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failure has been due to an inadequate appreciation of the problem on the part of the Managing Agency and of the Corporation itself at the early stages. The Board is already taking emergency measures to deal with the back-log of accounts, and to strengthen its staff and overhaul its accounting organisation in East Africa. I have formally drawn their attention to the urgent importance of doing every- thing possible to avoid a position in which the 1949-50 accounts are also subject to qualification by the Auditors.
27.
On the agricultural side I am making arrangements to broaden the advisory field on which the Corporation draws. This will ensure that all the technical matters, such as rotation and selection of crops, are fully explored in the light of experience elsewhere, and that the experimental work is such as to yield results which can be used as a reliable guide for future plans. In particular I am arranging for regular consultation between the Corporation's experts and the Colonial Secretary's agricultural advisers whose experience will, I believe, contribute materially to the development of the Scheme on the right lines.
Summary of the problem
28.
It may be helpful if, in conclusion, I endeavour to set out the essence of the problem as I see it.
(i) By the end of this financial year, the Corporation will have cleared and planted 112,000 acres and the clearing of a further 90,000 acres will be in train. The borrowings by the Corporation in the same period will have amounted to approximately £32 million. The Corporation propose that they should be authorised to proceed with further development plans over the ensuing four year period designed to bring the total cleared area up to 600,000 acres. They estimate that such a programme would involve a total borrowing of the order of £47.6 million.
(ii) The Corporation state that in their view the alternative to this programme is to close the scheme down, involving an estimated loss of £30 million.
(iii) My Department has examined the Corporation's proposals and, broadly speaking, are satisfied with the physical and financial assumptions underlying the capital development programme. But they have re-assessed the Corporation's estimate of earnings in a typical post-develop- ment year in the light of what they considered to be more realistic assumptions of price and total crop. On this basis the surplus envisaged by the Corporation would become a deficit.
(iv) They have also examined the possibility of a policy of limited liability - ¤•&•
e.
a four year development programme involving a total cleared area of 300,000 acres. But their conclusion is that although this would involve a modest saving of capital (say of the order of €5 million including the total cost of clearing the 300,000 acres cut from the target) the resultant net revenue would be more than halved owing to the impossibility of bringing down the operating overheads proportionately. In addition to this there would be a serious waste of the new railway and port installations built in the Southern Province. Under the Corporation's proposals these
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