From the 1970s onwards, African countries borrowed substantial amounts of money 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 (Ndikumana, L and Boyce, 2005).
In many cases, national states appropriated funds unwisely and mismanaged governance of foreign credit (Membere, 2005). This raises the question: why did this happen?
To investigate the reasons for and the unfolding of credit allocation in Africa, this paper continues with the material presented at the Business History Conference 2021. March, 14th, 2021: Rule of the Law vs Personal Relationships: A Clash of Cultures, and explores the dimensions of adjustment in a world view that emphasizes personal relationships.
The study uses an Agent-Based Model to analyze per influence and cultural bias (Romanowska, 2021) to find possible outcomes to credit allocation. The questions investigated are: was it possible for the political/economic elite to avoid peer pressure in credit allocation? What other choices did the political establishment had given their cultural setup?
To transition from abstract modeling to historically meaningful insights, the research compares the model results with historical evidence from two case studies, namely Cameroon and the Ivory Coast between the 1970s and 1980s, a period when private lending was at its peak (Griffith-Jones). These cases provide an example of societies based on societal structures where the traditional clan structure played an important role.
References
Griffith-Jones, S. El crecimiento de la banca multinacional, los mercados de euro monedas y los paises de la periferia. Available at https://www.researchgate.net/publication/272910562_El_crecimiento_de_la… Accessed on the 29th August 2020.
Membere, W.T. Why Heavily Indebted Poor Count