Lever Acquires Land Concession in the Belgian Congo

Date April 14, 1911

William Hesketh Lever’s concession in the Belgian Congo set an example of multinational corporate responsibility in a developing economy.

Locale Belgian Congo (now Democratic Republic of the Congo)

Key Figures

• William Hesketh Lever (1851-1925), English entrepreneur in international business
• Jules Renkin (1862-1934), minister of colonies of Belgium, 1908-1919

Summary of Event

An agreement signed on April 14, 1911, by William Hesketh Lever and the Belgian colonial government in Brussels invested in Lever Brothers, Ltd., extensive proprietary rights and responsibilities for the development of business and society in what is now the Bas-Zaïre region of the Democratic Republic of the Congo, known then as the Belgian Congo. Lever’s interest in Africa began early in the 1900’s, following the poor performance of his Pacific islands ventures. Lever looked to the British colonies as sources of raw materials, but policy concerning lands in the tropical dependencies did not foster extensive concessions to business or the development of a plantation enterprise. The British government, only a few years earlier, had revoked the charter concessions of the Royal Niger Company in northern and southern Nigeria and was not about to grant another concession.

Out of necessity, Lever shifted his search for raw materials to other areas, and a combination of events gave him the opportunity he wanted. Mounting African resistance to the murderous and brutal regime of Belgium’s King Leopold II in the Congo Free State was firm and unmistakable. Beginning in 1902, world opinion, especially in England, condemned the murderous system of forced native labor in the corporate plantations of the Congo.

The idea of corporate respect and responsibility toward colonized peoples had been a valued part of British policy since the eighteenth century, even though its enforcement by resident officials did not always reflect the seriousness with which the Home Office in London viewed the policy. Every attempt was made by British colonialists, however, to respect local customs and laws, except in cases in which local traditions conflicted with British notions of equity and good conscience.

The physical abuses meted to the people of the Congo by the concessionary firms in the Free State offended the minimum standards of equity. By 1908, it was clear that Leopold’s Congo government was on the brink of a collapse. The Congo Reform Association, vocally led by journalist Edmond Dene Morel, and the Aborigines Protection Society publicized the abuses in England. This publicity finally led to an international inquiry. A depression in the world rubber market soon eroded whatever clout and protective support Leopold enjoyed from rubber-importing nations.

The pressure was such that in November, 1908, Leopold turned over his Congo Free State to the Belgian government. Questions arose, however, as to the legal validity of the annexation, and international recognition of the transfer ultimately depended on Belgium’s promise to reform the defunct system in the Congo. Thus on Leopold’s death in December, 1909, neither King Albert, Leopold’s uncle and successor, nor the government could afford to continue the old system in the Congo.

Responding to hints of opportunity and encouragement from other industrialists, and after preliminary investigations, Lever took up the challenge to secure a foothold in the Congo. On April 14, 1911, Lever, on behalf of himself and Lever Brothers, Ltd., entered into an agreement with the colonial administration of the Congo, represented by Jules Renkin. As a newcomer to the colonial enterprise and eager to secure corporate participation in the process, the Belgian parliament hastily approved the concession.

By the terms of the agreement, Lever Brothers, through a newly formed subsidiary, accepted far-reaching responsibilities that went beyond the ordinary scope of a firm’s business obligations. These obligations were designed to satisfy the international insistence on reform in the Congo. The mere fact of a concession being granted that included social and political responsibilities was not a novelty. The British East Africa Company, the Royal Niger Company, the British South Africa Company, the Portuguese Mozambique Company, and many others before Lever Brothers had been chartered with mandated political and social responsibilities in the colonized areas. The uniqueness of the Lever concession rested on the specificity of the mandates. In addition to provisions requiring the company to develop agricultural and oil-processing facilities within a given period, Lever Brothers was required to comply with minimum standards of community responsibility set by the agreement, including the construction and staffing of a school and a hospital in each of the localities in the concession. The concession required the company to pay minimum and fair wages for local labor and to respect local traditions. The injunction was significant given the fact that in the neighboring Moyen Congo, the French were increasingly subjecting the local population to forced labor and were pursuing a system of cultural orientation designed to “evolve” or reform the Congolese into French persons.

The concession also imposed certain commercial conditions for the benefit of the Belgian economy. The company was required to buy about one-third of its industrial input from Belgian sources. This condition could be waived if such items were locally produced by the company. The agreement, however, anticipated that the company would maintain a minimum volume of purchases from Belgium. A clause in the concession enjoined the company to ship specified quantities of palm oil to Belgium directly from the colony, and another prescribed the Belgian flag and registry for the company’s ships. Belgian workers secured the right to reside and work in the concession areas. The agreement required that at least half of the company’s workforce be Belgian citizens. The five concession districts in Lusanga, Basongo, Ingende, Bumba, and Barumbu were intended by the grant to become pivotal points of development in the colony.

The grant thus carefully qualified the present and future interests of the company. It was required to establish an oil-processing plant in each of the districts within six years of the grant, after which it would be in a position to exercise leasehold options. The company would not take freehold interest in the lands before 1945. With the influx of European firms and speculators in the post-World War I era, the concessional limitations were watered down.

Significance

The concession of 1911, as contracted, placed on Lever Brothers a fundamental responsibility to introduce a moral quality to the conduct of colonial commerce and trade. The concession thus represented the prospect of a new beginning for the Congo’s people in their relationships and contacts with foreign firms and held out the promise of equity and fair play in business. The gulf between promise and practice, however, would limit the full impact of the concessional stipulation.

The concession, apart from enabling Belgium to find and consolidate its colonial foothold in Africa, reinforced the erstwhile system of large long-term grants to foreigners under Leopold. Nevertheless the Belgian government, by granting the concession to Lever Brothers, showed a seeming disposition to reform and in effect softened England’s opposition to the 1908 annexation of the Congo.

By the terms of the grant, the Lever Brothers subsidiary had to ensure that forced labor was replaced with a system of voluntary labor. Outside the palm oil concession areas, however, the production and processing of rubber, ivory, copper, uranium, diamonds, and gold continued to rely on veiled forced labor. In the Katanga copper mines, forced labor took subtle forms, including the imposition of various taxes and resort to migrant and temporary workers from Northern Rhodesia. Following the expansion of mining activity in Northern Rhodesia in the 1920’s and the resulting shortage of migrant laborers, Union Minière mildly upgraded its employment practices. In 1925, the colony exported 85,323 tons of copper produced essentially by migrant and underpaid native laborers. By 1959, mining accounted for 60 percent of the domestic exports.

Critics have argued that Lever Brothers merely upgraded the status of native labor to indentured servitude. By 1925, the company had more than twenty-four thousand African employees in the region. The company’s need for local labor expanded shortly after production began. By the end of the first quarter of 1912, the company had shipped produce to Belgium. In that year, the company produced 384 tons of palm oil and 118 tons of palm kernels. Despite the interruptions of World War I, expansion continued. By 1918, the output of palm oil and kernels reached 4,491 tons and 2,206 tons, respectively.

In the context of the colonial economy, African labor remained concentrated in the primary industries of agriculture, mining, and processing. The shortage of African labor, which increased significantly during and after World War I, caused the colonial government to introduce a “full employment” policy, under which able-bodied Congolese were required to seek employment. As in Kenya and other European plantation colonies, the Congolese were effectively edged out of cash-crop production and marketing by foreign operators.

Congolese farmers, having lost their lands to mining and plantation interests, accepted positions as wage earners. The situation in the Belgian Congo did not show any significant departure from the situations in the neighboring colonies of Angola, Kenya, and Rhodesia, where European plantations and mining monopolies dominated. By 1959, shortly before independence, more than a million native employees and laborers were working in the various industrial sectors of the Belgian Congo. In the period following World War II, native labor increasingly moved into manufacturing, construction, transportation, commerce, and clerical services.

The contractual commitment of Lever Brothers to the concession hamstrung the firm’s competitiveness in the Congo. Lever Brothers, through its subsidiary, was saddled with undertaking the social transformation of the Congo. Some historians have argued that Lever Brothers did not necessarily seek to be ahead of its time and was merely the victim of a cosmetic colonial policy symbolized by the concession of 1911. Whatever the case, social services improved in the concession districts as well as in the outlying territory. Within its concessionary domain, the company contributed to the infrastructural development of the colony. By the mid-1950’s, the colony had 3,214 miles of railroads, 90,253 miles of motor roads, and improved seaports at Matadi and Boma. In 1911, the Matadi railroad had hardly been able to bear the weight of equipment for the Lever Brothers subsidiary.

Lever Brothers took advantage of the concession to integrate the company’s oils and fats operations along vertical lines, controlling the entire process of production from the palm fields and oil mills of the Congo to the soap shops of Brussels. The concession of 1911, short of enabling Lever Brothers to achieve a perfect integration of the oils and fats enterprise, prepared the way for the firm to undertake the challenges of British corporate multinationalism in tropical Africa.

Although Lever’s palm oil and kernel production in the Congo was not immediately profitable, partly because of competition from trading companies and capital investments in the erection of the mandatory mills, he was able to retain a sizable share of the market by diversifying investments. The latter effort led to the acquisition of trading companies and shipping lines. Lever’s most fulfilling venture was his expansion into Africa. The concession afforded his company a unique opportunity to show exemplary conduct of multinational business in a dependent and developing environment, but pressures for cheap labor and profit suffocated an otherwise noble purpose.

Bibliography

Ake, Claude. A Political Economy of Africa. Harlow, England: Longman, 1981. Provocative volume discusses the disarticulation of African economies by colonial and postcolonial interests.

Coquery-Vidrovitch, C. “The Colonial Economy of the Former French, Belgian, and Portuguese Zones, 1914-1935.” In Africa Under Colonial Domination, 1880-1935. Vol. 3 in General History of Africa, edited by A. Adu Boahen. Berkeley: University of California Press, 1985. Provides excellent summaries and data.

Edgerton, Robert B. The Troubled Heart of Africa: A History of the Congo. New York: St. Martin’s Press, 2002. Documents the history of the Congo from the fifteenth century to the beginning of the twenty-first century. Includes map, bibliography, and index.

Fieldhouse, D. K. Unilever Overseas: The Anatomy of a Multinational, 1895-1965. Stanford, Calif.: Hoover Institution Press, 1978. Offers insights into the strategy and structure of the multinational firm.

‗‗‗‗‗‗‗. The West and the Third World: Trade, Colonialism, Dependence, and Development. Malden, Mass.: Blackwell, 1999. Examines relations between Western and Third World nations, focusing on economics and the effects of colonialism. Includes tables, select bibliography, and index.

Gran, Guy, ed. Zaire: The Political Economy of Underdevelopment. New York: Praeger, 1979. Collection of essays analyzes the internal and external variables that conditioned the history and development of modern Zaire, now known as the Democratic Republic of the Congo. Includes an interesting discussion of a concession in 1976 by President Mobutu Sese Seko to a German firm for a satellite pad.

Stopford, John M. “The Origins of British-Based Multinational Enterprise.” Business History Review 48 (Autumn, 1974): 319-335. Offers interesting analysis of the growth, maturation, and expansion of family enterprises into overseas markets.

Wilson, Charles. History of Unilever: A Study in Economic Growth and Social Change. 2 vols. New York: Praeger, 1968. Comprehensive and well-documented institutional history describes the quality of enterprise that shaped the institution.