The study examines the British influence on the IFRS adoption in their former African colonies, in comparison to other European colonisers. With many African countries adopting the International Financial Reporting Standards (IFRS), the question of whether they have been influenced by their colonial masters is an intriguing subject. The paper develops a model of IFRS adoption by developing countries of Africa on the basis of their colonial history. It compares the British influence on the adoption of the IFRS by her former colonies with those of those European colonisers. African countries are segmented on the basis of their colonisers and classified on their colonial magnetism to either the Anglo or Franco-German blocks. The disposition of the Anglo block to IFRS adoption is compared with those of others to ascertain the level of influence of their colonial masters. The study reveals that most former British colonies of Africa seem to follow their colonial ruler in adopting the IFRS, a trend that shows the subtle influence of Anglo-imperialism in the region through the system of financial accounting reporting. The Franco-German block has lesser influence on their former colonial countries and hence, the low IFRS adoption rate in the block. Most Franco-German colonies however follow the OHADA accounting model.
Accounting system has been a well known tool used by imperial powers to control and protect their investments in former colonies. British imperialism in Africa imposed a system of accounting that ensures greater disclosure of expenses and profits in their investments in the region (Watts, 1973). Accounting thus became a scheming process of imperialism. Davie (2000) observed that the British colonial masters used accounting practice as an instrument of domination and control, which aided their business activities and subsequent expansion of their colonial territories. It was used as a convenient mechanism for the purpose of ensuring more accountability in the colonies, and as an administrative tool of imperialism. Although his study focus on Fiji, a former British colony in Asia, it demonstrates that accounting practice as endorsed by British imperialism was articulated through negotiable interpretations and explanations to protect colonial interests and investments. Such concepts as self accounting and financial responsibility were designed to favour imperial policies and activities to the detriments of the indigenous population.
Colonialism was founded on coercion, the use of armed force to conquer and to maintain dominance. It was maintained through an imperial project that involved the imposition of British economic and cultural values. The British strategies for controlling work, land ownership and trade were an intrinsic part of this project and accounting was implicated in the administrative structures required to create and maintain such imperialistic system (Bush and Maltby, 2004). Accounting, was not primarily intended to serve economic aims, but was a technology for imposing a new form of power knowledge.
A key evidence of the British influence on IFRS adoption on African countries is seen on the number of African countries that have adopted or signed up for the IFRS adoption, majority of which are from the Anglo-Saxon School. Elad and Tumnde (2009) classify the African accounting system into two categories: Franco–German and Anglo-Saxon; each exerts powerful influence on the accounting system of the colonised countries. There is a force of colonial magnetism that influences the accounting standards hence, their disposition to IFRS adoption.
The study develops a neo-colonial model of IFRS adoption in which the accounting standards of each African country is influenced by their former colonial masters. Therefore, African countries are demarcated on the basis of their colonial lineage which magnets them to either the Anglo bloc or to the Franco-German bloc as shown in Figure 1. The Anglo bloc countries are those colonised by the British and include Nigeria, Ghana, Kenya, Sierra Leone, Zambia and Swaziland. The Franco-German bloc include the African countries colonised by the French, Germany and other European powers and includes Central African Republic, Chad, Gabon, Cameroun, Congo, Equatorial Guinea, Senegal, Togo, Cote d’voire, Mali, Mauritania etc.
Figure 1: Neo-colonial model of IFRS adoption in Africa IFRS colonial influence
Anglo blocFranco-German bloc
Nigeria Central Africa Republic
Sierra Leone Colonial magnet Cameroun
Switzerland Equatorial Guinea
South Africa Togo
Uganda Cote d’Ivoire
The current study has two objectives: first to establish through verifiable evidence, that the British colonialism in Africa employed accounting standards in a dubious manner to achieve their imperial mission. It illustrates the entrenchment of the British accounting system on it colonies through crafted ‘standards’. Secondly, the paper demonstrates that the contemporary accounting standard of IFRS is a tool of neocolonialism by the West, particularly the British, to protect their financial interests in the developing countries of Africa. The current structure and composition of the International Accounting Standard Board (IASB) is an eloquent testimony that the interest of the IFRS is the protection of investments of the developed countries. It supports the argument in the accounting literature that IFRS is a tool devised by the West to continue to exploit and maneuver the economy of the third world countries (Bakre, 2008; Arnold and Sikka, 2001). The international organizations such as the World banks that insist on compliance of IFRS as a pre-condition for granting loans to poor countries, depicts itself as willing agents at the whelms of the imperialists to ensure that underdeveloped countries mandatorily adopts the IFRS. In comparison with other European colonisers of Africa such as the French, Germany and Portugal; the British asserts far greater influence on the adoption of IFRS of her colonies.
Accounting as a tool of British imperialism and neo-colonialism
Accounting was used as an instrument of quantifying business values and returns, as well as creating imaginable precision among the colonies. It was a visible link in the proliferation of British trade. It created facts, which were muffled in the politics of ambiguity that significantly confused the locals. Davie (2000) asserts that accounting in the hands of the British Empire served as a device to promote imperial projects. It was used to justify the so-called economic benefits for changes that were based on increased efficiency and cost reductions. The local traditional leaders who were used as stooge of the Empire, benefitted from such manipulations, which increased their political powers in their domain. In general, British imperialism used manipulative accounting standards to swindle the resources of their colonies.
The accounting practices of most African colonies are replica of their colonial dictators even after independence. Elad and Tumnde (2009) note that there were wholesale exports of British accounting standards to Africa, notwithstanding the economic and developmental differences between the colonizing European invaders and their underdeveloped African countries. Some evidence suggests that such accounting standards were enacted mainly to protect the British investments in the African countries (Briston, 1978; Oliver, 1957). The British influence in setting accounting standards undoubtedly influenced their former African colonies who conscientiously followed their accounting system. Attempts to reduce the influence of the former colonial masters led the Organization of African Unity (OAU), (currently African Union AU) to establish the African Accounting Council (ACC) in 1979. The main objective of the ACC is to provide any needed assistance to member countries in the standardisation of their national accounting system. Unfortunately, the activities and impact of the ACC has become moribund due to structural and administrative lapses.
Fewer former French colonies in Africa have shown less keenness in the IFRS adoption. Their reluctance may be a reflection of the disposition of the French towards the IFRS. In France, mandatory IFRS is only applicable to the small number of listed firms; a situation that is similar to Francophone countries. Scheid and Walton (1992) affirm that in France, some major accounting requirements and regulations are subject to individual interpretation and application. Such an attitude towards full compliance by the French, have also been followed by their former colonies in areas of accounting regulations compliance. Elad and Tumnde (2009) observed that most Francophone countries using the OHADA1 accounting system hardly comply with its provisions. There are loose interpretations that firms are allowed to apply, often to suit their circumstances.
The absence or minimal involvement of the French in advocating full IFRS compliance may underpin the reluctance of its former colonies in Africa to fully embrace the Standards. Table 2 shows that although the French were involved in the colonization of about 32.4% of African territories and countries, only 9% of its colonies have adopted or intend to adopt the IFRS as their national standard. That most Francophone countries follow the precedence of the French could be thought of as a foregone conclusion. Elad and Tumnde (2009) highlight some cases involving the extent of culpable liability of auditors under the French system which are similar to the Cameroun, a former colony of France, as well as, other Francophone countries.
Under the OHADA accounting regulation, French remains the acceptable language of interpretation. Although the OHADA regulations have an English version, but where there is a conflict in understanding of the accounting rules, the French interpretation will prevail (Enonchong, 2007). This clearly illustrates the extent to which the colonial masters continue to influence their former colonies in the contemporary issues of IFRS adoption and language particularly in Africa. France, which was a key player in the colonization of Africa, has failed to influence its colonies towards mandatory IFRS adoption. In contrast, most former British colonies have adopted the IFRS owing to the influence of Britain in edging towards a global harmonization of the accounting standards.
In general, the African accounting system has followed patterns of colonial lineage. Elad and Tumnde (2009) demonstrate that African countries have followed two main schools in their accounting standards: the Franco-German (uniform accounting) and the Anglo-Saxon (judgmental or pragmatic accounting); each reflects the ideals of the colonizers. This is highlighted in Figure 1 above which shows the influence of imperialism on accounting system of most Africa countries. Of the two schools, the Anglo-Saxon has remained very proactive and dominant in influencing its colonies. With the America’s delay in adopting the IFRS, British has exerted its influence, perhaps, inadvertently on its colonies, resulting in most of them adopting the IFRS.
Pre-colonial evidence of Anglo-Saxon and Franco-German influences on accounting in Africa
The British imperialism utilized accounting techniques, in a very selective manner, to subjugate and control colonies to entrench colonialism (Bell et al., 1995; Smith, 1990). Many studies have attested to the use of accounting mechanism as a colonial weapon in facilitating the achievement of imperial objectives (Miller and Rose, 1990), and as a controlling devise from a distance (Neu, 2000). Thus, accounting as a technique played quite different roles based on the intentions of colonial rulers in different colonies (Alam, Lawrence and Nandan, 2004).
During the German invasion, accounting as a colonial tool was applied to ostracize the Jews. Accounting in the service of the German bureaucracy was a means of expediting the annihilations of the Jews. Funnell (1998) documents evidence that accounting numbers were substituted for qualitative attributes of individuals and thus reducing their dignity. It was a disguised tool intended to humiliate the Jews.
Tinker, Lehman and Neimark (1991) affirm that accounting was used by the colonialist in creating class strata and grossly sustaining political and economic inequality between the capitalists and their employees. A typical instance is the British tax system which was targeted at exploiting the wealth of those in her colonises. Oldroyd, Fleischman and Tyson (2008) thus conclude that accounting should be condemned as morally unjust in it support of slavery and for its alienation of the intrinsic property rights of individuals in the British colonies.
In some instances, such contrived accounting tools were used in connivance of local leaders who may be ignorant of such economic ploy by the empire. Alam, Lawrence and Nandan (2004) document the experience of Fiji, a former colony of Britain, where in the pretext of preserving social structures and protecting the indigenous community from exploitation, the colonial rulers devised schemes to their advantage, so as to extract surplus value from land often with the collaboration of indigenous chiefs of the country. An outstanding visibility in the use of accounting as colonial technique by the British was in the tax laws. Bush and Maltby (2004) opine that taxation represents the use of accounting to regulate behavior of the colonies. Taxation was fundamental to administration across the British Empire but was mediated by different cultures across Africa. This resulted in the adoption of different taxation policies across the West African region. Hetherington (1978) confirmed that the principle of taxation, as introduced by the colonial Lord Lugard, ensured that taxation remained central to administration until the uprises of nationalism which inevitably forced changes in colonial policy. Taxation was thus central to drawing the colonized into a monetary economy linked to world commodity markets. Bush and Maltby (2004) also revealed that in the colonial era of most colonized countries, development funds were firmly linked to capitalist interests and the expansion of the modern cash crop economy. The colonized were still expected to pay for their own development through the imposition of various types of taxation
Taxation in West Africa was therefore a scheme devised to serve a number of objectives. It was a technology of government as well as the purely financial way of raising revenue (Miller and Rose, 1990). It was an instrument of British colonial policy, capable of having important effects on Africans’ lives. In various countries of West Africa, tax as an accounting system was utilized as a tool of colonialism; land tax in Sierra Leone was imposed on indigenous farmers; poll tax in Ghana and Hut ( yard ) tax in Gambia. In Nigeria, taxation was more of a political rather than an economic nature. Lugard used taxation as part of a scheme to create a calculative order, but not a capitalist one (McPhee, 1926).
The imposition of tax and its assessment made Africans accountable to the colonial masters and accounted for their activities. The traditional African system was therefore beclouded by such imposition of foreign accounting system of colonialism. In some cases, such impositions are met with stiff opposition from the local people; a situation that sometimes resulted in the use of military force to subdue any uprising by the colonised populace. Bush and Maltby (2004) attest that attempts to impose rational, bureaucratic accounting and taxation systems met with stiff oppositions because it failed to acknowledge the existence of African systems of communal organization and related alternative systems of accounting, such as tally sticks similar to those used in Europe in the medieval period. Johnson and Caygill (1971) observe that British professional bodies, particularly accounting, came to be characterized as imperial bodies with imperial interests, not only because of their distinct penchant for empire building, but also because of the very important empire management function which they served
Difference between the Anglo and Francophone accounting systems and Post Colonial Influence on African
Although both the French and British are signatories to the IFRS both have notable differences in their accounting systems and in the level of influence they exert on their former African colonies. Such differences are reflected in the financial reporting system of their former colonies. The French accounting system is strictly regulated with a contractual and patrimonial view of the company. The British accounting system upholds an economic view of the company and less regulated which allows more freedom for firms financial reporting. These differences are also reflected in their presentations of accounts. For instance, Pardina, Rapti and Groom (2008) observe that the French allows valuing of assets at historical value instead of the economic value at the time of reporting while the British allows assets at an estimate of their economic value following current cost accounting approach or historical cost.
Another fundamental difference between the Francophone and Anglo-Saxon accounting is in the charting of accounts. A chart of accounts is a listing of all accounts in the general ledger with the accompanying reference or folio number. While the Plan Comptable Général (PCG) of the French accounting practice has a legally fixed codification rules for accounts charts, the British has no legal obligation for firms but instead allows significant freedom for firms. Most Francophone African countries follow the French pattern by applying the PCG accounting systems such as the Systéme Comptable Ouest–Africain (Syscoa) which uses a strict codification rule (Pardina, Rapti and Groom, 2008).
Similarly, the English speaking African countries of former British colonies follow very closely the accounting philosophies of the British with its reliance of the economic view as enshrined in the IFRS. The British influence on her former colonies is palpable and undoubtedly conscientious. In an address at the Commonwealth member countries Head of States, the British Chancellor implored all ‘African allies to gear up towards ensuring totally compliance with the international accounting standard’ and praised ‘those African compatriots who have led their countries to adopting the IFRS’ (Henry, 2010). In a memo addressed to Economic Community of West African Countries (ECOWAS) Finance ministers, the British Foreign Secretary, David Miliband urged ministers to push for compliance with IFRS before the end of 2012 if the international community is to take their financial aids requests seriously. Kenya and Ghana are among the foremost in the Anglo-Saxon bloc to adopt full IFRS implementation and both received commendations from the British government for ‘treading the right path with the British’ (Theophilus, 2009). During the 2010 induction lecture for the newly qualified accountants in Lagos, the British high commission to Nigeria applauded the national accounting body for following Britain in adopting IFRS and urged other African countries to join as ‘the United Kingdom cannot mislead our African allies’ (Sunday, 2010). These evidences demonstrate the assertive influence of the British in coercing and prodding their former African colonies towards IFRS compliance.
The result of these overtures from the British is the surge in the number of IFRS adoptions in the Anglo-Saxon school which are influenced by the British. In comparison with the Franco-German European colonisers, the British has exerted more influence on her former colonies more than other colonisers in entrenching IFRS adoption on their former colonies. Table 1 below depicts some African countries colonised by the British and other European colonisers and the percentage of IFRS adoption. It shows that African countries colonised by the British have a hundred percent IFRS adoption rate.
Table 1: Comparison of Anglo-Saxon influence on adoption of IFRS in Africa