Neocolonialism by Kwame Nkrumah 1965
THE U.N. Economic Commission for Africa’s Standing Committee for Trade has recently described the African continent as ‘riddled with different trade regimes and payments systems supplemented in most cases by specific economic ties with countries or groupings of countries outside Africa’. [Background Paper on the Establishment of an African Common Market, 13 October 1963.]One of the most effective ways in which Britain and France have retained economic ties with former colonial territories is through action to ensure that the new STates remained in the monetary zones centred on London and Paris.
There are seven major currency groups in Africa, the French franc zone, the sterling area, the Belgian franc area, the Spanish peseta and the Portuguese escudo areas, the South African rand area, and the countries like the United Arab Republic and the Congo (Leopoldville), with separate currency units. By far the greater part of Africa’s trade comes within the sterling area and the French franc zones of Africa.
The sterling area has been somewhat looser than the franc bloc. For example, Nigeria and Ghana have established their own currencies and their own banks, though they continue for the most part to keep their international reserves in the form of sterling. When I opened the Bank of Ghana at the end of July 1959, I spoke of the decisive part played by a central bank in the economic life of a country: ‘Our political independence will be meaningless unless we use it so as to obtain economic and financial self government and independence. In order to obtain this it is of absolute and paramount importance that a central bank should be set up by the Government.’ In setting up the Bank of Ghana we obtained assistance from the Bank of England, but our bank has always followed a policy designed to secure our economic independence and to foster the general development of the country. The Bank of Ghana, like other banks, set up in a similar way, has no claim on foreign exchange reserves of England, but has complete control over its own foreign exchange earnings.
The East African Currency Board is the main multinational monetary institution in the sterling area. It embraces Kenya, Tanzania [Tanzania has announced plans for its own currency.]and Uganda in Africa, and Aden outside the region, with a currency freely convertible at a fixed rate to the pound sterling. The member countries of the Currency Board have no control over domestic money supplies. In the long run these are controlled by export and import levels and foreign investment flows, and in the short, by lending policies of the London banks. Under this arrangement nationally directed growth often leads to a shortage of currency which hinders expansion.
In Britain the names of the ‘Big Five’ banks are household words. These banks with their immense resources are closely linked with big industrialists to form a small and specially powerful group with world-wide interests. In 1951 the 147 directors of the Big Five banks held between them 1,008 directorships of which 299 were in other financial institutions such as other banks, insurance companies and investment trusts. Many of the biggest companies have directors on the boards of more than one of the biggest banks. ‘The more the interlocking takes place, the less one can say “this one is a financier, and that one is an industrialist.” There emerges a group of finance capitalists dominating both finance and industry.’ [Monopoly: A Study of British Monopoly Capitalism by Sam Aaronovitch, p. 54.] The dangers, therefore, of too close ties with foreign banks are apparent. Yet the large participations of foreign banks in African banks may be seen from the following:
Republic of Congo: Crédit Congolais is a subsidiary of Barclay’s Bank D.C.O. through its affiliate in Antwerp, the Banque de Commerce; Banque Internationale pour le Commerce et l'Industrie du Congo is a subsidiary of B.N.C.I., Paris, through B.N.C.I. (Afrique); Banque Commerciale Congolaise is a subsidiary of Crédit Lyonnais; Société Générale de Banques au Congo is made up of Bayerische Vereinsbank (5%), Société Générale de Paris (51%), Banco Nazionale del Lavoro, Banque de l'Union Parisienne and Bankers International Corporation (Morgan Guaranty).
Congo (Leopoldville): Banque Internationale pour le Commerce is a subsidiary of B.N.C.I.; Société Congolaise de Banque is also a subsidiary of B.N.C.I.; Banque Belge d'Afrique (Banque de Bruxelles and Brufina); Banque Centrale du Congo Belge et du Ruanda-Urundi (Société Générale de Belgique); Banque du Congo Belge (Société Générale de Belgique and Compagnie du Congo pour le COmmerce et l'Industrie); Banque Belgo-Congolaise (Société Générale de Belgique and C.C.C.I.).
Cameroun: Société Camerounaise de Banque (Deutsche Bank (5%) and Crédit Lyonnais); Banque Internationale pour le Commerce et l'Industrie (B.I.C.I. du Cameroun is made up of Bayerische Vereinsbank (5%), Société Générale de Paris (51%), Banque de l'Union Parisienne, Banco Nazionale del Lavoro, and Bankers International Corporation (Morgan Guaranty).
Gabon: Union Gabonaise de Banque (Deutsche Bank (10%) and Credit Lyonnais).
Liberia: Bank of Monrovia is owned 100 per cent by First National City Bank of New York (Morgan); Liberian Trading & Development Bank [Mediobanca (60%) and Bankers International Corporation (Morgan)].
Libya: The Sahara Bank (Tripoli) [Bank of America International N.Y., Bank of America, California, Banco de Sicilia, Palerno (Bank of America Associate)].
Central Africa: Union Bancaire en Afrique Centrale is owned by Société Générale de Paris and Crédit Lyonnais.
Nigeria: Barclays Bank D.C.O.; Bank of West Africa; Philip Hill (Nigeria) Ltd. is made up of Philip Hill (40%), Banca Commerciale Italiana (30%); United Bank for Africa [B.N.C.I., Rotterdamsche Bank, Banco Nazionale del Lavoro, and Bankers Trust Corporation (Morgan)]; Nigerian Industrial Development Bank (Chase International Corporation, Bank of America, Northwest International Bank, Irving International Finance Corporation, Bank of Tokyo, Instituto Mobiliare Italiano and Commerzbank have together taken up shares to the value of £480,000; Société FInancière pour les Pays d'Outremer is made up of International Finance Corporation (£490,000), Bank of Nigeria (£490,000), Nigerian private investors (£20,000) and the Investment Company of Nigeria (£500,000). A government loan brings total funds up to £5 million.
Rwanda Burundi: Banque de Ruanda Urundi is a subsidiary of B.N.C.I.
Sudan: Nilein Bank (Banque des Deux Nils) is a subsidiary of Crédit Lyonnais.
Ivory Coast: Société Générale de Banques en Côte d'Ivoire is made up of Bayerische Vereinsbank, Société Générale de Paris, Banque de l'Union Parisienne, Banco Nazionale del Lavoro, and Bankers International Corporation (Morgan Guaranty); Banque Ivoirienne de Crédit is a subsidiary of Crédit Lyonnais; B.I.C.I. du Côte d'Ivoire is a subsidiary of B.N.C.I. and Société Ivoirienne de Banque is made up of Deutsche Bank (16%), Crédit Lyonnais (42%), International Banking Corporation (16%), Banca Commerciale Italiana (16%), and Ivory Coast Government (10%).
Dahomey: Société Dahomienne de Banque is a subsidiary of Crédit Lyonnais.
Mali: Banque Malienne de Crédit et de Dépôts is a subsidiary of Crédit Lyonnais.
Morocco: Banque Franco-Suisse pour le Maroc is made up of Swiss Bank Corporation (50%) and Crédit Commercial de France (50%); Banque Nationale pour le Developpement Economique is made up of Deutsche Bank, Banco Nazionale del Lavoro, and Commerzbank; Caisse Marocaine des Marchés is part-owned by Crédit Foncier de France; Banque Fonçière du Maroc is part owned by Crédit du Nord; Banque Commerciale du Maroc is made up of Cie Industrielle et Commercial (C.I.C.), Credit Lyonnais du Maroc, Union Africaine et Financière Maroc, and Union Européenne Industrielle et Financière.
Tchad: Banque Tchadienne de Crédit et de Dépôts (Government of Tchad and Crédit Lyonnais).
Tunisia: Union Bancaire pour le Commerce et l'Industrie (B.N.C.I. and Banco di Roma); Banque de Tunisie (C.I.C.); Union Internationale de Banque (Société Tunisienne de Banques, Banca Commerciale Italiana, Commerzbank, and Bank of America); Banque d'Escompte et de Crédit à l'Industrie en Tunisie (B.E.I.T.) is made up of Banque Industrielle pour l'Afrique du Nord (Banque de l'Indochine, 5%), International Banking Corporation (Morgan Guaranty), and Comptoir National d'Escompte de Paris.
Madagascar: Banque Malgache d'Escompte et de Crédit (Malagasy Government and Comptoir National d'Escompte de Paris).
South Africa: In addition to Barclays D.C.O., Crédit Lyonnais, and other big U.K. and French banks, there are French Bank of South Africa (Banque de l'Indochine), First National City Bank of New York (S.A.) Ltd., Banque Commerciale Africaine (C.I.C., 12,631 shares) and the Standard Bank.
In addition, there are a number of other banks functioning throughout Africa, such as the British Bank of the Middle East, which operates in Tunisia and Morocco and Libya, and National and Grindlays Bank, with branches and agencies in the Somali Republic. A recently established bank in the Merchant Bank of Central Africa, which is a creation of the Rothschild Banking group. The Banque Lambert has a participation as well as Mediobanca.
Reports of important French banks for their financial year 1963-4 indicate the way in which they are adapting themselves to the new conditions of independent States without losing any of their former influence. The following report of the Comptoir National d'Escompte de Paris appeared in Le Monde, 16 June 1964:
‘We have asserted in a new form our policy in Africa. We opened in April, as we indicated last year, the Banque d'Escompte et de Crédit à l'Industrie en Tunisie (B.E.I.T.) which we have found in Tunis with the Banque Industrielle de l'Afrique du Nord (B.I.A.N.) and the Morgan Guaranty International Banking Corporation; this new establishment has taken over our local branches and those of the B.I.A.N. We also decided to create, with the Malagasy Government, the Banque Malgache d'Escompte et de Crédit (B.A.M.E.S.) to which we have since ceded our agencies in Madagascar, and which is presided over by a Malagasy personality, administered by a joint board and managed by our representative. We hope to give to this traditional sector of our influence a new drive and to emphasise thereby the position which we have held in Madagascar since 1885. In Algeria we are retaining only an agency in Algiers, where in spite of the circumstances we have maintained some activity.’
Three days earlier, on 13 June 1964, Le Monde contained a report of the activities of Credit Lyonnais:
‘In Morocco we have during the month of February 1963, with the help of the Banque Marocaine du Commerce Extérieur, proceeded to transform our agencies into a company under Moroccan Law. The B.M.C.E.E. has taken up an important participation in the registered capital of six million dirhams in the new company, which functions under the registered title of Crédit Lyonnais-Maroc.
In Tunisia, where our agencies have obtained satisfactory results, the conversations taken up with the Société Tunisienne de Banque, the Banca Commerciale Italiana, the Commerzbank A.G. and the Bank of America have ended in the creation of the Union Internationale de Banques, with a capital of 700,000 dinars, which has taken over with effect from 2 January 1964 the working of our agencies.
With the association of the Republic of Chad there was created in February 1963 the Banque Tchadienne de Crédit et de Dépôts, with a capital of 100 million francs CFA. These two participations help to complete our representation in black Africa, where our establishment is now interested in eleven banking companies.’
The French have maintained close monetary ties with the countries of former French West Africa and French Equatorial Africa. The Banque Centrale des Etats de l'Afrique de l'Ouest (B.C.E.A.O.) controls the currencies of Mauritania, Senegal, Ivory Coast, Upper Volta, Dahomey and Niger. The currency issued by the bank is still called the CFA franc, but now, instead of ‘Communauté Financière d'Afrique’, the initials mean ‘Communauté Financière Africaine’. National monetary commissions have been set up in the various States, and there is a limited degree of African representation on the administrative council.
The same does not apply to the Banque Centrale des Etats de l'Afrique Equatoriale et du Cameroun (B.C.E.A.C.) which is concerned with the Congo (Brazzaville), Gabon, the Central African Republic, Chad and Cameroun. The national monetary commissions have the same powers as those in former French West Africa, but central bank administrators sit on them, and the administrative council is composed of Frenchman.
As a research group of the Department of Economics in the University of Ghana has pointed out, ‘the most significant feature of these currency blocs is that the foreign exchange reserves of the franc zone countries are still pooled in France itself. They are estimated individually for each member, but cannot be drawn upon beyond a certain margin of credit governed in each case by a bilateral agreement with the French government. Local monetary policy, exchange control and duty policy ... must operate within the framework of this central allocation by the French.’
Certain former French colonies, Tunisia, Morocco, Algeria, Mali and Guinea have, since independence, established their own banks and currencies, but they have pegged their currencies to the franc.
The existence of separate monetary zones is having a harmful effect on the growth of trade in Africa. It is leading to illegal trade and revenue losses in many countries and makes an African Common Market difficult. Like the old, artificial political boundaries which are a relic of the colonial period, the various monetary zones help to emphasise differences when the independent African States should all be working for unified economic development. They perpetuate links with former colonial powers and strengthen the forces of neo-colonialism.
A significant step forward in continental economic cooperation was taken in September 1964, when the African Development Bank was founded. Its headquarters are at Abidjan, Ivory Coast, and its membership is limited to independent African governments. All powers of the Bank rest in the Board of Governors, each Governor being a representative of a member state. The aim of the Bank is to accelerate the economic development and social progress of its member countries, and to accomplish this, the Bank is authorised to promote the investment of public and private capital in Africa.
While foreign private investment must be encouraged, it must be carefully regulated so that it is directed to important growth sectors without leaving control of such sectors in foreign hands. Here again, we see the need for unified planning. With the support of a Union government and a continental code to govern foreign investment the African Development Bank would be able to accelerate the stimulus it is already giving to the economic development of the continent.