Rule of Law versus Personal Relationships: a Clash of CulturesFrom the 1970s onwards, African countries borrowed substantial amounts of money in order to finance development and improve the quality of life of their citizens. However, the money borrowed was not always channeled towards the original purposes. This resulted in massive borrowing without resolution of national crises.
In many cases, a generation that had fought and obtained freedom from colonial control for their people, dealt with leadership who had opted to enrich themselves. In different circumstances national states appropriated funds unwisely and mismanaged governance of foreign credit. This raises up the question: why did this happen?
To investigate the reasons for and the unfolding of credit allocation in Africa, this paper explores the dimensions of adjustment to two different world views: one that emphasizes the rule of the law and another that focuses on personal relationships.
The potential questions raised are plenty. Among them, this paper focusses on two important ones: “was the recipient state sufficiently qualified to understand all the implications of the contracts?”, and “was the banking sector aware of the potential differences in interpretation?” This paper addresses the context of both parties’ understanding of the nature, terms and conditions of foreign borrowing and credit extension.
The research concentrates on two case studies, namely Cameroon and the Ivory Coast between 1970s and 1980s, a period when private lending was at its peak . These cases provide an example of a negotiation between one party implicitly considering the rule of law as a base (commercial banks) and another party relying on personal relationships to implement the accord (African governments).