Business History Review

Articles

Collusion and Competition in Colonial Economies: Banking in British West Africa, 1916–1960

Gareth Austina1 and Chibuike Ugochukwu Uchea2

a1 Gareth Austin teaches African and comparative economic history in the Department of Economic History at the London School of Economics and Political Science

a2 Chibuike Ugochukwu Uche is professor of banking and financial institutions and dean of the faculty of business administration at the University of Nigeria, Enugu Campus

Abstract

This article examines the collusion between the only two major banks to operate in British West Africa for most of the colonial period after 1916, Barclays and the Bank of British West Africa. The companies' records reveal that the alliance was more far-reaching than has previously been shown, escalating to include not only comprehensive price-fixing but also restrictions on the products offered. The article considers the reactions of African and European customers and the colonial governments, and analyzes the motives that sustained the collusion for so long and the political circumstances that permitted it. The arrangement was partly a defensive response to a perception that the market was too small for full rivalry, but there was a rent-seeking element too. Finally, the article explores the implications of the bank alliance for the broader economies, reflecting on the relation between the security that the banks achieved through their agreements and their very cautious lending policies.

Gareth Austin teaches African and comparative economic history in the Department of Economic History at the London School of Economics and Political Science. He was trained in Cambridge and Birmingham universities, and he taught at the University of Ghana in the 1980s before moving to London. A former editor of the Journal of African History, his most important work is Labour, Land and Capital in Ghana: From Slavery to Free Labour in Asante, 1807–1956 (2005). He is currently writing a book on markets and states, in the context of information and incentive problems, in West African history.

Chibuike Uche is professor of banking and financial institutions and dean of the faculty of business administration at the University of Nigeria, Enugu Campus. He received his Ph.D. in accounting and finance from the London School of Economics and Political Science in 1997. His dissertation was awarded the International Economic History Association's prize for best doctoral thesis completed between 1997 and 2000 on the post-1918 period. He has been a Commonwealth Scholar; a Carlo and Irene Brunner Scholar; a World Bank Robert S. McNamara Fellow; an Association of Commonwealth Universities Titular (Worshipful Company of Chartered Accountants) Fellow at the London School of Economics; a Leventis Visiting Fellow at the School of Oriental and African Studies at the University of London; and a Visiting Fellow at the African Studies Centre, Leiden.