Foreign banks, Africans, and credit in colonial Nigeria, c. 1890‐1912

Abstract

S ince the mid-1970s very little research has been done on the subject of colonial banks in British West Africa.2 Until then, however, the subject had received enormous attention from researchers,3 whose work has in no small way contributed to our understanding of the origins and practices of these foreign banks. In particular, it is now widely accepted, for instance, that foreign banks in colonial West Africa lent much less to Africans (individually and corporately) than they did to the Europeans and that most of the credit received by Africans was obtained from nonbank sources. There is also fairly widespread agreement as to the reasons for the unhelpful attitude of the foreign banks. These include the lack of unambiguous title to assets that might otherwise have been used as collateral, the relatively high cost of handling large numbers of individually small transactions, and the high rate of bad debts experienced with African transactions. Perhaps the most contentious reason for the unhelpful attitude of the colonial banks is racial prejudice.4 To these factors already established in the literature, this article adds evidence of change and contingency. Specifically, it shows that foreign banks' policies on lending to Africans varied according to the particular interests of their shareholders. Using correspondence and testimonies given to commissions of inquiry, the article shows that the first British bank to establish itself in colonial Nigeria, the African Banking Corporation (later to become the Bank of British West Africa (BBWA)), was keen to lend to Africans as well as Europeans. It was challenged by a later entrant, Anglo African Bank (later to become the Bank of Nigeria), which was founded by interests closely linked to a powerful combine of British merchant houses. It will be shown that these British trading interests saw their new bank as a means to help preserve barter trade5 and their monopolistic position in the export-import trade, a position which, as they perceived it, required that Africans be denied access to