. THE ORIGINS OF THE COLONIAL ECONOMY
• Colonization was simply an extension of the trading ties that
existed for over 400 years between Africa and Europe. Peasant
agriculture characterized most parts of the region and
there was no money economy. Production patterns were conditioned
by land availability.
• Trade involved slaves, gold, ivory, salt, and other commodities.
Trade in slaves is argued to have deprived the region of
enormous human capital.
• The trade in different items continued until the middle of the
19th century, when European governments decided to take
administrative control of the regions they traded with (Berlin
Conference of 1884).
• The decision to colonize large parts of Africa was driven by
(1) a need to support the industrial revolution with disrupted
flows of raw materials in large quantities, cheap labor,
and the need for new markets for industrial goods (2) strategic
competition among European powers, both politically and
militarily, and (3) individual hot heads (adventurers) that
sought to achieve fame.
THE STRUCTURE OF THE COLONIAL ECONOMY
There were basically three types of colonial economies in Africa:
(a) “peasant-statist” regimes known all over West Africa and
parts of East Africa
(b) The settler economies that developed plantations using
huge labor reserves in eastern and southern Africa
(c) Economy organized around chartered companies as in
Congo.
• The peasant-statist regimes were basically primary
commodity export enclaves. The colonial government
provided the minimum of infrastructure to ensure
that export crops would be produced by peasant
farmers and shipped to Europe. Taxation was intended
to make the administration self-sufficient, and
social services were minimal (largely coming from
missionaries). The state (colonial government) determined
what should be produced for exports, in
what quantities, and also determined producer prices.
There was minimal private participation outside agriculture,
and hardly any processing took place.
• In the settler economy, plantation agriculture was
controlled by European settlers that confiscated land
and marginalized indigenous people. Investment was
much more significant as the owners of the capital
also lived in those colonies. While exporting mainly
primary commodities also, the role of the government
was minimal, hence influencing largely the incentive
structure.
• In the chartered economies, the main characteristic
was the involvement in mining by those chartered
companies, the little regard for agriculture and associated
labor, and infrastructure only to support mining
and related activities. There was little attempt to
develop domestic governance structures and no investment
in human capital development and social
services.
• In many economies there were reforms in some colonies,
largely in response to growing nationalist agitation.
Reforms brought in greater participation by
the indigenous people in the running of the colonies
and hence greater attention paid to social services.
The structures of the economies remained the same.
THE LEGACY OF THE COLONIAL ECONOMY
Hardly any industrial production; MVA was 5% in Ghana at
time of independence.
• The monetized economy could be found in only select regions
of the country;
• Hence there were hardly any domestic markets for land, labor
and capital.
• Entrepreneurship was quite absent in most societies
• International trade in primary commodity exports and manufactured
consumer imports were mostly with the dominant
colonial power (trade concentration)
• There was significant social inequality
• Ethnic and regional inequalities became pronounced
• Fragile class systems emerged
