² This was the pioneer banking legislation in Nigeria. The Ordinance also applied to foreign banks except that they had to maintain a paid-up capital of £0.1m. Unlike most local banks, foreign banks did not have much difficulty in complying with the Ordinance's provisions since their headquarters were usually abroad and they had better capital bases. See Paton, G. D., Report on Banks and Banking in Nigeria (unpublished, 1948, pp. 4–6) [subsequently the Paton Report].Google Scholar

³ For instance, during the early 1950s the two British banks, which controlled 90% of bank deposits in Nigeria, operated only 23 branches in 17 towns: Rowan, D. C., ‘Banking in Nigeria: a study in colonial financial evolution’, Banca Nazionale del Lavoro Quarterly Review (1952), p. 163.Google Scholar

⁴ Lack of interest in developing internal markets and in assisting indigenous enterprise is a common feature of expatriate banks in underdeveloped territories, particularly in those possessing racially heterogenous societies; see Economic Commission for Asia and the Far East, Report on the Mobilisation of Domestic Capital in Certain Countries of Asia and the Far East (Bangkok, 1951), ch. 3.Google Scholar

⁵ Bank of England, London, Archive [hereafter BoE]: OV69/1, Powell to Boss, 20 Aug. 1948, f. 166, p. 1.

⁶ Fry, R., Bankers in West Africa (London, 1976), p. 116.Google Scholar

⁷ See, for instance, Azikiwe, N., Zik: A Selection from the Speeches of Nnamdi Azikiwe (Cambridge, 1961), pp. 211–13.Google Scholar

⁸ For instance, similar views were documented in Sierra Leone – Cox-George, N. A., Report on African Participation in the Commerce of Sierra Leone and the Government Statement thereon (Sierra Leone, 1958), p. 47.Google Scholar See also Hopkins, A. G., An Economic History of West Africa (London, 1973), p. 209.Google Scholar

⁹ See Kennedy, P., African Capitalism: The Struggle for Ascendency (Cambridge, 1988), p. 40Google Scholar and Kaniki, M. H. Y., ‘The colonial economy: the former British zones’, in Boahen, A. A. (ed.), General History of Africa VII: Africa Under Colonial Domination 1880–1935 (London, 1985), p. 405.Google Scholar

¹⁰ See Sir Trevor, C., Report on Banking in the Gold Coast and on the Question of Setting up a National Bank (Accra, 1951), para. 122Google Scholar; Rowan, D. C., ‘The native banking boom in Nigeria’, The Banker (10 1951), p. 244Google Scholar; and Nwankwo, G. O., ‘British overseas banks in the developing countries: 1 – until 1945’, Journal of the Institute of Bankers (06 1972), p. 157.Google Scholar

¹¹ See for instance, Eggleston, A., ‘The early years’, in Ghana Commercial Bank (Accra, 1963), pp. 105–9.Google Scholar

¹² Newlyn, W. T. and Rowan, D. C., Money and Banking in British Colonial Africa (Oxford, 1954), p. 96Google Scholar and Brown, C. V., The Nigerian Banking System (London, 1966), p. 24. Note that some African governments established commercial banks during the dying days of colonialism. For instance, the National Bank of Ghana, 100% government-owned, was established in 1952.Google Scholar

¹³ In the Gold Coast (Ghana), for instance, the 1906 Companies Act prevented the establishment of any local company to carry out any form of banking operation and this was not repealed until 1950 (Ordinance no. 36).

¹⁴ Onoh, J. K., Money and Banking in Africa (New York, 1982), p. 95.Google Scholar

¹⁵ As in the case of African Continental, see below.

¹⁶ The Industrial and Commercial Bank was established in 1929 and failed the following year.

¹⁷ Newlyn, and Rowan, , Money and Banking, p. 98.Google Scholar

¹⁸ Azikiwe, N., Banking Monopoly in Nigeria: Statement made by the Hon. Premier in the Eastern House of Assembly on 8th August, 1956 (Enugu, 1956), p. 3Google Scholar. See also National Bank advertisement in Daily Times (30 09 1961), p. 11.Google Scholar

¹⁹ Notorious for their poor capitalisation, rapid expansion and incompetent management. Little wonder most of them were usually referred to as ‘wild cat’ or ‘mushroom’ banks.

²⁰ Central Bank of Nigeria, ‘The growth of commercial bank activities 1959–1966’, in Oyejide, A. and Soyode, A. (eds), Commercial Banking in Nigeria (Ibadan, 1986), pp. 64–5.Google Scholar See also Brown, , Nigerian Banking, p. 25.Google Scholar

²¹ Azikiwe, , Banking Monopoly, p. 4.Google Scholar The bank's original capital was £250 divided into 50 £5 ordinary shares. See Report of the Tribunal Appointed to Inquire into Allegations Reflecting the Official Conduct of the Premier of, and Certain Persons Holding Ministerial and Other Public Offices in the Eastern Region of Nigeria, Cmnd. 51 (London, 1957), p. 3 [subsequently referred to as Foster Sutton Report].Google Scholar

²² According to Azikiwe, the real reason for buying the company was because one of its objects was ‘generally to act as bankers to customers and others’ – see Report on Banking and Finance in Eastern Nigeria (Enugu, 1956), p. 13.Google Scholar

²³ Foster Sutton Report, p. 3.

²⁴ Azikiwe, , Zik, pp. 211–13.Google Scholar

²⁵ It has not been possible to access the composition of the bank's shareholders for the 1940s. On 31 Mar. 1955, out of the bank's 115,935 issued £1 ordinary shares, the holdings of Azikiwe and members of his family in the bank were: Dr N. Azikiwe – 28,000; Mrs C. E. Arinze (his sister) – 4,000; Miss E. O. Arinze (a niece) – 4,000; Mr O. C. Azikiwe (his father) – 4,000; Mr J. O. Nwosisi (a cousin) – 100. The Zik groups holdings comprised: Zik Enterprises Ltd – 49,900; African Book Co. Ltd – 2,000; Nigerian Commodities Ltd – 4,000; Nigerian Paper Co. Ltd – 2,000; Nigerian Printing Supply Co. Ltd – 2,000. Azikiwe held 44.9% of Zik Enterprises, 45% of African Book, 45.4% of Nigerian Paper and 63% of Nigerian Printing: Foster Sutton Report, p. 7.

²⁶ At the end of 1953, apart from Azikiwe who was the chairman, the bank had four other directors, three of whom were Zik's relatives.

²⁷ In 1951, the bank made the following advances to the Zik group of companies: Zik Enterprises Ltd – £135,000; Comet Press Ltd – £5,000; Nigerian Printing Supply Co. Ltd – £15,000; Nigerian Real Estate Corporation Ltd – £50,000. These were described as investments in the balance sheet. In addition, the Zik group of companies was further indebted to the bank to the tune of £112,173 out of the bank's total loans and advances of £471,874. See Foster Sutton Report, p. 8 and appendix E.

²⁸ Fry, , Bankers in West Africa, p. 26.Google Scholar

²⁹ Baster, A. S., The Imperial Banks (New York, rep. 1977), ch. 4.Google Scholar

³⁰ The prevailing regulations regarding the disclosure obligations and conduct of government ministers were spelt out in a dispatch from the Secretary of State of the Colonies with reference no. WAF/39/3/05 dated 1 Dec. 1951 and addressed to the Officer administering the Government of Nigeria: Foster Sutton Report, p. 5.

³¹ In the same resignation letter, Azikiwe appointed A. Kofi Blackson. who was also a director of the bank, to act in his place and to ‘exercise all powers and enjoy all privileges appertaining to these offices excepting that of shareholder until your company has had opportunity to make necessary arrangements in accordance with your memorandum and articles of association’. Blackson was described in an internal memorandum of the Bank of England as ‘an African stooge of Dr. Azikiwe and reputed to be hopelessly incompetent’ – BoE: OV68/3, Loynes to Parsons, 16 Jul. 1956, f. 93.

³² Letters with reference nos. HO/58/5/52. This was followed up with a second letter with reference no. HO/58/9/52 dated 6 Oct. 1952: Foster Sutton Report, p. 5.

³³ Foster Sutton Report, p. 6.

³⁴ Under the 1952 Banking Ordinance, a Banking Officer was appointed in the Ministry of Finance to monitor the enforcement of the Ordinance. He was responsible to the Financial Secretary.

³⁵ BoE: OV68/2, f. 110.

³⁶ BoE: OV68/3, f. 23, p. 2.

³⁷ Memorandum, ‘Reserve of liquid assets’, 19 03 1954, and marked ‘Strictly Confidential’, reproduced in Foster Sutton Report, p. 6.Google Scholar

³⁸ Tignor, R. L., ‘Political corruption in Nigeria before independence’, Journal of Modern African Studies (1993). p. 192.Google Scholar See also Deloitte Plender Griffiths and Co., African Continental Bank Limited (London: unpublished report, 1956), p. 2 [hereafter Deloittes Report].

³⁹ In 1954 alone, 17 of the then existing 24 indigenous banks failed.

⁴⁰ BoE: OV68/4, Memorandum, 19 Mar. 1957, f. 56c.

⁴¹ This policy was based on the following principles: (a) to discourage monopoly of monetary transactions by any one bank; (b) to liberalise credit facilities for Nigerian entrepreneurs; (c) to encourage the development of indigenous Nigerian banking and (d) to plan for the eventual establishment of a state bank.

⁴² The delegation was led by Azikiwe.

⁴³ Report on Banking and Finance in Eastern Nigeria, p. 4.Google Scholar

⁴⁴ Eastern Region Finance Corporation Law, 1954.

⁴⁵ This was made by the Eastern Region Marketing Board. The circumstances in which this was done was one of the issues investigated by the Foster Sutton Report (pp. 67–78).

⁴⁶ ibid., p. 23. A subsequent board meeting of the Eastern Region Finance Corporation, held on 27 Jul. 1955, increased the investment in African Continental shares to £0.877m.: ibid., p. 26.

⁴⁷ For the terms of this agreement see Report on Banking and Finance in Eastern Nigeria, p. 6.Google Scholar

⁴⁸ Formerly an ally of Azikiwe and described by the Glasgow Herald, 25 07 1956Google Scholar, as a ‘bizarre figure’ who attained the high rank of chief whip, deputy speaker and chairman of the Regional Development Corporation in Eastern Nigeria despite the fact that he had served 5 years 11 months with hard labour for being in possession of counterfeit coins.

⁴⁹ Eastern Region House of Assembly Debates, 26 Jun. 1956, p. 65.

⁵⁰ BoE: OV68/3, Memorandum, 6 Jul. 1956, f. 89.

⁵¹ ibid., Internal memorandum, 29 Jun. 1956, f. 85.

⁵² ibid., Internal memorandum, 6 Jul. 1956, f. 89.

⁵³ ibid., Memorandum, 29 Jun. 1956, f. 85.

⁵⁴ Azikiwe, , Zik, p. 2.Google Scholar

⁵⁵ Before the 1952 Constitution, the Secretary of State could set up such a Commission under section 22 of the Commission of Inquiry Ordinance without consulting any one. With the creation of the regional governments in 1951 and the 1952 Constitution, the Secretary of State could only set up such a commission on matters relating to the regions on the advice of regional governments. The infeasibility of this option led to the introduction of an Order in Council which gave a legal cloak to the actions of the Secretary of State. This Order in Council was described by the then British Attorney-General as nothing more than a piece of machinery to overcome a ‘technicality’. See Azikiwe, , Zik, for further discussion.Google Scholar

⁵⁶ Members included: S. Foster Sutton, Chief Justice of the Federation of Nigeria; J. H. M. Comarmond, Chief Justice of the High Court of Lagos and of the High Court of the Southern Cameroons; V. A. Savage, a Chief Magistrate in the Eastern Region of Nigeria; and G. F. Saunders, Fellow of the Institute of Chartered Accountants in England and Wales. Initially Azikiwe pressed that the inquiry be conducted by Savage (an African). Though the colonial government believed that Savage was incorruptible, it was feared that he was far too inexperienced to conduct an inquiry of such magnitude and might be ‘browbeaten’ by Zik. However, he was co-opted as a gesture to Azikiwe [BoE: OV68/3, Loynes to Parsons, 19 Jul. 1956, f. 96]. An earlier idea that a banker might be a member was dropped by the Colonial Office because of Zik's accusations about the British banking monopoly: ibid., Loynes to Hawker, 23 Jul. 1956, f. 97.

⁵⁷ The Tribunal, appointed ‘to inquire into the allegations reflecting on the Official Conduct of the Premier of and certain persons holding Ministerial and other Public Offices in the Eastern Region of Nigeria’, was specifically required to look into the following matters: (l) allegations of improper conduct on the part of Azikiwe, Premier of the Eastern Region of Nigeria, in connection with the affairs of the African Continental; (2) the circumstances in which securities or the proceeds of securities belonging to the Eastern Region Marketing Board were transferred to the Eastern Region Finance Corporation and the circumstances in which such proceeds were invested in or deposited with the African Continental; (3) the relationship, direct or indirect, between Azikiwe and the African Continental, its directors, shareholders or officers, at all times, whether before or after such investment or deposit as aforesaid, material to the circumstances as aforementioned; (4) the relation ship between the Eastern Region Finance Corporation and the African Continental at all material times as aforesaid; (5) the relationship between any body or organisation, corporate or unincorporate in which Azikiwe has or had at any material time as aforesaid, an interest, whether direct or indirect, and the African Continental; (6) the use made of the resources of the African Continental whether before or after the investments and deposits referred to in paragraph 2 were made, in so far as any such use appears to the Tribunal to be material for the foregoing purposes; and (7) whether in respect of any of the aforesaid matters any person holding ministerial or other public office has infringed the standards of conduct demanded of the holder of such office and if so in what respect.

⁵⁸ The Economist, 25 08 1956, p. 622.Google Scholar

⁵⁹ BoE: OV68/3, Loynes, to Hawker, , 29 06 1956, f. 85.Google Scholar

⁶⁰ Tignor, , ‘Political corruption’, p. 180.Google Scholar

⁶¹ Public Record Office, Kew, London [hereafter PRO]: CO 554/1181, Sep. 1955.

⁶² PRO: CO 544/840, Williamson, T. B. to Johnston, J. B., 6 01 1955.Google Scholar

⁶³ PRO: CO 583/275/30647/1A.

⁶⁴ BoE: OV68/3, Acting Governor General of Nigeria to Secretary of State, 12 Jul. 1956, f. 91.

⁶⁵ ibid., Secret internal memorandum signed by J. B. Loynes, dated 16 Jul. 1956, f. 93.

⁶⁶ Paton Report, p. 17.

⁶⁷ Akinbiyi, D. T., House of Representatives Debate (1952), p. 1116.Google Scholar

⁶⁸ For instance, the 1952 Ordinance stipulated minimum reserve requirements without providing a ‘reserve force’ and no lender of last resort to assist banks in distress. It also required banks to maintain adequate liquidity without providing investible money market instruments. This resulted in indigenous banks operating with high expenses through having to maintain all their liquidity in idle cash: Nwankwo, G. O., Prudential Regulation of Nigerian Banking (Lagos,. 1990), p. 19.Google Scholar

⁶⁹ BoE: OV68/3, 16 Jul. 1956, f. 93.

⁷⁰ No copy of this report appears to have survived. An insight into its terms of reference and the inquiry's results can be gained from BoE: OV68/6, internal memorandum, 1 Jul. 1958, f. 35a.

⁷¹ Deloittes Report, p. 1 and Foster Sutton Report, p. 43. The Foster Sutton Report was, however, of the view that Azikiwe's conduct in the whole affair fell short of the expectations of honest, reasonable people (p. 42).

⁷² Deloittes Report, p. 2.Google Scholar

⁷³ ibid., p. 9.

⁷⁴ BoE: OV68/4, Loynes to Parsons, 12 Oct. 1956, f. 21.

⁷⁵ IBRD, The Economic Development of Nigeria (Baltimore, 1955) [hereafter World Bank Report].Google Scholar

⁷⁶ Report of the Advisory Committee on Aids to African Businessmen (Lagos, 1959), p. 9.Google Scholar

⁷⁷ Rowan, , ‘Banking in Nigeria”, p. 163Google Scholar; see also Nwankwo, , Prudential Regulation, p. 19.Google Scholar

⁷⁸ World Bank Report, p. 153.Google Scholar

⁷⁹ The rates charged by the British banks appear to have exceeded those in other British colonies outside west Africa. For instance, it was estimated that interest rates charged by these banks were usually between 4–6% in the West Indies as compared with 6–8% in West Africa – see Greaves, I., Colonial Monetary Conditions (London, 1953), p. 47.Google Scholar

⁸⁰ It was possible to obtain 5% on British Treasury Bills and 3·5% on seven-day deposits with commercial banks in London: Deloittes Report, p. 2.

⁸¹ Foster Sutton Report, p. 35.Google Scholar

⁸² Deloittes Report, pp. 6–7.Google Scholar

⁸³ ibid., p. 4.

⁸⁴ Trevor, , Report on Banking in the Gold Coast, para. 123.Google Scholar

⁸⁵ World Bank Report, p. 155.Google Scholar

⁸⁶ At that time, the savings system permitted withdrawals without charge anywhere in Nigeria irrespective of the place of deposit.

⁸⁷ World Bank Report, p. 155.Google Scholar

⁸⁸ Both were prominent African businessmen.

⁸⁹ Though Azikiwe had resigned his directorships of these companies, Blackson was still a director of some of them.

⁹⁰ Deloittes Report, pp. 5, 6.Google Scholar

⁹¹ BoE: OV68/6, Internal memorandum, 1 Jul. 1956, f. 35a.

⁹² Akintola Williams & Co.

⁹³ BoE: OV68/6, f. 35.

⁹⁴ Foster Sutton Report, pp. 8, 9.Google Scholar

⁹⁵ Deloittes Report, p. 9.Google Scholar

⁹⁶ ibid.

⁹⁷ BoE: OV68/4, Loynes, to Bolton, , 30 01 1957, f. 45.Google Scholar

⁹⁸ ibid., f. 47.

⁹⁹ On several previous occasions, payment had been put off apparently due to the bank's limited resources. See Foster Sutton Report, p. 33.Google Scholar

¹⁰⁰ Of these, Zik received £5,252, O. C. Azikiwe (his father) £2,000, C. E. Arinze (his sister) £1,550 and Blackson (the bank's general manager) £1,150.

¹⁰¹ Foster Sutton Report, p. 33.Google Scholar

¹⁰² BoE: OV68/4, f. 45.

¹⁰³ ibid., f. 47.

¹⁰⁴ ibid., Loynes to Watson, 11 Apr. 1957, f. 63d.

¹⁰⁵ ibid., Internal memorandum, 19 Mar. 1957, f. 56d.

¹⁰⁶ ibid., Loynes to Watson, 19 Mar. 1957, f. 56c.

¹⁰⁷ ibid., Loynes to Watson, 11 Apr. 1957, f. 63d.

¹⁰⁸ And also to permit regional governments generally to own or participate in commercial banks; see House of Representatives Debate, 12 09 1957, p. 2233.Google Scholar

¹⁰⁹ Though the Foster Sutton Report concluded that Zik's conduct in the affair fell ‘short of the expectations of honest reasonable people’, it conceded that nationalist idealism had animated Zik to found and strengthen the African Continental (p. 42).

¹¹⁰ BoE: OV68/4, Loynes to Watson, 19 Mar. 1957, f. 56c.

¹¹¹ ibid.

¹¹² Ayida, A. A., ‘A critical analysis of banking trends in Nigeria’, in Nigerian Institute of Social and Economic Research Conference, Proceedings (Dec. 1960), p. 28.Google Scholar

¹¹³ Ajibola, W. A., ‘The politics of banking development’Google Scholar, in Oyejide, and Soyode, , Commercial Banking in Nigeria, p. 36.Google Scholar

¹¹⁴ BoE: OV68/4, Loynes to Parsons, 12 Oct. 1956, f. 21.

¹¹⁵ ibid., Loynes to Bolton, 30 Jan. 1957, f. 45.

¹¹⁶ The Banking Ordinance and the Central Banking Ordinance. A detailed analysis of these regulations is beyond the scope of this paper.