The legitimate trade in communities attracted a number of British merchants to the Niger River, as well as others who had been formerly engaged in the slave trade but now changed their line of trade. The large companies that opened depots in Delta Cities and Lagos were very competitive.
To some extent, competition among these companies undermined the collective position of their owners compared to the local merchants. In the 1870s, therefore, George Taubman Goldie began amalgamating some of these companies which was later renamed the United African Company and National African Company.
The Royal Niger Company, as it later became popularly known, established its headquarters far inland at Lokoja, which was the main trading port of the company. It was from here that the company pretended to assume responsibility for the administration of areas along the Niger and Benue rivers where it maintained depots. It soon gained virtual monopoly over trade along the river. The company interfered in the territory along the Niger and the Benue, sometimes becoming involved in serious conflicts when its British-led native constabulary intercepted slave raids or attempted to protect trade routes. The company negotiated treaties with Sokoto, Gwandu and Nupe that were interpreted as guaranteeing exclusive access to trade in return for the payment of annual tribute. Officials of the Sokoto Caliphate interpreted these treaties quite differently. From their own perspective, the British were granted only extraterritorial rights that did not prevent similar arrangements with the Germans and the French, and certainly did not surrender the sovereignty of the Caliphate. Even before gaining its charter, the company signed treaties which it interpreted as granting it broad sovereign powers.
The company considered itself the sole legitimate government of the area, with the executive, legislative and judicial powers all subordinated to the rule of a council created by the company’s board of directors in London. However, the company did accept that emirs could act as partners in governance and trade. It, therefore, hired native intermediaries who could conduct diplomacy, trade and intelligent work in the local area. The company paid its workers in barter. Trade was also conducted through a mechanism of barter and credit. Goods were made available on credit to African middlemen, who were expected to trade them at a pre-arranged price and deliver the proceeds to the company. The company’s major imports to the area included gin and low-quality firearms.
By the 1880s, the National African Company became the dominant commercial power, increasing from 19 to 39 stations between 1882 and 1883. In 1886, Goldie secured a royal charter and his company became the Royal Niger Company. The charter allowed the company to collect customs and make treaties with local leaders. Under Goldie’s direction, the Royal Niger Company was responsible in depriving France and Germany of access to the region. The Royal Niger Company had its own armed forces. This included a river fleet, which it used for retaliatory attacks on uncooperative villages. Britain’s imperialistic posture became more aggressive towards the end of the century. The appointment of Joseph Chamberlain as colonial secretary in 1895 marked a shift towards new territorial ambitions of the British Empire.