GOVERNMENT OF THE SOUDAN LOAN BILL. (Hansard, 7 August 1919)

§ LORD HYLTON

My Lords, this Bill, for which I ask a Second Reading this afternoon, is one authorising the Treasury to guarantee the payment of interest on the loan to be raised by the Government of the Soudan. A White Paper has been presented to Parliament, dated July 26 last, giving a full explanation of the subject, but as it is one of some interest and the sum of money involved is by no means inconsiderable, I think it only respectful to your Lordships that I should say a word or two in detail following the lines of the Paper that has been presented to Parliament.

By the Government of the Soudan Loan Acts 1913–14 it was provided that the Treasury should guarantee interest at a rate not exceeding 3½per cent. on any loan raised by the Government of the Soudan for the purposes set out in the Schedule to the 1914 Act, not exceeding in the aggregate an amount sufficient to raise £3,000,000. The Schedule of that Act set out under three heads the various works for which this money was to be applied. In the first place the most considerable item was works for the purpose of irrigating the Gezireh Plain, to which £2,000,000 was allocated. Then there was a smaller sum of £800,000 applicable to the extension of the Soudan Railway system, and a smaller sum of £200,000 was provided far other irrigation works and contingencies.

The Schedule to the Bill which is now before your Lordships is as follows:—Works for the purpose of irrigating the Gezireh Plain, including the repayment of any temporary loan raised for those works under the last Act has been raised from £2,000,000 to £4,900,000. The extension of the Soudan Railway system money is a slight reduction on the last Act; it now stands at £700,000 instead of £800,000. The money asked for in regard to the Tokar irrigation and Railway Extension now stands at £400,000 instead of £200,000 in the last Act.

Your Lordships who are acquainted with Leal conditions will know that the Gezireh plain is situated between the Blue Nile and the White Nile immediately south of Khartoum, and the works for the purpose of irrigating it comprise a masonry darn or weir near Sennar on the Blue Nile, some 626 170 miles south of Khartoum, to hold up the level of the river, a main canal to carry the water by free flow from the dam to the land to be irrigated and a system of subsidiary canals to conduct the water throughout that land, the area of which, as the scheme was originally designed, was to be 100,000 feddans, a feddan being about the same area as an acre. In January, 1914, the sum of £500,000 was advanced to the Soudan Government by the National Debt Commissioners against bonds issued under the 1913 Act to enable a commencement to be made with the Gezireh irrigation works pending time amendment of the Acts and the flotation of the Loan. The works were begun, and when war broke out in 1914 arrangements were on foot for issuing an instalment of the Loan, but no issue was ever made, and the £500,000 has now been expended on the work which has been carried on slowly during the war upon the main canal and certain other portions of the scheme.

Further study of the scheme in view of the altered conditions attributable to the war showed that the area to be irrigated bad to be increased to make the scheme financially a safe enterprise for Government, while it should not be too large for the population and resources available. These considerations fixed the area to be irrigated at. 300,000 feddans instead of the 100,000 feddans originally contemplated. Apparently in the Soudan, as everywhere else, there is an immense increase in the cost of all materials and labour, and the estimates for the scheme, including interest during construction, now amount to £4,900,000. When the works were going to cost only £2,000,000 and money was a great deal cheaper, it was intended that the Soudan Government should provide out of its revenues the annual interest and sinking fund payments in respect of the Loan. This is no longer possible in view of the enormously increased annual charges in this respect and the strain thrown upon the Soudan Government's Budget by present conditions. It has therefore been necessary to include in the Loan £1,000,000 to provide for interest during construction of the works, and until the time when it is anticipated that the receipts derived by the Government from the scheme will be sufficient to support the annual charges.

Those of your Lordships who are interested in these subjects will be aware that criticisms have from time to time been 627 lodged against this scheme on certain grounds. There has been a considerable correspondence, I think in The Times, and these criticisms were considered by His Majesty's Government to be of such a nature that it was only right that an investigation should take place into the accuracy of the allegations brought against this scheme. A Commission was appointed by the Foreign Office to consider them and the Commission decided that the criticisms were entirely without foundation and should never have been made. Copies of the Commission's report have been laid in the Library of the House. The burden of the criticism was that Egypt would suffer by the abstraction of water from the Nile to meet the needs of this project in the Soudan. His Majesty's Government is satisfied that as a matter of fact the Soudan can be developed to the extent contemplated by this Bill without in any way prejudicing Egypt.

The second item in the Schedule to the Act of 1914, viz., "Extension of the Soudan Railway System, £800,000," was intended to provide for the repayment to the National Bank of Egypt of the advance of £800,000 which they made to the Soudan Government for the building of the extension of the Soudan Railways from Khartoum through the Gezireh to El Obeid. Since that time the Soudan Government has been able to make provision out of revenue for the reduction of the debt to £700,000, and this constitutes the second item in the Schedule to the new Bill.

The Tokar cotton-producing area is situated about sixty miles from Suakin and is flooded annually by the flood of the River Baraka. Cotton has been grown there for many years and the average annual yield is about 4,000,000 lb. of ginned cotton, but the industry is capable of improvement and development by the construction of a modern irrigation system and the provision of railway transport from Tokar to Port Soudan, the port of export of the country, by extending the hue from Suakin to Tokar, a distance of about 60 miles. In the schedule to the Act of 1914, these items were not specifically provided for, but an item of £200,000 for "other irrigation works and contingencies" was included in it. The development and improvement of the Tokar cotton-producing industry is a work of some importance, not only to the Soudan but to British cotton interests. The present schedule provides 628 for these works the sum of £400,000, which includes, in addition to the estimated cost of the works, an allowance for interest during construction for the reasons given above in the case of the Gezireh scheme.

Your Lordships will see that, although the amount of the Loan originally sanctioned is to be doubled, no new schemes are involved. The necessity of applying to Parliament for additional financial assistance is due to the conditions resulting from the war. The experimental cotton-growing areas in the Gezireh have been at work for a number of years and have produced a very valuable and satisfactory type of cotton which has sold at high prices in the Liverpool market. The Soudan Government believes that the results obtained from these experimental stations are a true index of the yield which may be expected from the whole area.