Company Profiles: Africa Essay ⋆ Business Essay Examples ⋆ EssayEmpire

There have long been traders, both African and Arab, working throughout the African continent, but especially along rivers or along its east coast. From the late 15th century, but more particularly in the 16th century, there have been a number of European colonial companies that mainly operated under government charter. Some more recent companies are or have links with mining or agricultural companies that have been on the continent since colonial times; others are agency houses that sell goods and services on behalf of overseas companies. Also, some overseas companies have started operations in Africa since the 1960s, and there are an increasing number of African-owned companies, some government owned or controlled and others created or bought out after independence.

The Chartered Companies

The Portuguese Company of Guinea was involved in trade with West Africa and with the importation of spices to Portugal from 1482 until 1499. Some of the earliest European chartered companies were primarily involved in trade in the East Indies, and so trade with Africa became incidental to their main business. These included the Honorable East India Company (British), which was founded in 1600 and remained in existence until 1858 (being formally dissolved in 1873) and the Dutch Vereenigde Oost-Indische Compagnie (VOC), or Dutch East India Company, which was established in 1602 with an initial 21-year monopoly to carry out trade in Asia. Both companies were involved in establishing trading posts in Africa and had extensive extraterritorial powers, including their own armies and navies.

The Royal African Company, from England, was established in 1660 and was heavily involved in slavery, being responsible for the transportation of 90,000–100,000 slaves between 1672 and 1689. It lost its charter in 1698 and ceased to be involved in the slave trade in 1731, when it started trading in ivory and gold dust. Indeed much of the gold was used in England to make coins, with the result that the English gold coin became known as the guinea. It was succeeded by the African Company of Merchants.

For the Germans, the Kurfürstliche Brandenburgisch-Afrikanische Kompagnie (Brandenburg African Company) was founded in 1682 and occupied two parts of modern-day Ghana, being heavily involved in slavery for much of its existence. Over 100 years later, for the British, the Sierra Leone Company in 1792 founded the first African American colony, helping to settle former slaves from Nova Scotia, Canada. The American Colonization Society set up the Republic of Liberia for similar purposes in 1822. In 1886 the National African Company became the Royal Niger Company—also a British company under Royal Charter—and with its landholdings was, on January 1, 1900, transferred to the British government for a payment of £865,000, thus forming the basis of British landholdings in Nigeria. There were also exploration companies such as the African Association and the Geographical Society, technically under a company structure, which were involved in mapping Africa.

The Deutsch-Ostafrikanische Gesellschaft (German East Africa Company) was founded in 1885 to help establish a German claim to what is now Tanzania, and was heavily involved in plantations and trade prior to selling German East Africa to the German government in 1891. The Deutsch-Westafrikanische Gesellschaft/Compagnie (German West African Company) operated in West Africa but without a central authority.

The Portuguese had tried, for most of their involvement in Africa, to operate through their central government, but found it impossible to raise the capital and as a result established a number of companies, most of which operated in modern-day Mozambique. Of these, the most famous are the Companhia de Moçambique (Mozambique Company), founded in February 1891; the Companhia do Niassa (Niassa or Nyassa Company), which operated from 1891 until 1929; and the Companhia do Zambezia (Zambezi Company). The Mozambique, Niassa, and Zambezi companies remain best known through the colorful stamps they issued during their periods of operation. All three lost their status in 1929 when the Portuguese government took back control of their territories with an attempt to create a bigger home market for the Portuguese Empire.

Regional And Historical Differences

Because of the nature of the creation of colonial powers in Africa and other historical reasons, there have been significant differences between the companies that have operated in various parts of the continent. In north Africa, there had long been connections with the Ottoman Empire, and Turkish companies have had an important role, as have French, Spanish, Italian, and Greek companies. In Egypt, until the late 1950s, many of the companies in the country were controlled by Greeks, with also substantial numbers of Maltese involved in commerce. Under Gamal Abdel Nasser, Greek commercial influence in Egypt declined as he sought to promote Egyptian businesses. Greek companies, however, remained prominent in the Sudan and in Ethiopia, many being run by Greeks who had lived in these countries for many years rather than companies that had any connections with Greece itself. In Ethiopia, this ended with the overthrow of Haile Selassie in 1974, and in Sudan with the emergence of Gaafar al-Nimeiry, who became president in 1969. One of the main streets of traders in Djibouti is called Rue d’Athens, also showing the importance of Greek traders in the Horn of Africa.

In Morocco, Algeria, and Tunisia, French companies had been important in business life since the 19^th century, and they continued to dominate the economies of north Africa in the first half of the 20th century. The main commercial telephone directory published in French Africa, the Didot-Bottin, was heavily dominated by north Africa, with French companies being important in the much smaller economies of the countries of former French West Africa (Benin, Burkina Faso, Guinea, Mali, Mauritania, Niger, Senegal, and Togo) and those of former French Central Africa (Central African Republic, Cameroon, Chad, Congo, and Gabon). Prior to independence, most of the companies operating in these areas were registered in Paris, and many of the public services such as telecommunications were under the direct control of the colonial authorities or the French central government.

After independence, some of the former colonies were involved in establishing joint ventures, and a few established their own companies, with newly available capital in some of these countries managing to run rival firms. In addition, some of the countries have subsequently sold off sections of their government corporations to the private sector, in the case of Chad introducing plans for the privatization of the Société des Télécommunications du Tchad, and Congo privatizing the Société des Télécommunications du Congo. In Gabon, the telecommunications sector has the government-owned company providing telephone lines in the country, another company 61 percent owned by the government for overseas telephone lines, and a number of private companies operating mobile-telephone networks.

A few countries, such as Benin and Guinea-Bissau, run numerous para-state companies that are either partly or wholly owned by the state, such as the Société des Ciments du Bénin, the Société Béninoise de Brasserie in Benin, and Ultramaina in Guinea-Bissau. In Benin there were 130 of these in 1980, but only 27 in 1999, with some of these subsequently sold to the private sector.

In British Africa, during the time of colonial rule, British companies dominated the economies, and after independence, a number of these were sold off to local interests, with much of the business in formerly British West Africa (Gambia, Ghana, Nigeria, and Sierra Leone) dominated by companies based in Nigeria. And South African–owned and –based companies tended to dominate—and in fact still dominate—many of the economies of the smaller countries in southern Africa. In east Africa, the economic importance of Kenya also ensured that companies based there often dominated the region, with Indianowned companies being prominent in Uganda until the expulsion of the Indian community there by Idi Amin in 1972. Lebanese-owned companies remain prominent in trading in parts of British West Africa.

For the Portuguese, apart from their chartered companies that were taken over by the government in 1929, many of the plantations in Lusophone Africa (Angola, Cape Verde Islands, Guinea-Bissau, Mozambique, and Sao Tomé e Principe) were either owned by individuals or by the Portuguese government. As a result, after independence, and with socialist or communist governments taking over the former Portuguese colonies, state industrial enterprises were established. The Spanish government also tended to dominate former Spanish Africa (Spanish Morocco, Spanish Sahara, and Equatorial Guinea).

For transport, most road haulage companies were locally owned, but railways tended to be owned by the colonial government, and after independence, many were controlled by countries other than the ones in which the track was located, such as Rhodesia Railways running the railway line through Botswana until the 1970s. Shared ownership also exists with the Djibouti-Ethiopian Railway. Large numbers of independent countries also established their own airlines, with varying degrees of financial success.

Mining And Plantation Companies

Many European powers were involved in establishing plantation-style agriculture in their colonies in Africa, which led to many cash crops being grown either for consumption in the colonial country or for sale elsewhere. These involved food crops such as cocoa, coconuts, coffee, groundnuts, maize, palm oil, sugar cane, and also other plantation crops such as cotton, tobacco, and some rubber. To this end, there have been a large number of colonial companies involved in establishing and running these plantations. Some of these, such as those operated by the Portuguese, were run by individual wealthy landowners, whereas the British ones were often run through companies listed on the London Stock Market. The U.S. firm Firestone Tire and Rubber Company (now a subsidiary of Bridgestone) ran large rubber plantations in Liberia from 1926 until it was sold to the Japanese-owned company Bridgestone in 1988.

In addition, there were many smaller operations that were run by individual farmers who owned some of the best farmland in Africa, including the Central Highlands of Kenya, which were parceled out by the British to predominantly British people in the 1920s. It was these farming interests in Kenya and the wealth generated from them that led to a war to prevent independence, leading to thousands of deaths in the Mau Mau insurgency that eventually led to Kenya becoming independent in December 1963. There was certainly a close link between farming and political interests, with the European settlers in Algeria, many of whom were farmers, supporting continued French colonial rule. In Rhodesia, Ian Smith (1919–2007) was a farmer, and Smith’s defense minister Pieter van der Byl (1923–99) ran a large tobacco plantation.

The fate of many of these companies essentially depended on how independence was achieved in individual countries. In some of them such as Kenya and Uganda, the governments tried to encourage group farms, with Ghana and Guinea establishing state farms, while others—particularly the former French colonies—recognized the benefits of having private companies, most linked to a particular sector of the economy, such as the Compagnie de Gérance du Coton in Burundi, which controlled the local cotton industry; and the Cameroon Sugar Co., Inc., founded in 1975 for the Cameroon sugar industry.

Although it had been possible in colonial times for individuals to run farms and small plantations, the scale of mining ventures usually required far more capital. As a result, most mining operations were owned by public companies, or by private companies with a range of stock holders. There were obvious exceptions to this; Cecil Rhodes (1853–1902) managed to carve out a large “empire” in southern Africa through good fortune, shrewd deals, links with the governments of both Britain and South Africa (he was prime minister of the Cape Colony from 1890 until 1896), and also force. His company later came together as De Beers, founded in 1888, controlling the diamond business.

Other large diamond companies included Alfred Beit (1853–1906), who struck diamonds at Kimberley and then became an ally of Rhodes. Of the other major mining companies operating from South Africa, the most well-known were Anglo American Corporation (founded 1917), Consolidated Goldfields (founded 1887), Gencor Ltd. (founded 1895), and Rand Mines Ltd. Mention should also be made of Billiton, a Dutch mining company with a South African background, which merged with the Australian firm BHP to become BHP Billiton. In other countries, there were many other companies such as the Companhia do Manganes de Angola and the Companhia Mineira do Lobito SARL; in the Central African Republic, the Société Centrafricaine du Diamant in Bangui; and in Ghana, the Ashanti Goldfields Corporation.

Agency Houses and Overseas Companies Throughout colonial Africa, there were a range of agency houses that sold goods from a range of European firms in Africa, acting as agents and distributors. For the manufacturers this was better than establishing their own operations in African countries where there were always delays in shipping and delivery. In Sudan, the shipping and later trading firm Mitchell Cotts sold a wide range of British goods, especially air conditioning, as did a range of agency houses in other countries.

Although many insurance companies operated through agency houses, some other European insurance companies established their own branches in parts of Africa, particularly those that had large European populations such as South Africa, Egypt, Algeria, and Kenya. There were also a large number of European banking institutions that operated in Africa. The British bank Barclays (founded 1690), was always strong in South Africa, and controversially kept up banking ties with South Africa during the period of apartheid, leading to boycotts of the bank. Two centuries earlier, it had also been associated with financing of the slave trade, although that was far less controversial at the time. Also with long connections to South Africa was the Standard Chartered Bank (founded 1853), which opened a branch in Cape Town in 1862, and runs a subsidiary in West Africa: Standard Chartered Bank (Gambia) Ltd; the Standard Chartered Bank in Lesotho had been bought out by South African businessmen and run as Nedbank, Lesotho. Because of its involvement with India, Grindlays Bank (founded 1828) was favored by many Indian traders in East Africa, and the Bank of India and the Bank of Baroda both operate heavily in Kenya.

French banks such as the Banque Afrique Occidentale and the Crédit Lyonnais operated in French colonies, and retained much of their market share after independence. The Banque des Etats de l’Afrique Centrale operated in the countries of former French Central Africa (and also Equatorial Guinea), and there were also local subsidiaries such as the Bank of Africa-Burkina, and the Crédit Lyonnais Madagascar (which is actually owned by the Malagasy government). There are also other institutions such as the Ecobank-Burkina SA, operating in Ouagadougou, with Ecobank Ghana Ltd. operating in Accra, the Ghanian capital, and Ecobank Guinée in Conakry.

The British security printers De La Rue and Waterlows and the U.S. company, the American Banknote Company, were involved in printing money and postage stamps for many African countries, as well as other important printing contracts such as passports. Foreign and locally owned shipping companies provided mail services and also took passengers around Africa, with many of the colonial powers promoting companies registered in their own countries, such as the Companhia Portuguesa de Transportes Marítimos that still operates in the Cape Verde Islands, with P&O, the White Funnel Line, and other firms operating around the continent.

There were also many engineering companies that were involved in projects throughout Africa. The French company Richier was heavily involved in road construction and other civil engineering projects in French West Africa in the 1960s. As there was not sufficient demand for cars on the African continent, automakers in Europe and North America imported cars to Africa. British Africa was largely involved in importing cars from Britain, and French Africa from France, with car assembly plants in Nigeria and South Africa.

Locally Owned Companies

After independence, many people in Africa were eager to control the economies of their countries and prevent what was seen as the pervading influence of “neo-colonialism,” which Kwame Nkrumah of Ghana, and also Julius Nyerere of Tanganyika/Tanzania, saw as a system by which the colonial powers essentially continued to control independent nations through a range of important companies. This saw Ghana and Tanganyika—from British Africa—introduce measures to reduce the importance of these companies.

There were also many programs of nationalization, sometimes—as in the case of Namibia, and the Egyptian government taking over the Suez Canal in 1956— with compensation, but many times without any compensation—such as the Algerian government taking over former French businesses after independence in 1962, and the Zimbabwe farm invasions by Robert Mugabe’s supporters, the “war veterans” from 1997. The most drastic example of taking over of companies was when Idi Amin in Uganda expelled ethnic Indians in 1972. Some of them were from families that had lived in Uganda for generations, and many of the businesses taken over by Idi Amin and his supporters quickly failed.

One of the major areas of control by foreign multinationals that concerned many governments in independent Africa was that of the oil companies. Shell operated through much of Africa, with the French company Total later making inroads, and Esso was involved in prospecting in Chad. However, after countries became independent, many of them established their own state oil companies such as Sonatrach in Algeria; the Société Congo Gulf Oil in Kinshasa, Congo; the TotalFinaElf Côte d’Ivoire in Abidjan; and the National Oil Corporation in Libya.

Some other governments have had different ways of promoting business in their countries. There have been a number of stock markets; the oldest and most powerful are the ones in South Africa: JSE Securities Exchange, established in 1887; and the AltX, the Bond Exchange of South Africa, and the South African Futures Exchange, all located in Johannesburg. There are also other stock markets in Algeria (1998), Côte d’Ivoire (1976), Botswana (1989), Cameroon (2002), the Cape Verde Islands, Egypt (the Cairo and Alexandria Stock Exchange established in 1888), Ghana (1990), Kenya (1954), Libya (2007), Malawi (1995), Mauritius (1988), Morocco (1929), Mozambique (1999), Namibia (1992), Nigeria (1960 in Lagos, 2001 in Abuja), Rwanda (2008), Sudan (1995), Swaziland (1990), Tanzania (1998), Tunisia (1969), Uganda (1997), Zambia (1994), and Zimbabwe (1993); and there are plans to establish one in Angola. These have helped with raising local capital, and also provided a forum for local investors.

Other countries have insisted on local citizens being directors, which has changed the management of many of the companies operating in Africa and created a large African managerial class. These have transformed the nature of many of the businesses on the African continent, and how they are run, although political problems have interrupted the economic progress in many countries.

Bibliography:

Africa South of the Sahara 2008 (Europa Publications, 2008);
Dickie and A. Rake, Who’s Who in Africa: The Political, Military and Business Leaders of Africa (African Development, 1973);
Raymond E. Dumett, “Sources for Mining Company History in Africa: The History and Records of the Ashanti Goldfields Corporation (Ghana), Ltd.,” Business History Review (v.62/3, 1988);
Ubong Effeh, Why Sub-Saharan Africa is Mired in Poverty: The Consequences of Misrule (Edwin Mellen Press, 2008);
Adam Jones, Brandenburg Sources for West African History 1680–1700 (Franz Steiner Verlag, 1985);
Louise Fox and Melissa Sekkel Gaal, Working Out of Poverty: Job Creation and the Quality of Growth in Africa (World Bank, 2008);
Kempe Ronald Hope, Poverty, Livelihoods, and Governance in Africa: Fulfilling the Development Promise (Palgrave MacMillan, 2008);
Sandra James, Christy Oddy, and Monica Scott, Major Companies of Africa South of the Sahara, 2009 (Gale-Cengage/Graham & Whiteside, 2008);
George Klay Kieh, Jr., Africa and the New Globalization (Ashgate, 2008);
The Middle East and North Africa 2008 (Europa Publications, 2008);
Godfrey Mwakikagile, Investment Opportunities and Private Sector Growth in Africa (New Africa Press, 2007);
Geoffrey Wood, Industrial Relations in Africa (Palgrave Macmillan, 2007).

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