Modern perceptions of the African colonial experience imagine European powers subjecting indigenous Africans to cruel working conditions at little pay, if any at all. Research by LSE undergraduate William Cipto finds evidence to support these perceptions. Uncaptured rents, the difference between productivity and wages, were frequently between triple and double miners’ wages in the Enugu coal mine of colonial Nigeria. Yet over time, uncaptured rents fell. The miners’ power to bargain for better wages in a critical but vulnerable sector may explain how they improved their position. The colonial Nigerian coal industry offers a compelling example of how time, place, and supply chains can affect historical trajectories of rents, wages, and institutions.
Africa’s present-day economic trials are often tied to its brutal colonial past. Acemoglu, Johnson & Robinson (AJR)’s signature work proposes that post-colonial economic development either benefitted or suffered by virtue of whether European colonialists invested for the long-term, or without regard for a colony’s future. Europeans did not invest long-term in places where Europeans fell most to disease, a signal cost to the colonialists. Africa was particularly inhospitable to Europeans, and so too to long-term investment by European colonialists. Europeans thus established ‘extractive’ institutions that aggravated sustainable economic growth but helped Europeans transfer resources out of the colony.
How extractive were these extractive institutions?
We can measure extractiveness in terms of uncaptured rents, the difference between productivity and wages. I use the British Government Railway and Colliery Reports and the Colonial Office Blue Books to calculate the average annual productivity of indigenous Nigerian coal miners in the Enugu mine, the only coal mine in colonial Nigeria. Then I subtract productivity from the miners’ annual wages. The difference shows us the uncaptured rents of the miners. If the colonial Nigerian mine had effective extractive institutions, then the uncaptured rents of the miners should far outstrip their annual wages. I find that for the Nigerian coal mine in Enugu, uncaptured rents did outstrip annual wages, though, over time the difference fell. The miners’ growing power to bargain with their employer improved their ability to take a larger share of their output in wages.
Nigeria under British colonial rule fits with AJR’s thesis of African economic development. Nigeria’s colonial experience began with the adventures of 18th century mercantilist corporations, like the Royal Niger Company, granted rights by the British Crown to establish trade links with indigenous tribes and to administer territories along the Niger River. In 1899, French imperial interest in the Gulf of Guinea prompted these British mercantile corporations to cede their territories to the British Crown. A year later the Crown formed the Northern and Southern Protectorates of Nigeria.
Investment in Nigerian coal came with colonisation and the need to fuel the British economy, running then by rail and steam. Only the colonial state could have financed the 1903 geological survey that discovered sub-bituminous coal deposits in the Udi district. Nigeria’s apparent abundance of mineral resources prompted Parliament to pass ordinances that authorised the Crown to seize indigenous-owned lands for mineral prospecting and gave the Crown a monopoly on all mining-related activities in the colony. Nigeria’s only coal mine opened in Enugu in 1915 and was connected by rail to Port Harcourt a year later.
The colliery was indeed extractive. The annual uncaptured rents of indigenous Nigerian coal miners were generally far higher than their annual wages (Figure 1). Uncaptured rents were often between triple and double the wages made by the miners.
What is surprising is how the uncaptured rents of the indigenous miners fell over time. Uncaptured rents fell by so much that in 1939 the wages of indigenous coal miners were roughly equal to the uncaptured rents.
Why did uncaptured rents decline?
With Enugu’s growth came an influx of job opportunities for indigenous Nigerians. Employment at the new colliery became the best alternative to starvation for many Enuguans, who had once laboured as subsistence farmers. As the Enugu colliery prospered, the town of Enugu itself developed, too. More job opportunities near to the colliery meant the cost of finding another job fell for the miners, and so too did the capacity of the colliery’s management to keep down miners’ wages.
As miners had an easier time finding another job, the creation of an economically precious supply chain linking the coal mine, the railway, and the port called for more and more sensitivity to the demands of the miners. Research by Carolyn A. Brown shows how over time the mine formed the second half of a “symbiotic relationship” with colonial Nigeria’s railway system. On one hand, the colonial railway system needed coal from the Enugu colliery to operate. On the other hand, the Enugu colliery needed the colonial railway system to take the coal to Port Harcourt. If the miners struck, or left for other work, business at both the mine and the railway could halt.
The miners used their critical position in this industrial entanglement. They came to garner a notoriously militant reputation with frequent work stoppages. Gradually, the colonial state improved indigenous working conditions at the colliery, though doing so induced a decline in annual miner productivity without any commensurate cuts to their annual wages. Uncaptured rents fell.
The Enugu coal mine in Nigeria was certainly extractive. Yet the colonial Nigerian coal industry also provides a compelling example of how conditions specific to a time, place, and supply chain can affect rents, wages, and institutions.
