African Lakes

The African Lakes Corporation plc (ALC) was a British company originally set-up in 1877 by Scottish businessmen to co-operate with Presbyterian missions in what is now Malawi. Building on its original connections with the Free Church of Scotland, it operated its businesses in Africa on a commercial basis with a larger philanthropic purpose. Its businesses in the colonial era included water transport on the lakes and rivers of Central Africa, wholesale and retail trading including the operation of general stores, labour recruitment, landowning and later an automotive business. The company later diversified, but suffered an economic decline in the 1990s and was liquidated in 2007. One of the last Directors of the company kindly bought the records of the company and donated them to Glasgow University Archive Services, where they are still available for research.

Formation and activities in the colonial era

The predecessor of this company was established as the Livingstonia Central Africa Company in 1877 with its head office in Glasgow by a group of local businessmen and its first managers were two brothers, John Moir and Frederick Moir. It was renamed The African Lakes Company Limited in 1878 and The African Lakes Corporation Limited in 1894.[1] John Moir left the company in 1890, but Frederick Moir returned to Scotland in 1891 and continued to work for it there. All three of the original directors of the Company and several of the original shareholders were connected to the Foreign Missions Committee of the Free Church of Scotland, the parent body of Livingstonia Mission.[2] Their aim was to set up a trade and transport concern that would work in close cooperation with the missions, to combat the slave trade by introducing legitimate trade, to make a profit, and to develop European influence in the area. The company's shares were acquired by the British South Africa Company in the 1930s, which later absorbed its businesses.[3] In 1893 the business of The African Lakes Company Limited was transferred to The African Lakes Trading Corporation Limited, a company registered in Scotland, which re-registered as a public limited company named The African Lakes Corporation plc in 1982.[4]

The company established trading posts at locations along the shores of Lake Nyasa and in the Lower Shire Valley in the late 1870s and early 1880s. As first, its commercial activities were hampered by the requirement to supply the mission stations and by a lack of capital. Its managers, the Moir brothers, concentrated on trading ivory rather than cash crops but faced stiff completion from Swahili traders who offered the African elephant hunters the guns and ammunition that the company was unwilling to supply. The African Lakes Company made, or claimed to have made, treaties between 1884 and 1886 with local chiefs at the northwest of Lake Nyasa around Karonga, where it had a trading station, with the ambition of becoming a Chartered company and controlling the route along the Shire River to that Lake. The company gave up any ambition to control the Shire Highlands in 1886, as local missionaries protested that did not have the capacity to police this area effectively. However, it had promised to defend the people of the Karonga area of the lakeside against the well-armed Swahili traders seeking slaves as well as ivory and became involved in local warfare against the Swahili and their allies between 1887 and 1889. Its lack of success in this put an end to its political claims in this area also.[5] However, the company claimed the treaties it had made with the chiefs also entitled it to ownership of over 2.7 million acres, amounting to all of what was the North Nyasa District (covering all of today’s Karonga, Chitipa and Rumphi District districts). Investigations in 1929 showed that the company’s claims were spurious: some supposed treaties had never been made, others were with people who were not chiefs of the areas claimed, and some were obtained by deception. The company was said to have made almost no effort to develop its lands, but had sold off some of it to plantations, and local people were concerned that there would be further sales. By this time of this report, the company had been taken over by the British South Africa Company, which agreed in 1930 to the cancellation of the land title in exchange for the grant of mineral rights over the same area.[6]

The African Lakes Company was also involved in water transport and operated a number of steamboats on Lake Nyasa and the Shire River down to the mouth of the Zambezi River at Chinde. The British concession at Chinde was leased from the Portuguese Government for 99 years from 1890 and became an ocean port served by Union-Castle Line and German East Africa Line ships until 1914, when services were suspended. A limited Union Castle service was resumed in 1918, but ceased in 1922, when a cyclone damaged the port.[7] In 1897, African Lakes had a trading station at Chinde, at which passengers transferred to its fleet of around six small river steamers of up to 40 tons which took passengers and goods from there up the Zambezi and Shire River, along which it had other trading stations, to the British Central Africa Protectorate. It also had several trading stations around, and three lake steamers on, Lake Nyasa (the largest of 177 tons), a steamer and a large sailing boat on Lake Tanganyika and a small river steamer on the upper Shire.[8] The development of the port of Beira, Mozambique, the construction of the Trans-Zambezi Railway towards Beira and a disastrous cyclone in 1922 which severely damaged Chinde sank brought most river traffic on the Zambezi to an end. The new Trans-Zambezi Railway Company took over the fleet of the African Lakes Company in 1923 and these vessels were used to ferry traffic across the Zambezi.[9]

As early as the 1880s, the company recruited labour near Livingstonia Mission and transported them in its steamers to work on six-month contracts in the Upper Shire Valley, the start of labour migration in Central Africa; by 1894, it employed 5,500 migrant workers in the Shire Highlands. In addition to its trading stations, the company opened stores in towns aimed at wholesale trade and Europeans, and by 1911, it had also opened around 50 "Mandala" village stores. The colloquially name Mandala reputedly derived from the spectacles worn by John Moir, which reflected light like a pool of water.[10] The company's original base in Blantyre, Mandala House, still exists and is a National Monument and the oldest building in Malawi.[11] After the rail link to Beira led to the sale of its steamers, the company focused on its Mandala stores and established an automotive business, Mandala Motors in 1924, which grew to include 11 countries in Africa.[12]

Post-colonial activities and liquidation

During the 1980s and in order to utilise Advance corporation tax (ACT) paid on dividends to shareholders, the Company acquired several profitable motor dealerships in the United Kingdom. The performance of the investment was woeful. During the recession in the mid-1990s the Company was forced to dispose its UK Motor Group as these were incurring losses the Company could not sustain. It then successfully raised new capital, bringing in new investors, to clear residual debt and expand its activities. The Company was successful after this in raising additional capital and acquired further automotive and IT distribution companies, disposed of its hotel group in Malawi and then acquired Africa Online, an Internet Service Provider based in Nairobi.

Thus the Company focused on three core activities, automotive, IT distribution and internet in sub-Saharan Africa, but thereafter made the internet its focus. This proved to be the Company's and its Management's undoing. Ultimately in order to sustain the cash required for its early-stage internet operations and its projected expansion the Company was forced, in the absence of new capital, to dispose any assets it could to raise money. The Company sold its non-internet businesses including the Vizara Rubber Estate in northern Malawi for what could be considered a fraction of its actual worth to a consortium of three including the then General Manager of the estate Dinesh K Chugh in March 2003, while in May 2002 the entire Malawi automotive interests Mandala Ltd (T/A Malital Ltd and Malawi Motors) were sold to the French Group CFAO SA (formerly Compagnie Française de l'Afrique Occidentale).

Sales of profitable investments and continued losses and massive provisions against the investment in its internet business led to significant losses, deteriorating balance sheet and share price. The Company had been listed since incorporation and had also listed shares on the Nairobi Stock Exchange, but following the collapse of its share price it was delisted in 2003 and became a private company. On cessation of its listing its share price was less than 1 pence, the lowest in its 120-year history. Thereafter management restructured the balance sheet to wipe out a large number of shareholders.

Finally the receivers were called in. The Company sold Africa Online to Telkom South Africa as its last asset in 2007 for a portion of its original gross investment and is now being liquidated after over 130 years of operation.

In 2013 a group of Scottish investors revived the African Lakes Company Ltd name as a vehicle for Scottish "impact-investment" in Malawian small and medium-sized enterprises (SMEs). Their goals are to encourage investment in Malawian businesses, build sustainable livelihoods, generate a financial return for investors and reduce Malawi's dependence on aid. This project has the support of the Scottish and Malawian Governments and number of experienced investors.

References

  1. ↑ Company information at: http://www.mbendi.com/orgs/cjgk.htm
  2. ↑ B. Pachai, (1967). In The Wake of Livingstone and The British Administration: Some Considerations of Commerce and Christianity in Malawi, The Society of Malawi Journal, Vol. 20, No. 2, p. 57.
  3. ↑ John G Pike, (1969). Malawi: A Political and Economic History, London, Pall Mall Press pp. 77, 195.
  4. ↑ Company information at: http://www.mbendi.com/orgs/cjgk.htm
  5. ↑ J McCraken, (2012). A History of Malawi, 1859-1966 Woodbridge, James Currey pp. 48-52. ISBN 978-1-84701-050-6.
  6. ↑ Pachai, (1978). Land and Politics in Malawi 1875-1975, Kingston (Ontario), The Limestone Press, pp. 151-7.
  7. ↑ J Perry (1969) The growth of the transport network of Malawi, The Society of Malawi Journal, 1969 Vol. 22, No. 2 , pp. 25-6, 29.
  8. ↑ The Admiralty Hydrographic Office (1897) The Africa Pilot (Part III) South and East Coasts of Africa, Sixth Edition, London Admiralty Board, pp. 239, 264.
  9. ↑ J Perry (1969) The growth of the transport network of Malawi, pp. 29-30
  10. ↑ J McCraken, (2012). A History of Malawi, 1859-1966 pp. 83-4, 178.
  11. ↑ Mandala House page. www.societyofmalawi.org/mandalahouse.html
  12. ↑ Owen J. M. Kalinga and Cynthia A. Crosby, Historical Dictionary of Malawi, 3rd ed. (Scarecrow Press, 2001) ISBN 0-8108-3481-2

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