Readings for an Honors Seminar in Business History:
The Search For An African Middle Class

These four articles are all concerned with African business history although perhaps it would be better to say business history in Africa. In three of them (Dumett, Saul and Himbara) there is quite clearly a preoccupation with the existence of an African middle class that is framed in a Eurocentric theory of capitalism. There is an assumption that a class of businessmen or entrepreneurs which is autonomous from the state needs to exist before a national economy can properly develop. In the fourth article the problem of economic development is absent from the analysis. Padayachee and Morrell write a brief history of Indian merchants in the Natal economy prior to World War I that is an intervention in a historiography that has tended to view such things through the lens of race relations. Padayachee and Morrell pay attention to such relations but they are an element of their weave rather than its frame. It reads particularly well next to Himbara’s article on Kenya which is also concerned with Indian merchants in Africa but which reads top-down developmental rather then bottom-up historical.

African Merchants of the Gold Coast, 1860-1905: Dynamics of Indigenous Entrepreneurship

Raymond E. Dumett

Comparative Studies in Society and History > Vol. 25, No. 4 (Oct., 1983), pp. 661-693

In this article Dumett argues that the concept of the entrepreneur is one that can be applied meaningfully to the African merchants who operated on the Gold Coast in the second half of the nineteenth-century. While there have been a host of studies by sociologists and anthropologists that emphasize the importance of culture to African trade, and a host of studies by historians and economists who analyze innovation and technological change in export crop agriculture there is only a small literature on those West African traders who attained the status of important merchants. Using what few business records survive, scattered references in colonial documents, secondary sources and interviews with men who were once active in the trade or are the heirs of trading firm founders Dumett attempts to provide an account of Gold Coast entrepeneurship that will fill the gap in the historiography.

Dumett begins his paper with a meditation on the category of “entrepreneur,” on how it has been used, misused and rejected as an analytic tool in the study of African economy. His preferred definition of the term is one which emphasizes the role of the entrepreneur as a leader who combines the basic elements of production and distribution in new ways. Dumett then turns to the theoretical models that have been used to explain the phenomenon of entrepreneurship in West Africa. He argues that socio-psychological explanations too often depend on inappropriate typologies and that a better explanation for the rise of particular groups to trading dominance is to be found in geographical factors. The importance of location on or near trade routes is reinforced not only by the spread of new technologies or modes of trade and production along such routes but by the access they provided to an increasingly global market place. Only after such geographic determinants are met can cultural behavior and social structure come into play as variables. The more adaptable the social institutions, the more combatable with profit motive the cultural values, and the more wide-ranging the kinship system then the more likely such a community is to produce the entrepreneur. And finally, Dumett argues, there is the important political factor of how closely an entrepreneur is related to traditional rulers. His conceptual framework established he proceeds with his case studies.

Dumett has gathered the names of almost two hundred indigenous traders and commercial agents who were active along the Gold Coast in the second half of the nineteenth-century. Of these he estimates at least twenty-five could be classified as large-scale traders or merchants. Of these twenty-five Dumett selects merchants from three trading towns or districts and begins the process of matching up there individual histories with his conceptual apparatus. Dumett argues that these merchants displayed elements of classic entrepreneurial behavior: vigorous promotional activity and salesmanship, disciplined managerial supervision and accounting, a willingness to take risks and to pull out of badly judged ventures. They also attempted to diversify their mercantile activity into land purchasing, retailing, mining, banking and processing but with less success then they had in their primary activity. He also briefly touches on the reason for the decline of the entrepreneurial classes in his conclusion but the bulk of this essay is not the analysis or explanation the introduction promises but the mere description of mercantile behavior. Theory aside it is this wealth of description that makes Dumett’s paper so interesting and it shows, although this is not really his intent, the degree to which these merchants were imbedded in the larger commercial system of the Atlantic basin and the hybrid nature of coastal business culture – the way European and African technologies, products and values intermingle in the market.

Development of the Grain Market and Merchants in Burkina Faso

Mahir Saul

The Journal of Modern African Studies > Vol. 24, No. 1 (Mar., 1986), pp. 127-153

This work of historical anthropology is written with issues of economic development very much in mind. Saul hopes it will contribute to an understanding of the contemporary West African food sector and to the renewed debate over the role of class in African economic history. He begins with a brief summary of colonial and pre-colonial history but identifies the crucial period in the Burkina Faso grain trade as beginning after World War II. Saul provides a detailed and nuanced history of the trade in which he emphasizes how global and local political and economic developments shut down old patterns of business and opened up new ones. The most important factors were independence, urbanization and the growth of a cash economy. While the basic modes of agricultural production have remained stable those three factors plus mechanization (cheap trucks) have meant an increase in the size of both markets and distribution networks. This in turn has concentrated capital in the hands of a professional group of grain traders whose political relations to the bureaucratic elite running the state are tense, sometimes combative but ultimately symbiotic.

Saul relies on a wide range of secondary sources but his own field notes provide the most fascinating reading of the article. The accounts of how individual traders and merchants took advantage of the changing conditions of post-War Burkina Faso are a lesson in how quickly new technologies – be they automotive of financial – can be mobilized by ambitious people willing to take a risk. On the other hand his treatment of international business is a little uneven. It is excellent when he is showing how local agents of companies purchasing oil crops for export used their position to develop and exploit the cereal crop market but in the post-colonial period he is a little brusque. There seems a tendency for anthropologist to impose rigid boundaries between indigenous merchants and foreign capital except in overtly colonial situations – and sometimes even then. Some of his traders sell and buy in the European market and multinational companies still operate in Burkina Faso and the state has relations with both groups but Saul does not explore those relations.

Myths and Realities of Kenyan Capitalism

David Himbara

The Journal of Modern African Studies > Vol. 31, No. 1 (Mar., 1993), pp. 93-107

Himbara, like Saul is concerned with the problem of economic development in Africa and the role of an indigenous entrepreneurial class or national bourgeoisie in contributing to that development. Himbara argues that determinist paradigms such as those of the dependency theorists, neo-liberals and orthodox Marxists have trouble coping with varied and uneven patterns of development. Each nation-state in Africa has its own particular compositions and history and such differences that are impossible for universalizing theories to explain. In Kenya for instance, the characterization of East African Indians as foreign has not only had devastating social and political consequences it also fouls up economic analysis because it treats their capital as foreign. Himbara argues that such an error is the equivalent of calling the capital of Americans of German descent “German capital” or of English descent “British capital.” What is more important than their diasporic origins in Himbara’s account is their long experience in the process of capital accumulation in the East African economy. This experience is due in part to the very fact that their ethnicity has precluded them from close relations with the state but it has also meant they are politically vulnerable group. Himbara argues that the preoccupation of the state with the problem of foreign capital has meant economic planners have overlooked the existence of a small or “micro-scale” enterpises known as jua kali or “hot sun” operations. The jua kali consisted of welders and sheet metal workers who operated outside of the formal economy (under the hot sun). In post-colonial Kenya the jua kali acquired technical skills and knowledge of the market place and began diversifying in so far as the “public service businessmen” of the state would allow them to. In Himbara’s view if such groups as the Indians and the jua kali operators were encouraged to cultivate their entrepreneurial ambitions rather than made into political scapegoats or passed over by the national ministries and state agencies that administer development programs they would eventually develop into the genuine national bourgeoisie the Kenyan economy needs.

Indian Merchants and Dukawallahs in the Natal Economy, c1875-1914

Vishnu Padayachee; Robert Morrell

Journal of Southern African Studies > Vol. 17, No. 1 (Mar., 1991), pp. 71-102

In this article Padayachee and Morrell provide a detailed account of how Indian merchants and traders extended the colony’s commercial network into the hinterland and created an informal lending and credit network that remained outside and independent of official banking structures.

This analysis of those business networks is meant to provide something of a counterbalance to accounts in which the Indians in South Africa are treated as homogenous ethnic or racial group. Padayachee and Morrell show the differences that existed within that community between indentured Indian laborers who were primarily Hindu and the largely Muslim passenger Indian immigrants that arrived in Natal with capital in hand and commercial ambitions. The article also shows how Indian mercantile and financial networks developed by passenger Indians were integrated with a global Indian diaspora and with the white business community in South Africa. Padayachee and Morrell are particularly concerned with showing that changes in the way these merchants did business were not determined principally by racially based restrictions but by a range of factors not least of which were their organizational and financial logics.

Using a wide range of secondary sources, interviews, economic data and immigration, court and financial records Padayachee and Morrell have produced a rich history of a forty year period that takes into account a range of cultural, social, economic and political factors in its situation of Indian commercial behavior. That period ended in 1914 for a variety of reasons including factors internal to Indian business operations, regional economic changes, racist legislation and geopolitical developments.

In the course of doing the research for this assignment I was sidetracked briefly by a guano obsession. I didn’t pursue it but I thought you might be interested in a few of the articles I found:

The articles on the Grace firm are both excellent as transnational pieces as well as business histories. And the 1930 article is a great descriptive piece of American sealers getting a piece of the British guano trade off of Namibia. The article on Navassa is about American laws that allow traders to take possession of guano islands as yet unclaimed and the conflict over such an island between the U.S., Britain and Haiti.