Collusion and competition in colonial economies: banking in British West Africa, 1916-1960

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.