Lending Policies and Credit Administration in Pre-colonial Nigeria: A Case Study of Kundila of Kano

Abstract

This paper studies the canons of lending and credit administration methods in the pre-colonial informal financial sector taking a case study of Kundila a famous 19th century trader in Kano City. Using desk research and interview techniques, the study finds similarities in both the lending principles and credit management styles in the pre-colonial informal setting and the modern financial institution's practices. However, the Islamic legal system in the 19th century has helped to quicken administration of justice on cases of loan default as opposed to secular laws that tend to cause delay in modern Nigeria. There was also intensive monitoring of loan and cases of auction of collateral or other severe measures against loan defaulters. The paper concludes that the modern financial sector can learn from the leasing methods of Kundila so as to accord small and medium scale enterprises the opportunity of acquiring sophisticated machineries and equipment. This will increase aggregate production and assist government in achieving food security as well as rapid economic growth and development in the economy.