Economy within an Economy: the Manilla Currency, Exchange Rate Instability and Social Conditions in South-Eastern Nigeria, 1900–48

Abstract

This paper studies the effects of the coexistence of the manilla currency and British currency in south-eastern Nigeria, and the way in which this monetary situation created political tensions which eventually led to the redemption of the manilla. When British control of Southern Nigeria was formalized in 1900 and British currency introduced in the south-east in the following year, the inability of the colonial authorities to put into circulation adequate supplies of British coins, coupled with historically entrenched use of traditional currencies, compelled the colonial state to recognize the latter as legal tender. However, the continuing circulation of these currencies alongside British coins created financial and economic difficulties, causing the colonial state to adopt a number of legislative measures to eradicate them. While other traditional currencies capitulated to these measures, the manilla continued to be popular as a result of objective economic factors, and was strengthened by some of the very instruments designed to eliminate it.Meanwhile, the constantly fluctuating exchange rate of the manilla was generating discontent. These fluctuations were caused primarily by the gyrations of the world market. Improved prices of palm products–the main sources of British currency in the economy of southeastern Nigeria–brought about the appreciation of the manilla. This caused hardship among wage-earners by reducing the exchange value and the purchasing power of their meagre and fixed income which had to be converted to manillas in order to buy food and other locally produced goods and services. Periods of depression, on the other hand, caused manilla depreciation as a result of a diminished inflow of British currency. This reduced the income of peasant producers, while increasing the purchasing power of workers. The ferments generated by fluctuating manilla values have remained, until now, unidentified causal links in the political movements in south-eastern Nigeria, including especially the women's movements of the 1920s.The discontent intensified in the 1940s, when the influx of cash into the Nigerian economy caused by war-time military spending and the post-war commodity boom caused a continuous appreciation of the manilla. This development made life more difficult for workers, whose incomes were already being decimated by inflation. The resulting intensified political tension, as well as the existing obstacles to trade and smooth collection of taxes (also caused by unabating manilla fluctuations), made the demonetization of the manilla through redemption inevitable. With the elimination of the manilla, which had constituted a sub-system within the economic system of colonial Nigeria, the colonial state's economic control of Nigeria can be said to have been completed.