International Economic History Conference, Helsinki, 21 August 2006
Stephanie Decker
IEHC 2006, Session 94
THIS IS A DRAFT VERSION ONLY
How to gain local Goodwill and influence Politicians:
British Companies and Economic Nationalism in Nigeria and
Ghana, 1945 to 1977
Stephanie Decker
([email protected])
I Economic Nationalism Revisited
Economic nationalism, since the time of Friedrich List, has been employed by a range of
countries. However, what types of attitudes, policies and legislation this entailed in the
individual cases differed widely. Scholars researching economic nationalism have grappled
with the difficulty of defining it comprehensively (Peter Burnell), finding a theoretical
framework for it (Henry G Johnson) or categorising it politically (Dudley Seers).1 It stands to
reason, therefore, that these difficulties arise because scholars try to unite case studies that do
not really address the same problem. If this was the case, the fact that there are two panels at
the International Economic History Conference this year, which address the subject (the
present one on the Developing World, and one on Eastern Europe), would only mean that it is
a convenient catch-all concept that unites very different subjects and approaches.
Despite the elusiveness of economic nationalism, that most observers intuitively refer to
certain policies and events as economic nationalism, just as they do with political nationalism
(an equally thorny issue). And, although coincidence does not indicate causality, it is striking
that international occurrences of what is usually considered economic nationalism tend to
cluster in certain decades of the twentieth century: the 1920s-1930s, and the late 1960s-1970s
(arguably the late 1940s to early 1950s is also such a phase).2 One specific effect of host
country nationalism can be expropriations, the occurrence of which has been monitored by the
United Nations since the 1960s (see Figure 1). The majority of expropriations of British firms
took place in Africa (49 percent), followed by the Middle East (19 percent ) and Latin
America (8 percent). 3 Expropriations, however, are not the only condition that indicates the
existence of economic nationalism.
1
PJ Burnell, Economic Nationalism in the Third World (Brighton: Wheatsheaf, 1986); HG Johnson, 'A
Theoretical Model of Economic Nationalism in New and Developing States', in Economic Nationalism
in Old and New States, ed. by idem (London: George Allen and Unwin, 1967), pp. 1-16; D Seers, The
Political Economy of Nationalism (Oxford: Oxford University Press, 1983), pp. 46-49.
2
The present panel will probably allow for more accurate timeframes and incidences.
3
FC Boyd, 'Expropriation of Alien Property in International Law: A Study of Recent State Practice
Concerning British Nationals' (MPhil, University of Nottingham, 1988), pp. 37, 43. As these figures are
only for British interests, this might just reflect regional distribution, but Geoffrey Jones also names
Africa and the Middle East as the regions where international business was most commonly
expropriated. This reflected that 60 percent of all acts occurred in less than thirty countries, and
1
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Stephanie Decker
Figure 1: Instances of Expropriation of International
Business worldwide (total) and British Companies affected
(from 1965), 1960 – 1985
90
9
80
70
3
60
17
16
50
4
7
40
6
30
9
5
6
65
74
34
13
14
24
12
5
1
3
1
1
1981
1982
1983
1984
1985
24
1980
39
1979
47
1978
32
1977
15
1976
1964
10
1
1975
1963
16
1973
1962
5
1972
1961
8
1971
22
1970
11
1969
8
1968
8
1967
7
1960
10
3
1974
20
4
9
1966
1965
0
International business 1960-1985
British companies 1965-1985
Source: Charles R Kennedy, ‘Relations between Transnational Corporations and
Governments in Host Countries: a look into the Future’, Transnational Corporations 1
(1992), 67-91 (69); Fiona Boyd, ‘Expropriation of Alien Property in International Law: A
Study of Recent State Practice concerning British Nationals’ (M. Phil. Law, University of
Nottingham, 1988), p. 29.
Coincidence alone does not indicate causality, but countries’ policy-making does not occur in
a vacuum either. Waves of economic nationalism suggest that there are some international
factors at work, even if cases still differ fundamentally. The following case study of two
formerly British colonies in West Africa, Ghana and Nigeria, and their policies against UK
foreign investment, seeks to shed light on the international as well as local factors that
determined the emergence and eventual form of economic nationalism. I will argue that
economic nationalism has to be understood in the context of the specific political economies
concerned: while international trends and concerns are important in opening up potential
courses of action, the actual route taken reflects the configuration of local institutions and
internal conflicts.
By distinguishing between international and local factors, different case studies become
comparable and can be debated in order to come to a clearer understanding of what
determines the forms of economic nationalism. This will help to define a set of requirements
that mark specific incidences or policies as economic nationalism.
The current case study is drawn mainly from business sources, and focuses on business
perceptions of economic nationalism in Ghana and Nigeria. This is closely connected to the
beyond the regions already referred to, only Chile, Peru and Indonesia stand out. Fiona Beveridge’s
sample indicates that 30 percent were extractive companies, 20 percent financial, 15 percent in
manufacturing and 13 percent in agriculture. G Jones, Evolution of International Business: An
Introduction (London and New York: Routledge, 1996), p. 293.
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Stephanie Decker
emergence of a consensus on development issues that united colonial governments, African
elites as well as labour, and British business. Through the use of a different set of sources,
some features emerge that have not received sufficient attention in the existing literature,
especially the fact that economic nationalism was not aimed exclusively, not even primarily,
at foreign investment, but rather at resident aliens.4
II The Development Consensus, Legitimacy and Goodwill
Economic nationalism in West Africa can only be understood in the context of the colonial
empire, post-1945 decolonisation and the emergence of the discipline of development
economics, which came to have an inordinate influence on economic policy-making. The
Gold Coast (postcolonial Ghana) and Nigeria had experienced economic nationalism in the
1930s over the organisation of cocoa-buying. This was particularly significant in the Gold
Coast, whose main export produce was cocoa, and Western Nigeria, which was also
predominantly a cocoa producing area. European companies, mainly British (also French and
Swiss), controlled the market through so-called pools, and West African nationalists lobbied
the colonial government successfully to disband them.5 The cocoa-buying companies,
however, continued their arrangements informally, arousing the suspicions of nationalists.
Their cooperation became effectively legalised with the beginning of World War II, when the
government shifted to a controlled war economy. As a result, colonial government became
tainted in the eyes of West African nationalists by commercial monopolies (or, more
correctly, oligopolies), while companies became closely associated with imperialism.
During and particularly after the war, the British colonial governments became highly
uncomfortable with their close association to business and officially distanced themselves.
This left business in a precarious and vulnerable position politically, especially since the postwar Labour government carried out the nationalisation of certain industries in the UK. For
Ghana and Nigeria, contemporary development thinking became central in the reorganisation
of the relationship between government and business. Both could agree on the desirability of
economic development. Development gave imperial administration the veneer of a civilising
mission continued, as well as bolstering the nationalist credentials of the emerging African
politicians. But most importantly for business, it provided imperial companies with the basis
for a renewed corporate legitimacy.
Corporate legitimacy became essential to companies that had been closely associated with the
British Empire. As decolonisation became a political reality, they needed to find a new
justification for their continued presence.6 Orthodox development thinking of the 1940s and
4
Collins and Biersteker have made that point in their studies, but do not give it the prominence this
deserves in my opinion. Because the academic discourse of the 1970s and 1980s focused on the
conflict between host country and foreign investment interests, the internal targets of economic
nationalism have been largely relegated to the sidelines, or represented as external – a questionable
decision. See TJ Biersteker, Multinationals, the State, and the Control of the Nigerian Economy
(Princeton, NJ: Princeton University Press, 1987), pp. 53 (FN2), 145; and P Collins, 'The Political
Economy of Indigenization: The Case of the Nigerian Enterprises Promotion Decree', African Review,
4, no. 4 (1974), 491-508 (505-506).
5
On Nigeria see Jan-Georg Deutsch, Educating the Middlemen: A Political and Economic History of
Statutory Cocoa Marketing in Nigeria, 1936-1947 (Berlin: Das Arabische Buch, 1995); and on the Gold
Coast: J Miles, "Rural Protest in the Gold Coast: The Cocoa Hold-Ups, 1908 - 1939", in The Imperial
Impact: Studies in the Economic History of Africa and India, edited by Clive Dewey and Antony G.
Hopkins (University of London: Athlone Press, 1978), pp. 152-170.
6
And, according to Frederick Cooper and Peter Cain and Anthony Hopkins, the commitment to
economic development was central in the shift from post-war imperial resurgence to decolonisation as
well. F Cooper, Decolonization and African Society: The Labor Question in French and British Africa
(Cambridge: Cambridge University Press, 1996), especially p. 469; PJ Cain and AG Hopkins, British
Imperialism (London: Longmans, 1993), especially p. 278.
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Stephanie Decker
1950s generally advocated an approach that would be summed up as jump-starting a less
developed economy through the influx of capital, technology and know-how.7 Companies
could fulfil a positive role in this scheme if they provided capital and transferred knowledge
and skills through training and promotion of local people.8
Goodwill policies were the result of attempts by business to be accepted by their host societies
and most importantly their elites. They followed the tenets of what I call the orthodox
development paradigm relatively closely. The fact that they were also commercially profitable
did not devalue their importance for positive public relations, but rather reflected how closely
they were aligned to official economic policy.
II.1 The development consensus in theory
What were the features of this framework of post-war development ideologies? Tony Killick,
in his study of the impact of development theories on policy making in Nkrumah’s Ghana lists
a number of characteristics, as does Gustav Ranis in a general review of the field of
development economics.9 The central idea is the ‘big push’, which was supposed to propel a
traditional country into modernity, normally via industrialisation. The appropriate tool for this
was raising the investment ratio, as capital scarcity was seen as the main structural deficiency.
Consumption was curtailed in order to increase available funds by creating domestic (often
compulsory) savings, supplemented by foreign capital. Central to this was the interventionist
state, which was meant to act as a provider of infrastructure, subsidies and appropriate
protection (especially with regard to import substitution industrialisation). All of this was
based on the assumption that over a certain level of per capita income, growth would become
self-sustaining.
Post-war development thinking was certainly not monolithic, but most authors agree that a
number of features were broadly accepted (although some critics with a neo-classical
background emerged, most notably Peter Bauer, and, for Ghana, Douglas Rimmer and Tony
Killick). The most important features, especially in the context of this study, were
•
•
•
•
•
•
The state as the key instrument of development
Industrialisation, especially import substitution industrialisation for domestic
markets
Knowledge transfer through education and training
Creating growth by raising the investment ratio
Focus on savings-pushed growth (and, under Nkrumah in Ghana, deficit
financing)
Development projects were to be financed domestically, supplemented by
foreign capital (although conditions and restrictions were defined)
As colonial reform and later decolonisation increased the importance of African political and
popular opinion, colonial governments did not want to be perceived as collaborating with
British companies. Nevertheless, as business had shown to be responsive to governments’
economic vision during World War II and had cooperated in the organisation of West African
trade (reaping great benefits in the process), corporate principals, colonial officials, and later
nationalist politicians, found ways to integrate firms into the development framework. The
role that emerged for foreign investment was closely linked to the points mentioned earlier:
7
This was closely connected to more sociological ideas of modernising traditional societies.
The role of proprietary technologies was not much debated before the 1970s.
9
T Killick, Development Economics in Action: A Study of Economic Policies in Ghana (London i.a.:
Heinemann Educational, 1978), pp. 17-18; G Ranis, 'The Evolution of Development Thinking: Theory
and Policy', Economic Growth Centre, Yale, Discussion Paper, 886 (2004), 1-38 (1-5).
8
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•
•
•
•
•
Stephanie Decker
Welfare and the training and promotion of manpower
Industrialisation
Investing in and opening up new areas which local capital failed to exploit
Redeployment – this referred specifically to the merchant companies, which
left areas to African competitors that required low levels of capital, technology
and skills
Mobilising capital, especially savings, for local enterprises – this opened up
new opportunities for banks
Mining, being already an industry, was to reinvest, like other businesses, more of its profits
locally, and attempts were made to refine more raw materials in the country and develop byproduct recovery. Overall, however, mines, like the Ashanti Goldfields Corporation (AGC) in
Ghana, argued that they provided important exports, which earned foreign exchange to pay
for development projects and the imports they required.
These development policies that were espoused in post-war times showed signs of failure in
the 1960s. Critics from the left (dependency and underdevelopment theories) and the right
(neo-liberal economics) interpreted this differently. Dependency and underdevelopment
theories saw the reason for the failure of these policies as structural and largely external to
Africa: the global economy only allowed poor countries to develop in a relationship of
dependence to richer, mostly Western countries, which naturally curtailed the level of overall
growth and prosperity they could reach. Neo-liberal economics, however, argued that internal
factors, especially policy failure, was to blame.
This paper follows the analysis of policy failure, especially the argument put forward by
Robert Bates in the 1980s. However, this is not to say that policy was the only factor that
determined economic decline – commodity prices for West African exports fell after the end
of the post-war boom and the war in Korea.10 The failure of development was also not a
failure in absolute terms – growth rates in the early 1960s were still relatively good and
African countries overall did rather better than Asian countries – but rather fell short of the
aspirations and expectations of the people.11
Import substitution policies, which were common in African countries in the 1960s, but
especially in the 1970s, when many countries followed a structuralist or dependency approach
to economic development, had detrimental side effects, best explained by Robert Bates:
Observers began to realise that distortions in relative factor prices, overvalued
exchange rates, low interest rates, and biased internal terms of trade, all
instruments of import substitution, not only discouraged agriculture, encouraged
industrial capital and import intensity and limited the generation of employment,
but also created windfall profits for favoured elites long after such support was no
longer necessary for infant industry reasons.12
10
For Ghana Douglas Rimmer has argued that the fall in cocoa prices should also be attributed to
policy failure, as Ghana controlled the majority of world wide cocoa supplies. Government marketing
board policies were instrumental, so Rimmer, in bringing about the plunge in cocoa prices. D Rimmer,
Staying Poor: Ghana's Political Economy, 1950-1990 (Oxford: Pergamon, 1992), p. 69.
11
See Morten Jerven’s paper (calculations based on the World Development Index): ‘Regressions on
African Growth – A Review of the Method and the Evidence’, Paper for the African Economic History
Workshop (26 April 2006), pp. 3-4.
12
RH Bates, Markets and States in Tropical Africa: The Political Basis of Agricultural Policies
(Berkeley, Los Angeles, London: University of California Press, 1981), pp. 6-7. A similar argument can
be found in Ranis, 'The Evolution of Development Thinking', (7).
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Bates’s analysis of the policies in several African countries, including Ghana and Nigeria,
concludes that these elites benefit from policy choices made in the name of development
programmes. These groups were the owners of and workers in industrial firms, which enjoy
government protection and subsidies (resulting in uncompetitiveness, high consumer prices
and economic stagnation) as well as the economic and political elites, privileged farmers and
the bureaucrats in the public administration.13 He refers to them as the ‘development
coalition’. Considerably earlier, in the 1960s, Harry G Johnson, based on an earlier study by
Albert Breton on Canada, described a similar situation as a type of economic nationalism that,
although he thought it might be beneficial, was endangering development as it favoured a
narrow middle class in less developed countries.14 Tony Killick, in his study of development
policies and Nkrumah’s government, pointed out that nationalism and development
economics in the 1950s and 1960s were mutually reinforcing.15
The development consensus of the 1940s, 1950s and early 1960s offered private companies a
positive role model for their involvement in less developed economies, which they embraced
not only in their external, but frequently also in their internal communications, and
commercial policies that also served to ensure local goodwill. After establishing what can
reasonably be called a consensus within development economies, the next section addresses
how companies dealt with development ideas internally and externally, and how they
integrated them into their corporate strategies.
II.2 The development consensus in practice
In a review of recent scholarship on the relationship between Western, especially British,
business and colonial governments during decolonisation, Nick White has argued that there
existed “a fundamental lack of unity between business and government thinking on
development and decolonisation issues”16 For development issues in West Africa this is
hardly the case. It is true that British business was initially disappointed not only with the
direction British post-war imperial policy took, but also regretted the end of an especially
close relationship to the colonial governments and the Britain’s Colonial Office that had been
particularly strong during the War. But as subsequent British governments continued on the
route of decolonisation and development, business began to realise the advantages of
following that lead. The fact that the British government was not active in protecting foreign
investment abroad for political reasons made it even more important that companies found a
legitimate cause for their presence in developing countries that provided a relatively safe
platform from which to negotiate with African politicians. Britain’s companies were no longer
to enjoy the special protection of an imperial presence, and those business leaders who
realised this were more likely to find a way to protect their investment. 17
Government support for business became increasingly elusive, especially after the Accra riots
in 1948, in which the trading companies, first and foremost the British United Africa
Company (UAC), were especially targeted. As a result, business began to accept that the only
successful strategy was to regain the trust of colonial officials, and increasingly of African
politicians as well. Surprisingly, directors and managers began to reflect in internal
documents on their role within the framework of development policies, indicating that they
were not only trying to regain public trust but also a corporate sense of mission for the new
13
Bates, Markets and States, pp. 62-77, 121.
HG Johnson, 'A Theoretical Model of Economic Nationalism’.
15
Killick, Development Economics in Action, pp. 11-32, 53-54.
16
N White, ‘The Business and the Politics of Decolonization: The British Experience in the Twentieth
Century’, Economic History Review 53,3 (2000), p. 544-645 (p. 546).
17
White, ‘The Business and Politics of Decolonization’, pp. 549-555.
14
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postcolonial era. British business learned the importance of good public relations through the
lesson of the Accra riots, and used every opportunity to publicly underscore their commitment
to African development. These attempts to gain local goodwill also influenced commercial
policies, which sought to combine profitable strategies with acceptable ways to conduct
business.
II.2.1 The Rhetoric of Development
Ideas of development, first endorsed by British colonial governments in 1940, reverberated in
local contexts, ultimately beyond the control of officials, and later of national politicians.18
Appealing to these ideas offered a powerful base for corporate legitimacy. All the companies
in this study emphasised to a greater or lesser degree their own role in the seminal process of
developing West Africa and this became one of the dominant tropes in companies’ advertising
and public relations.19
How can these corporate efforts at sharing the development discourse be interpreted?
Frederick Cooper and Randall Packard argue that ideology should be analysed in a way that
connects it to the different sources of support and opposition:
The point is not to decide whether or not development discourse is truly
hegemonic, but to examine the project of building and fracturing hegemonies: how
financial, political and discursive power was deployed […]20
Discursive power is far from dominant in this trinity, particularly with regard to politics which
changes quickly although the language employed remains the same. Firms in West Africa
were powerful financially, and did not hesitate to convert some of this into political influence
(for companies’ political strategies see chapter 4). However, their own understanding of the
political process could also impose limits on this behaviour, as the UAC’s careful avoidance
of taking the side of political candidates in the Gold Coast shows.21 How far they influenced
discourse, or were themselves influenced by it, is however a more difficult issue, but
Frederick Cooper and Randall Packard have pointed out how powerful ideas of development
became in local context, almost taking on a life of their own.22
That business found it necessary to create a sense of purpose, of a global mission or of moral
legitimacy, has been best researched for American business in the early twentieth century,
although from different angles. While Thomas O’Brien argues that General Electric’s entry
18
F Cooper, Decolonization and African Society: The Labor Question in French and British Africa,
African Studies Series 89 (Cambridge: Cambridge University Press, 1996); F Cooper and RM
Packard, 'Introduction', in International Development and the Social Sciences: Essays on the History
and Politics of Knowledge, ed. by Cooper and Packard (Berkeley, CA; London: University of California
Press, 1997), pp. 1-41 (pp. 4, 12, 18, 30).
19
On advertising see A Ramamurthy, Imperial Persuaders: Images of Africa and Asia in British
Advertising, (Manchester: Manchester University Press, 2003), pp. 175-192.
20
Cooper and Packard, 'Introduction', pp. 13, 23.
21
S Stockwell, The Business of Decolonization: British Business Strategies in the Gold Coast (Oxford:
Clarendon, 2000), pp. 149-152, 192-193, FN 131. Edward Spears was of course less cautious in
supporting Ashanti political movements, and the Consolidated African Selection Trust (CAST) also
admitted to trying to support political parties that promised business-friendly policies. These, however,
are special cases, as the example of the Nigerian civil war shows: companies avoided taking sides, as
the repercussions of backing the eventual loser could be highly damaging to their reputation and their
investment. Overall, firms seemed to have tried to gain political favour with all parties unless it was
clear which group would come out victoriously. Their political policy is mostly characterised by
opportunism.
22
Cooper and Packard, 'Introduction', pp. 4, 12, 18, 30.
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Stephanie Decker
into Cuba was perceived as part of a global mission by American firms to bring other
countries the industrial achievements and material prosperity. This mission had imperial
undertones in its assumption of the inherent inferiority of less technologically savvy people.23
Roland Marchand’s study of public relations and corporate image strategies of domestic
American business focuses on the attempts to gain not only consumer favour, but an elusive
moral and social legitimacy as an institution of the American way of life.24 British business in
West Africa was similarly on a quest to find local acceptance, and the post-war orthodox
theories of development offered private capital a distinct and substantive role within
decolonising economies.
It could be argued this was a case of corporate conceit, or a conscious attempt to deceive the
public in order to exploit Africa better, however, there is some indication in corporate files,
which were not intended for release, that the firms’ managers agreed with many development
ideas.25 Such comments were common in external relations, but corporate principals and
agents often did not see their own profit and that of the host country as distinct; indeed they
were considered complementary:
[…] the first plank in our platform in the future is to take our full share of the
colonial Development policy that is now being planned at home. The profit motive
is of course not only legitimate but necessary to our existence as a Company. […]
however […] it should not be permitted to interfere with the main reason for the
existence of the Company – that of helping to improve the lot and well being of
West Africa and its peoples. […] the firm with such a policy will prosper, and […]
the profit motive will thus be indirectly served. I have no doubt that this is already
the policy of the Company […]26
Business was just one of many groups that sought to justify their presence through finding a
role in the development framework, and the post-war focus on industrialisation, capital
investment, provision of finance and skills transfer offered ample space. In return companies
accepted the economic leadership of the state. In 1944 the UAC sought close alignment with
the new governor of Nigeria, Sir Arthur Richards: “[…] Mr Samuel […] hoped he had been
able […] to make clear in government circles that the Company’s aspiration was to help West
23
TF O'Brien, 'The Revolutionary Mission: American Enterprise in Cuba', The American Historical
Review, 98, no. 3 (1993), 765-785 (767).
24
R Marchand, Creating the Corporate Soul: The Rise of Public Relations and Corporate Imagery in
American Business (London i.a.: University of California Press, 1998), pp. 7-47.
25
Whether their corporate records represent a true reflection of their internal deliberations is, however,
always a difficult issue. In the case of the first quotation, from John Holt & Co., the files were
assembled to be submitted to the British Empire Records Project. This meant that the company
released material much earlier than the usual 30 year closure period, hence with a knowledge that
they were deposited with open access to posterity. The quotation is from a long letter, effectively a
quarterly report, which is the only such document in the folder. Its release into the public domain was
probably intentional. With regard to the other companies, the material for the UAC is drawn from
Unilever’s Directors’ Committee papers, which are a complete series, which has not been made
available to many researchers. Barclays’ files were only deposited and catalogued in the corporate
archives in 2000 (all files with the prefix 80, other records have been available for longer), when the
bank had arguably less reason to carefully select material for the period of decolonisation. In how far
recording was selective at the time these documents were composed is, however, impossible to
reconstruct. Roland Marchand makes the point that the audiences for corporate image campaigns are
many, both internal and external. Marchand, Creating the Corporate Soul , p. 44. Hence, corporate
image strategies have to carry some conviction and be reasonably cohesive in order not to undermine
each other.
26
Ibadan agent to John Holt Liverpool, “Quarterly report”,18.9.44, p. 3, RHO Mss Afr. 825, 232 (ii).
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Africa.”27 Two years later Frank Samuel, one of UAC’s managing directors, advised waiting
for an official lead on development:
Referring to new projects he said that although the Government appeared to be
anxious to encourage the secondary industries they had not yet formed a consistent
economic policy and until they had done this he did not consider it was sound to
proceed with any extensive new projects.28
By the late 1950s their commercial strategy had been decided, and the UAC sought to
maintain its commitment to West Africa and to plough back profits in an area with a
promising economic outlook. Hence, by 1959, their experience of cooperating with the
Colonial Development Corporation (CDC), widely considered in West Africa as a form of
economic imperialism, was rather negative:
[…] their preference was for drawing dividends where we would wish to see the
profits ploughed back into the venture; and commercially they had no technical
skill or local goodwill to contribute.29
Their arguments against the corporation indeed seemed to question the development value of
the CDC’s involvement. The CDC had been set up in the 1940s to earn dollars in order to
alleviate the pressure on sterling, which probably contributed to its poor local image.30 The
merchant companies’ more permanent economic interests were based on a different rationale,
which also received official blessing in 1948, a point that was reiterated frequently:
[…] the long term policy of many of the firms which policy has been endorsed by
government of confining themselves more and more to wholesale marketing and
leaving the retail business to the local small men […] 31
The policy endorsed became known as redeployment, and will be discussed in greater detail
in the final section (II.2.3). Especially after the Accra riots, the colonial governments put
increasing pressure on the firms to extend their commitment to West Africa in acceptable
ways, and they encountered little resistance from UAC’s principals, as this letter from DD
Jones, the Nigerian General Manager, shows:
[…] it would be most desirable if the large importing firms kept the African in
mind as a possible partner when launching out into new ventures. […] [Hugh Foot]
considered that from a long-term point of view the only solution to racial feelings
was to take the African into partnership. I must say that I wholeheartedly concurred
with his remarks. I have felt for some time that as a European firm only, our future
is uncertain. That picked Africans should be invited to be members of the Boards
of the new Companies we are now launching. For some years yet, this would be a
political gesture, but in time such Africans might perform useful offices. […] From
now on, I do not think there is any doubt that Government will discriminate in
favour of the African, and in all our future planning I consider we should be guided
by this thought.32
27
Directors’ Committee, 41. West Africa, 27.1.44, UHA UNI/BD/DC.
Directors’ Committee, 137. Mr. Samuel’s tour, 28.2.46, UHA UNI/BD/DC.
29
Directors’ Committee, 360. CDC, 5.6.59, UHA UNI/BD/DC. On the CDC see LJ Butler,
Industrialisation and the British Colonial State: West Africa 1939-1951 (London: Cass, 1997), p. 215.
30
Butler, Industrialisation, p. 193.
31
Cable to General Manager Lagos [UAC], 2.4.48, RHO Mss Afr. 825, 232 (ii); see also UAC advert,
‘Colonial Customer’, West Africa, 23.7.55.
32
DD Jones (General Manager Lagos) to GJ Cole (UAC London), 31.3.48, RHO Mss Afr. 825, 232 (ii).
28
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Localisation and African directorships only became a reality in the 1950s (see chapter 4). This
positive attitude towards the state’s economic leadership was also extended to the newly
independent countries, as Holt’s chairman publicly announced in 1960:
[…] in pursuing these enterprises [new manufacturing companies] we are greatly
influenced by the statesmanship shown by Ministers in Nigeria and Ghana and are
confident that the Governments of these countries will continue to develop their
natural resources of materials, manpower and ideas. The tempo of development
and expansion will be accentuated when Nigeria attains independence in October
this year, and we look forward to participating actively in the economic
development of West Africa.33
As this statement from the year of Nigeria’s independence shows, the development concerns
first voiced by their Ibadan agent in 1944 (cited earlier in this section) had become part of the
company’s official representation.
The AGC was also apt to argue along those lines as well, emphasising the importance of the
taxes and mineral duties that gold mining generated as well as social advancement through its
labour welfare programme. But overall the mine’s management appeared not to be too aware
of the further implications of Ghana’s drive for industrialisation. When they debated with the
British High Commissioner in 1963 why the Consolidated African Selection Trust (CAST)
had a better image in the country than themselves, they also mooted a tentative proposal for
further by-product recovery from gold mining.
The High Commissioner jumped at this suggestion and said that any such
possibility should be given the highest priority as development along these lines
would do more to improve the Corporation’s position in Ghana than anything else.
He was so enthusiastic about this that I had to remind him that no such project was
even under consideration but that the possibility had merely been cited as an
example. […] Complete endorsement of the High Commissioner’s views regarding
the importance of developing or assisting in the development of an indigenous
manufacture or processing industry. Lever Brothers were developing along these
lines, apparently most successfully.34
AGC’s rather secluded operations in Obuasi away from the hub of power in Accra might have
been the cause of their relative ignorance of Nkrumah’s approach to industrialisation. AGC
under the leadership of Edward Spears certainly showed the most hardline approach to
decolonisation and development of all the companies operating in Ghana, and it is noteworthy
that it was this company’s strategy that Nick White chose to debate in his article.35
Internal debates about development policies and companies’ potential role in this framework
were carried outside in an attempt to shore up local goodwill. Advertising was one area where
the development discourse featured most noticeably, and Anandi Ramamurthy shows that
issues such as industrialisation, complementarity and the emergence of a new middle class
became common tropes in corporate adverts.36 Barclays Bank showed particular interest in
33
Chairman’s Statement at Annual General Meeting of John Holt & Co., 4.3.60, LRO 380 HOL II.
RD Power, AGC Obuasi, to EL Spears, Chairman of Directors, London, Cc. to EW Morgan, 28.9.63,
GLL Ms 24,665.
35
White, ‘The Business and the Politics of Decolonization’, (552). Moreover, AGC was organised as a
freestanding company, which means that management did not benefit from any knowledge transfer
from subsidiaries operating in other companies. It seems that the Consolidated African Selection Trust
(CAST), operating in several African countries, was more astute in its policy-making and certainly had
a better reputation in Ghana.
36
Ramamurthy, Imperial Persuaders, pp. 175-192.
34
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Stephanie Decker
this, and its chairman, Julian Crossley, even had a report done on this topic for Nigeria in
1961, for which the bank canvassed six “authorities” with a “wide field of opinions”.37 There
was wide agreement that what the country needed was a land-owning educated class with not
too high a level of consumption and some savings. The three suggestions that appeared to be
most immediately relevant to the bank were commercial education, encouragement of savings
and financial assistance to small businesses in retail and manufacturing. Hence Barclays
expected the emerging middle class to be a pool for potential staff as well as customers. Julian
Crossley, chairman of Barclays Bank DCO, commented explicitly on the involvement of his
bank in the development project at the bank’s annual meeting in 1957:
From the primitive tribal Africa of Lord Lugard’s time, based on an agriculture at a
bare subsistence level, was developing an Africa where education of all grades was
very widely available, and where the levels of diet, health services, housing and
general well-being were improved out of all recognition. This process had had to
be achieved […] alongside a still surviving background of tribalism, and the
evolution of the “economic man” in Africa – an individual earning his living by a
money wage – involved a revolutionary change in status and outlook. To help
along this movement merited the goodwill and co-operation of all. This was
“Colonialism” on the British model, and our Bank – by opening offices in remote
areas, by educating the African in the way of thrift and encouraging savings
accounts by specially produced films and otherwise – was playing its full part in
the economic and social development involved.38
The BWA justified their use of advertising to increase their savings business in similar
terms.39 The two imperial banks were keen to see further economic growth, and their financial
services were presented as enabling this development. Barclays in particular associated itself
with post-war initiatives by forming the Barclays Overseas Development Corporation.40 BWA
also tended to count on “a great revolution whose final pattern is not yet discernible” but
which “deeply affected agriculture, industry and social and political relationships”.41 The
general attitude of British business was summed up by the bank in 1961:
Wherever one looks in Africa one finds territories, mostly now independent,
which, whatever their local problems, have one thing in common - a tremendous
need for development that only foreign capital can provide.42
However, the commercial policies that banks and trading companies employed were different,
and the following section will provide a brief overview.
II.2.2 Goodwill policies – merging commercial and political rationale
Three types of goodwill policies were key to the strategies of British companies:
Redeployment, bank branch expansion and Africanisation of staff. Redeployment became
important for the operations of the trading companies.
37
“Developing a middle class in Nigeria”, 20.10.61 and 30.10.61, BGA 80/3468.
Summary of a speech given by Sir Julian Crossley at the Annual Meeting in 1957, LA Borer,
“Unpublished DCO Story”, BGA not catalogued.
39
Report of the Directors and Statement of Accounts, 8.6.61, p. 8, GLL Ms 28,517.
40
F Bostock, 'The British Overseas Banks and Development Finance in Africa after 1945', Business
History, 33, no. 3 (1991), 157-176 .
41
Report of the Directors and Statement of Accounts, 8.6.61, p. 9, GLL Ms 28,517.
42
Report of the Directors and Statement of Accounts, 8.6.61, p. 13, GLL Ms 28,517.
38
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Stephanie Decker
The merchant companies’ redeployment strategy has been extensively debated in the
literature.43 To understand the significance of redeployment, it is important to know that
merchant companies in the 1920s were general importers and exporters, which ran a network
of small trading stations as far as railways and river transport reached inland; further
distribution was undertaken by African small traders along the road network.44 During World
War II and after, merchant companies began to reduce their large networks (see Table 1) that
had been engaged in general trading, and focused in specialist retail, department stores,
wholesale and limited manufacturing.
Table 1: Reduction of trading posts by the two largest British
trading companies in West Africa
UAC
Holt
1939
1,382
1940/41
1941/42
1942/43
330
168
156
1952
926
Note: Figures for UAC refer to Nigeria and the Gold Coast only. Figures for Holt refer to their entire
trading network, that includes some trading posts in French West Africa.
Source: FJ Pedler, Economic Geography of West Africa (London: Longmans, 1954), p. 145. Holt,
[chairman’s speech at the Annual General Meeting], for year ending 30.9.41, 27.7.42, p. 2; Chairman’s
speech, Ordinary General Meeting, for year ending 30.9.43, 16.8.44, p. 1; LRO 380 HOL II.
Why did merchants redeploy in the 1950s, moving into manufacturing and technical services,
for example automobiles in the case of Holt, as well as wholesale and specialised retail, and
away from general trading? Kilby argues that distribution mainly in an enlarged and
increasingly sophisticated market changed, which led to the entrance of new competitors and
direct sales by manufacturers.45 There were persuasive commercial reasons for the companies
to shift their capital away from traditional trade into more specialised goods, wholesale and
manufacturing (and in the case of many merchants, but not John Holt, into department stores).
Merchant companies began to embrace industrialisation policies in the 1940s and 1955
respectively, a move that was facilitated by the declining profitability of their core activities,
mainly produce buying and general retailing.46 Political reasons were equally important:
African retailers and cooperatives were to participate more in the economy, while foreign
business was to open up new areas of commercial activity.47 Economic opportunities suited
43
UAC, ‘Redeployment’, Statistical and Economic Review, 28 (London: UAC, 1963), pp.1-38; P Kilby,
Industrialisation in an Open Economy: Nigeria 1945-66 (Cambridge: Cambridge University Press,
1969), pp. 53-80; AG Hopkins, An Economic History of West Africa (Harlow: Longmans, 1973), pp.
276-279; Stockwell, The Business of Decolonization, pp. 152-157; DK Fieldhouse, Merchant Capital
and Economic Decolonisation: The United Africa Company 1929-1987 (Oxford: Clarendon, 1994), pp.
679-715.
44
R Tignor, Capitalism and Nationalism at the End of Empire: State and Business in Decolonizing
Egypt, Nigeria, and Kenya, 1945-1963 (Princeton, NJ: Princeton University Press, 1998), p. 205.
45
Kilby, Industrialisation in an Open Economy, pp. 61-62.
46
G Jones, Merchants to Multinationals: British Trading Companies in the Nineteenth and Twentieth
Centuries, (Oxford: Oxford University Press, 2000), pp. 141,143, 145.
47
The enquiry into the Accra riots of 1948 endorsed merchants’ redeployment strategy in its report,
see A Watson, Report of the Commission of Enquiry into Disturbances in the Gold Coast (London:
HMSO, 1948), para. 241. For this argument see A Harneit-Sievers, 'African Business, ''Economic
Nationalism'', and British Colonial Policy: Southern Nigeria, 1935-1954', African Economic History, 24
(1996), 25-68. Also Stockwell, The Business of Decolonization, pp. 156-157. In 1961, the CPP
reserved cocoa-buying in Ghana exclusively for Africans. Stockwell, The Business of Decolonization,
p. 155; see also B Beckman, Organising the Farmers: Cocoa Politics and National Development in
Ghana (Uppsala: Scandinavian Institute of African Studies, 1976), pp. 77-85.
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Stephanie Decker
political rationale, but this was partly due to the changes in the economy that were brought
about by a specific vision of development, which became accepted by political actors.
Redeployment became a central feature of commercial operations in West Africa, and the
branch expansion in banking in the 1950s, which is less frequently recounted, was connected
to this change.48 The expatriate banks encountered public and political pressure later than the
commercial companies, because they did not have many African customers in the 1940s and
1950s. Barclays and the Bank of British West Africa increased their branch network in both
countries significantly throughout the 1950s, and remained each others only serious rivals,
despite the entrance of African and other foreign competitors.49 This geographical expansion
went hand in hand with extending banking services, particularly savings and lending to
African customers. This expansion was not only prompted by the growth of West African
markets, but also by the withdrawal from direct up-country retail by the merchant companies.
While merchant companies continued to give credit to African producers, their gradual
withdrawal opened new opportunities for the banks.
Like the commercial companies, this new strategy was not a purely commercial decision, but
also prompted by political considerations. Development theory proclaimed that local savings
should be channelled into industrial and commercial investments instead of being used for
consumption. This provided a necessary political impetus to the imperial banks to extend their
services to more African customers, finally trying to address obstacles such as illiteracy and
insufficient security for credit. Increasing business with African customers also improved
advancement possibilites for the local staff of British firms.
Criticism of expatriates’ affluence and their control over the economy grew substantially after
World War II when Africans increasingly found a political voice. While the mercantile
companies were faster in giving responsibility to Africans, the process was not complete at
independence. Even the civil services in West Africa were not fully Africanised at
independence (apart from Nigeria’s Western region), although there is ample evidence that
the Colonial Office regarded it as a way to showcase its goodwill and regain the initiative.50 In
a similar way to the governments, British business sought to improve its local image by
highlighting its commitment to the training and promotion of African staff. Although a
convenient public relations tool, the advancement of local staff encountered internal
resistance and created some unforeseen problems.
Although British managers had concerns about profitability and the trustworthiness of African
employees (enhanced by pervasive institutional racisms), the rise of nationalism and popular
criticism of the firms in West Africa led principals to slowly Africanise the lower ranks of
senior staff as part of a wider strategy to ensure local goodwill. Corporate Africanisation
nevertheless remained slow. Files indicate a vicious circle, based on the low expectations that
British managers had of African staff performance, which was fuelled further by the insecure
48
R Fry, Bankers in West Africa: The History of the British Bank of West Africa (London: Hutchinson
Benham, 1976), pp. 184-186.
49
The early 1950s saw the ‘mushrooming’ of indigenous banks in Nigeria, which was halted by the
banking ordinance of 1952. The Gold Coast, however, was too small to support a similar development,
but nationalist pressure led to the establishment of the state-sponsored Bank of the Gold Coast in
1953, renamed Ghana Commercial Bank after the introduction of a Central Bank in 1957. DC Rowan,
'Native Banking Boom in Nigeria', The Banker (October 1951), 244-249; Stockwell, The Business of
Decolonization, pp. 61, 104.
50
See CO554/400 no. 1, 13.3.53 (item 180), in Nigeria. Part 2: Moving to Independence 1953-1960,
ed. by M Lynn, British Documents on the End of Empire, Series B, vol VII (London: HMSO, 2001), pp.
510-515. This document refers to both Ghana and Nigeria, and is also published in the volume on the
Gold Coast as item 126, see Ghana. Part 2: 1952 -1957, ed. by R Rathbone, British Documents on the
End of Empire, Series B, vol I (London: HMSO, 1992), pp. 19-25.
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Stephanie Decker
position of African managers (see Figure 2).51 Hence management assumptions about the
unsuitability of recruits created conditions which made it harder for new managers to perform
well.
Figure 2: Vicious circle of low African performance
Low
expectations
of
African staff or fears of
malfeasance
Complaints
initiative
about
lack
of
Enforcement of controls on
staff e.g. limits to unsupervised
lending
The response of British multinationals was also determined by political events beyond West
Africa, and was part of an international strategy to create and maintain local goodwill in order
to counter the rising economic nationalism in less developed host countries. Moreover, it was
important to find ways of reducing the cost of foreign operations at a time when many
companies were increasing their expenditure through expansion, investments and
redeployment.
II.3 Summary
Business sought to publicly emphasise its own commitment to the economic development of
West Africa, as it believed it to further both the cause of the African people as well as its own
profitability. The 1950s especially were a time of rapid economic growth, which improved the
prospects of any new investment, but also created a more competitive environment through
new international and local entrants. While there were clearly good economic reasons for this
change in corporate strategies, companies tended to present these decisions in the light of their
contribution to development. Hence they form part of the goodwill policies adopted by
business. Especially when these policies failed, as in the case of the banks’ lending to
Africans, the importance of the political motivations behind them became apparent.52
While a consensus existed on the framework of development policy, this did not mean that
corporate managers agreed with it wholeheartedly. But many concluded, like Unilever’s
directors, that they could work with it. That they continued to lobby in their interest only
reflects that they sought to get the best deal possible. It is indeed the case that the relationship
between colonial governments and British business grew more distant in the aftermath of
World War II.53 However, this turned out to be necessary for both to ‘save face’ during
decolonisation – although colonial governments realised this earlier than business. Most
importantly, it gave companies (which were initially disappointed) the impetus to restructure
51
A similar argument has been made by Michael Burawoy for Zambianisation in the private copper
mines, where expatriates had a low opinion of local staff, so they withdrew responsibilities and
discretionary powers from new managers, thus undermining the successors’ confidence. M Burawoy,
The Colour of Class, Zambian Papers 7 (Lusaka: University of Zambia, 1972), pp. 52, 99.
52
S Decker, ‘Decolonising Barclays Bank DCO? Corporate Africanisation in Nigeria, 1946-1969’,
Journal of Imperial and Commonwealth History, 33, no. 3 (2005), 419-440.
53
The central argument of Sarah Stockwell’s study The Business of Decolonization, see pp. 10-14.
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Stephanie Decker
their operations and overhaul their image. An increased distance did not equal a fundamental
disunity on policy.
III The Failure of Development and the Crisis of Corporate Legitimacy
Political legitimacy in West Africa during decolonisation was based mainly in anticolonialism and nationalism. By the mid to late 1960s, the new independent leaders in Ghana
(Kwame Nkrumah) and Nigeria (Balewa, Bello, Azikiwe, Akintola) found the stability of
their governments undermined by the relative failure of economic growth to live up to the
expectations of their respective populations. Internationally, observers were equally
disappointed with the economic performance of costly development projects, and
international political and economic discourse shifted to the left in the late 1960s.54 In this
climate, old political leaders lost their positions (and their lives in some cases), and were
replaced by new military regimes. After the success of the preceding generation in uniting
their young countries, gaining international political acceptance, negotiating economic
assistance and creating economic growth, they looked backed to a successful strategy of
nationalism and anti-colonialism. In the absence of a distinct political imperial presence, new
‘foreigners’ had to be found against which to unite the ‘nation’. These could be internal as
well as external.
With the removal of the first independent leaders of Nigeria and Ghana, a period of political
instability began that British business viewed ambiguously. The military, and in Ghana also
the police, took over government with a corrective, reformist agenda, returning power to a
relatively liberal, if short-lived, democracy in Ghana, while Nigeria descended into civil
war.55 In 1968 and 1969 Nigeria legislated the local incorporation of all extraterritorial
business and greater restrictions on banking. In Ghana, the National Liberation Council
(NLC) reserved certain small-scale enterprises for Ghanaians, and in 1969 Busia extended this
earlier decree, followed by an expulsion of mainly African foreigners. This marked the
beginning of so-called indigenisation programmes and part-nationalisation which were to
become a feature of economic policy in the 1970s.
The following section aims not only to analyse the response of business to this, but also poses
the question of how much this legislation was influenced by expropriations in other countries
and by new paradigms in development, as opposed to local conflicts over redistribution and
citizenship. Much of the early indigenisation legislation was clearly aimed at Lebanese and
other African foreigners, whereas the later decrees were more radical in terms of enforcing
state participation. Due to the role of foreigners and issues of citizenship, it is also necessary
to see indigenisation in relation to other measures such as the expulsion of nationals of other
West African states and the increasingly restrictive handling of expatriate immigration quotas
for Western multinationals.
III.1 The Local and the Global: Economic Nationalism in Nigeria and
Ghana
The interpretation of corporate expropriation by governments of less developed countries falls
roughly into two categories: those who see it as a struggle for control over the economy (the
54
This is also connected to the Cold War and should be seen as a field of intellectual and popular
inter-relationships.
55
See also Rimmer, Staying Poor, p. 106; T Falola, The History of Nigeria (Westport, CT: Greenwood
Press, 1999), p. 151.
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international dimension), and those who have focused on the local socio-economic trends that
accompanied it. The former view is more dominant in the literature, but normally refers to it
as an international phenomenon, while the other group has analysed the specific West African
cases more closely. This section argues that both approaches have overlooked some major
issues because of their overriding concern with the expropriation of Western multinationals.
While scholarship on the subject was far from homogeneous in its opinions, there was a
general idea that indigenisation constituted an attempt to take charge of foreign investment in
order to increase control over the economy. In particular Thomas Biersteker and Paul
Collins’s research into the Nigerian indigenisation programmes showed that the issue was
considerably less clear cut and pointed towards internal reasons for the legislation:
Nigeria’s indigenisation program was not exclusively designed to assert the
national will against the interests of foreign enterprises. Economic nationalism was
used in part as a disguise for a redistributional struggle underway within the
country. 56
However, despite this conclusion, academic research was framed by ideological contests over
development issues. Hence, although Paul Collins and Thomas Biersteker are among the few
scholars who have noted the importance of local conflicts for the policy formation in Nigeria,
Biersteker’s book nevertheless is entitled Multinationals, the State and Control of the
Nigerian Economy, thus reflecting the dominant perception of the issue in the 1970s and
1980s.57 Assumptions made at the time about the nature of the state, the nature of African and
foreign business, and capitalist, socialist or mixed economies, however, subdued a further
analysis of the complexity of local political formation.
The wave of expropriations that swept across less developed countries in the 1970s however
still poses questions about how international and local events intertwined. The term
expropriations somewhat obscures the multiplicity of approaches employed: local
incorporation, reserving enterprises for nationals, local content requirements, enforced
participation and nationalisation (with or without compensation). They indicated different
political goals. For Nigeria and Ghana, two West African countries at once different and
similar in their economic policies, this poses a number of questions. If it was really the state’s
goal to break the dominance of foreign capital, why not nationalise instead of indigenise?
Who benefited most from indigenisation programmes, and who was targeted? Did legislators
distinguish between different groups of non-nationals? Moreover, the issue of control has
been difficult to assess in practice, and it has often been conflated with ownership.
Economic nationalism in West Africa benefited two groups: African businessmen and
governments. African entrepreneurs could eliminate competition and elicit joint venture or
partnership offers as a result of indigenisation. Governments derived several benefits: the
popularity of those in power increased, additional revenue and resources for increased
patronage was created. Whose interests were dominantly expressed differs from programme
to programme, but two phases can be made out: an early phase, mainly the late 1960s in
Ghana and the early 1970s in Nigeria, and a late phase which began in Ghana with
Acheampong’s take-over in 1972 and in Nigeria with the Mohammed/Obasanjo coup in 1975.
The early legislation benefited African business, and, evidence suggests, was the result of
their pressurizing the government. Thomas Biersteker has underlined the importance of
56
Biersteker, Multinationals, pp. 290-291, 295-296. Also Collins, 'The Political Economy of
Indigenization', (503-508).
57
Biersteker, Multinationals; Collins, 'The Political Economy of Indigenization'. More typical for much of
the debate are the contributions in Multinational Firms in Africa, ed. by C Widstrand (Uppsala:
Scandinavian Institute of African Studies with the African Institute for Economic Development and
Planning, Dakar, 1975).
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Stephanie Decker
African businessmen in lobbying for the first NEPD, and similarly for the Ghanaianisation
decrees, as the Commissioner for Lands and Mineral Resources argued in 1968 that the
average Ghanaian wanted economic independence but not “something abstract like more
economic power to the state. He wanted new opportunities for himself, his relatives, and
friends to earn a living in trade or other fields.”58 These policies have to be seen in the late of
Nkrumah’s policies, which aimed to control the economy through state-owned firms,
displacing Ghanaian private capital. The only private capital that was allowed a large stake
was foreign, but this was treated more like a stop-gap solution on the way to African
socialism.
The main targets were not western multinationals but specifically Levantine and Indian
competitors in the retail trade. Evidence for this is not only the nature of reserved areas in
these early indigenisation programmes, but also long-standing grievances against Lebanese,
that were often voiced explicitly during the implementation of the programmes.59 Unilever’s
directors were even informed by the Nigerian ambassador in 1974 that
[…] the whole exercise had been the result of popular demand but not because of
the multi-nationals. The complaints had been against the misbehaviour of the
Lebanese and other small traders and nothing but praise was heard in respect of the
performance throughout the years of Unilever and UACI [UAC International].60
While it appears that in Ghana and Nigeria, Levantines and Indians were the main target, it is
also possible that this move against foreigners spilled over into the informal economy, as the
expulsion of other Africans, mainly involved in small trade and shops, from Ghana in 1969
and Nigeria in 1983 indicates.
Western multinationals, however, were much more widely affected by the provisions of
NEPD I in Nigeria than by the Ghanaianisation decrees of 1968 and 1969. According to a
Foreign and Commonwealth Office source on the Indigenous Businessmen’s Seminar held in
Lagos in September 1972, “[t]here is a latent disposition to regard expatriate firms as fair
game, to be clubbed – with Government assistance – until they render up their assets.”61
Nigerian businessmen, operating in a far more buoyant economy than their Ghanaian
counterparts, could aspire to take over some of the smaller multinationals – LINTAS for
example. Whether they attacked the interests of foreign companies or cooperated with them
depended on the opportunities available: the pressure exerted through NEPD I led
multinationals to search actively for local joint venture partners from the Nigerian business
community. Although those who collaborated were decried by dependency and
underdevelopment theory as compradors, they were not selling out, they were indeed buying
into the international system.62
Central to any ideology behind indigenisation was the notion of increasing national control.
When businesses were indigenised or nationalised 100 percent, this was not problematic, but
in cases of minority and majority shareholding, or indeed service agreements, it was not
necessarily evident who was in charge of a company. Political economy authors like
Biersteker and Hoogvelt were not convinced that Nigerian indigenisation led to greater
national control over the economy. In Nigeria criticism of NEPD I centred on the
58
JD Esseks, 'Economic Policies', in Politicians and Soldiers in Ghana 1966-1972, ed. by Dennis
Austin and Robin Luckham (London: Frank Cass, 1975), pp. 37-61 (p. 48).
59
Biersteker, Multinationals, pp. 54-55; Boyd, 'Expropriation of Alien Property ', p. 178; G Finlayson to
KT Hall, 13.10.72, PRO FCO 65/1222. Esseks, 'Economic Policies', p. 50. See also 5.1.1.
60
Minutes of the Special Committee and Directors’ Conference of Unilever, 19.4.74, UHA UNI/SC with
UAC International.
61
PJ Roberts, file note on “Indigenous Businessmen’s Seminar, Lagos, 28-29.9.72”, 5.10.72, PRO
FCO 65/1222.
62
J-F Bayart, The State in Africa: The Politics of the Belly (London: Longman, 1993), pp. 100-103.
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Stephanie Decker
concentrated shareholding that resulted from the decree.63 Hence the second NEPD limited
the percentage of shares that could go to an individual, thus further atomising equity which in
turn allowed foreign multinationals to maintain control even with a minority holding.
The easiest way to solve the conundrum of effective control through ownership while at the
same time enabling the widest possible distribution of wealth was through state acquisitions:
technically all citizens participated, but government agencies could exert effective control.
While Acheampong’s government took management control over the timber enterprises, and
in Nigeria the banks were effectively state-controlled by the late 1970s, nationalisation was,
however, not extensively practiced.64 Indigenisation was still to be achieved through the
purchase of shares or assets by private individuals or public bodies. In its third survey, the UN
Commission on Transnational Corporations applauded the new pragmatism of these
programmes: replacing foreign direct investment where possible but continuing to work with
it where its absence would leave a gap. On the point of control, however, their assessment was
less positive: the commission criticised the idea that ownership and control were equated and
concluded that domestic control, “in the sense of key decisions taken at enterprise level and in
accordance with local needs and priorities, not subject to the approval of the parent
company”, was, despite ownership, still elusive for most developing countries.65
The idea of furthering local business with more tangible measures was not newly devised in
the late 1960s, as Biersteker points out that “principal components of the first decree were
outlined in documents written prior to independence”.66 African businessmen themselves
were pressing for greater state support, not against Western multinationals, which were
considered potential partners, but against the Levantine competition in retail trading. As the
consensus in development economics shifted increasingly towards a more invasive state in the
mid- to late 1960s, these new approaches became dominant at UNCTAD.67 From here, it was
a small step towards a more radical interpretation of development.
Radical interpretations of economic development agreed with orthodox theory on the
importance of the state as the dominant actor in the economy. Some, for example the Nigerian
politician Obafemi Awolowo, went further and advocated the creation of socialism.68 In order
to improve the position of the periphery, it is the state which has to take control, and this
intellectual trend was evident in West Africa in the later indigenisation programmes.69 While
this could be termed an international view of the meaning of indigenisation, there is also a
local component, which has already been noted by scholars like Harry Johnson and Albert
Breton in the 1960s.70 Their arguments and interpretations are remarkably compatible with
recent debates in African studies about the nature of the state and the importance of
patronage.71 The importance of this factor is particularly clear in Nigeria. Just at the point
63
See amongst others Biersteker, Multinationals, pp. 298-299; Boyd, 'Expropriation of Alien Property ',
pp. 186-187, 190.
64
The Nigerian state also participated in the equity of the oil industry, but was dependent on foreign
technology and know-how, and its agencies were under-staffed; hence the Nigerian government could
not really be considered as in charge of these investments.
65
UN Commission on Transnational Corporations, Transnational Corporations in World Development Third Survey (UN Doc. ST/CTC/46, 1983), para 179.
66
Biersteker, Multinationals, p. 288. He refers specifically to an advisory committee set up on the
initiative of KO Mbadiwe, federal minister of commerce and industry, in 1959, see pp. 53-55.
67
Biersteker, Multinationals, pp. 23-27. Burnell, Economic Nationalism, pp. 12-14; Independent
Commission on International Development Issues, North-South: A Programme for Survival: Report of
the Commission (London: Pan, 1980).
68
O Awolowo, The Path to Economic Freedom in Developing Countries: A Lecture Delivered at the
University of Lagos on 15 March 1968 (Ibadan: University of Lagos, 1968), pp. 4-5.
69
Biersteker, Multinationals, pp. 266, 280, 285.
70
Johnson, 'A Theoretical Model of Economic Nationalism'; Breton, 'The Economics of Nationalism'.
71
For example Bayart, The State in Africa.
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when state and its agencies increasingly took a share in business interests, political discourse
focuses on greater redistributive justice. In Ghana, a general tendency existed to increase
public supervision over commerce in order to extend the possibilities for political patronage at
least since Nkrumah.72 Fela Kuti commented on this for Nigeria in a song lampooning the
American multinational ITT:
Multinationals which are established here make great declarations in the press for
better swindling us. They have an infallible method for that: they find a corrupted
African whom they give a million naira. In his turn he gives some crumbs in his
surroundings and thus becomes the chief. […] he […] goes up in power because he
is friend-friend with the journalists, friend-friend with the Secretary of State,
friend-friend with the ministers, friend-friend with the head of state. It is there the
beginning of our misfortunes: embezzlement, inflation, confusion, oppression. It is
the itinerary which borrowed Obasanjo and Abiola, two members of International
Thief Thief. 73
The alliance of local capitalist and military rulers was a feature of the NEPDs, which was not
mirrored in Ghana where indigenous business was less influential. Economic nationalism
created jobs and opportunities for patronage through the greater official supervision of the
economy, and this favoured the educated middle class who were able to get a position in the
civil service. While a clear preference for manufacturing had existed in West Africa since
colonial times and had been central to all development programmes, retail trade was more
important in the list of activities reserved for nationals. Until 1966, economic nationalism had
been employed by those distant from power, but by 1968 changing governments aimed to
increase public support through indigenisation.74
As new groups came to power, new sources for political patronage had to be found. African
states have been described as ‘gatekeeper states’, funding elites through their connection with
the international system, regulating access to their territory and extracting payment for this in
the form of tariffs, taxes, development aid and bribes.75 By extending their control over this
nexus, they extended their power internally, and for Nigeria it has been argued that the state
owned and controlled all sources of income.
As things stand now, the Nigerian state appears to intervene everywhere and to
own virtually everything including access to status and wealth. Inevitably a
desperate struggle to win control of state power ensues since this control means for
all practical purposes being all powerful and owning everything. Politics becomes
warfare, a matter of life and death.76
While it was indeed possible to capture already sunk investment, the stranglehold on the
‘gate’, however, almost stopped the further influx of funds. When cocoa and petroleum prices
were right, this could be supported for a time, but as autonomous growth failed to materialise,
the economic cost of these policies were ultimately too high. This is contrary to Samir Amin’s
assessment that only locally based development can be managed, but that “outward-directed
72
For Nigeria see for example the recommendations of the Adeosun panel and Obasanjo’s 1976
independence anniversary address. On Ghana: Rimmer, Staying Poor, p. 168.
73
Fela Kuti, ITT, 1979. Translated lyrics from http://kalakutarepublic.free.fr/english/songs/itt.htm
[accessed 7.3.05].
74
This is most clear in the case of the NLC and Busia in Ghana, see Esseks, 'Government and
Indigenous Private Enterprise', (26).
75
Bayart, The State in Africa, p. 25.
76
Claude Ake, ‘Presidential Address to the 1981 Conference of the Nigerian Political Science
Association’, in West Africa, 25.5.1981, p. 1163.
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growth […] itself [is] essentially beyond local control.”77 States seemed to have overstretched
themselves and the high level of regulation, the political rationale behind the allocation of
resources and the poor design and execution of development programmes left most African
economies, including Ghana and even oil-rich Nigeria, in a precarious situation in the 1980s.
Samir Amin’s view was common in the 1970s with supporters of the dependency school.
Economic development that links less developed countries to the international economy, so
Frank and others, led to dependent development and entrenched elites, who supported the
demands of foreign capital, and did not defend the national interest.78 However, this model is
problematic especially because it denies local people any form of agency in dealing with
foreigners, and assumes that they are either powerless or corrupted.
As redistribution is a central feature of indigenisation, it is important to note who is excluded.
It is not a revolt of the formerly colonised against the formerly colonising, but a postcolonial
struggle about who is entitled to receive rents from state control. These conflicts over class
and indigeneity are obvious in the expulsion of other African aliens from both Ghana and
Nigeria and the legislation against Lebanese, Indian and Western businesses.79
In West Africa, economic nationalism and political nationalism were always closely
intertwined. Early nationalists did not only attack the colonial state, but also imperial
business, making nationalism part of a wider anti-colonial sentiment that was very popular.
Once independent, however, nationalism lacked the external target, and internal disputes
began to loom large in politics, be it ideological, ethnic or otherwise. The 1960s witness a
resurgence of economic nationalism because some sectional interests felt they were a
‘bypassed generation’. The independence generation had been advanced rapidly to take over
the positions from the departing colonial power, and while the economy was still growing, it
grew more slowly than in the 1950s and this was not sufficient to fulfil the aspirations of
those who felt they were ‘under-privileged’. Similar to Breton’s conclusion of Canadian
economic nationalism, these groups were essentially a ‘lower middle-class’, whose members
had less opportunities than their predecessors but felt they had every right to receive the same
benefits as those who had come before them. The colonial focus on development had created
a culture of entitlement and appeasement of demands that Africa’s new independent states
were more often than not unable to fulfill.
The ‘nation’, as well as the ‘foreigners’, are not unchangeable entities in this context, and
hence the ‘nationalism’ is not the same either. Nationalism of the 1940s and 1950s imagined a
new African community within the colonial boundaries (in Nkrumah’s case, within the
African continent, and in Nigeria within the separate regions and ethnic identities), and
attacked the colonial presence. Nationalists in the 1960s and 1970s, often employing the
fashionable rhetoric of the day such as ‘neo-colonialism’ and ‘economic decolonisation’, were
not necessarily concerned with taking control and economic autarky. Many of their policies
were aimed at increasing the opportunities of sectional interests, often at the expense of
foreigners like Lebanese and Indian businessmen, other African nationals and multinational
companies.
III Conclusion
77
S Amin, Neo-colonialism in West Africa (Harmondsworth: Penguin, 1973) [French original from
1971], p. 274.
78
AG Frank, Lumpenbourgeoisie, Lumpendevelopment: Dependence, Class, and Politics in Latin
America, (New York: Monthly Review Press, 1972), pp. 1-5, 8-9, 13-16, 75-137.
79
On indigeneity: P Nugent, Africa since Independence (Basingstoke: Palgrave Macmillan, 2004), pp.
485-486.
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This case study is based on evidence from business sources, thus reconstructing the historical
events through the lense of corporate perception. This is a relevant and under-researched point
of view from one of the key actors in the conflict (others would be the state, African
businessmen, Lebanese, African consumers, trade unions, labour, ‘civil society’). As this case
study focused on the inter-relation between government and business, the position of
government clearly needs further research, as the case study bases the representation of this
side on secondary literature and business perceptions. Nevertheless, the research into
corporate records has also come up with new ways to look at social and political
developments in West Africa.
Economic nationalism and economic development are two closely intertwined issues. Ideas
about development framed how business presented itself to less developed host economies,
underlining their ability to provide scarce capital, skills and technology. As the understanding
of the nature of economic development shifted in the late 1960s and 1970s, business faced a
crisis of legitimacy.
The crisis of legitimacy had dire consequences for British business. As dependency and neocolonialism undermined the standing of foreign companies as potential agents of
development, economic policies radicalised in response. In West Africa, it took the form of
indigenisation programmes, which combined forced sales and part-nationalisations. Behind
this legislation were on the one hand the interests of African businessmen, who sought to have
sections of the economy reserved for themselves, and on the other hand the states, partly
motivated by economic nationalism as well as a degree of rent-seeking. While both Biersteker
and Collins concluded at the time that the Nigerian decrees were employed in redistributional
struggles, their work still exhibits the then fashionable idea of an attempt by less developed
countries to take control of foreign investment. However, the evidence from Nigeria and
Ghana seems to suggest that this was not the primary motivation, as government showed a
high degree of leniency to British business (with the exception of banking in Nigeria and
timber in Ghana).
While contemporary observers considered this a failure of host country policies, this
conclusion is only accurate if taking control was really the goal of the exercise. Indigenisation
programmes, with their focus on dispersed part-ownership, were not designed to take charge.
The foreign companies that were targeted were often not Western multinationals, but resident
Lebanese and Indians, or indeed other Africans, running at times very small enterprises. If
foreign businesses were targeted, then it was in the majority of cases to obtain an economic
rent. Pressure to indigenise business was accompanied by attempts to speed up Africanisation
of management. British companies viewed this as a greater challenge to their control over
their subsidiaries. This was also partly motivated by creating jobs and career opportunities for
supporters. But the key to economic nationalism is that, although some high-ranking policymakers might have had the intention to wrest control from foreign investors, the popularity of
these policies lay in the direct economic benefits they offered an aspiring lower middle class.
Policy-making in African states cannot squarely be attributed to one set of interests or
ideology, but was indeed constantly changing and pragmatic.80
As a case study for economic nationalism, some general features can be described: internally,
the existence of redistributional struggles between different groups, both class and ethnically
based, were connected to a resurgence of nationalism. This nationalism could be employed
against extra-territorial firms as well as resident aliens. What is crucial to the formation of
these conflicts is the importance that theories of development carried in the postcolonial
political economy.81 The development discourse is also important as an international
80
81
This argument has been made by Biersteker, Multinationals, pp. 290-291.
Cooper and Packard, 'Introduction', pp. 1-4, 7-13.
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dimension, particularly with regard to the international agencies that converted these theories
into policy practice and disseminated them around the globe. The radicalisation of economic
thinking in the 1970s, on the one hand inspired by the Latin American dependency school,
and on the other by communist and socialist intellectual influences, led to a crisis of
legitimacy of international business. This is a global phenomenon, as the sudden surge of
instances of expropriations illustrates (see Figure 1 at start of paper).
While the international factors should be similar for other cases of economic nationalism at
the same time, the way they become integrated into the respective political economy can be
very different, hence their impact is not necessarily similar. Moreover, some of the features
that are categorised as locally-specific for this case study might also occur in other countries,
for example the mobilisation of public opinion against an economically successful group of
internal aliens. An international comparison on how economic nationalism is exploited to
displace economically successful groups could be based on a number of individual studies.
Another factor that is rather hard to gauge is the influence of the development discourse, and
further research into the transfer and diffusion of ideas along the faultlines of the international
community is necessary.
As a case study of Nigeria and Ghana, it is not unproblematic to extrapolate wider features of
economic nationalism, especially considering the varied policies that fall under this heading.
However, this case study sought to analyse how general processes that affected the
developing, and to some extent the developed, countries (like decolonisation, development
theories, international discourse and nationalism) became meaningful in a local context. In
many ways, this papers intends to explain the great variety of policy-responses, while at the
same time highlighting the international trends and events that gave rise to it. The meaning
and content of economic nationalism differed even between countries like Ghana and Nigeria,
which promulgated relatively similar types of legislation. This does not mean that economic
nationalism is defunct as a concept, but rather that its power to mobilise different sections of
population is based on how well actors can tailor any specific variety of nationalism to
reverberate in local contexts.
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