continued
