Sunday June 15 2014

How Uganda’s wealth has changed hands since 1962

A Peugeot in Kampala recently

A Peugeot in Kampala recently. Majority of the Magendo dealers, who left formal employment because their salary could no longer afford them a comfortable life, started dealing in scarce goods. This kind of class thrived mostly along the border points, with the eastern border points of Busia and Malaba being the most lucrative. Some of them were driving Peugeot cars as a sign of class. 

By Henry Lubega

Ever since Independence in 1962, Uganda’s economy and wealth has changed hands as many times as the country has changed regimes. The 10 different regimes the country has had have each come with its own source of wealth and class of wealthy people.

Different regimes have pursued different economic policies and these have favoured different groups of people. Under the first independence government (1962 to 1971), the civil servants were the wealthy class and this mainly benefited the Baganda.

By Independence, the Baganda dominated the civil service replacing the departing Europeans. Their dominance had to do with their being part of the biggest elite class of Ugandans. According to History professor Phares Mutibwa, “When the Baganda replaced the Whites, they were being paid the same salary scale as the Whites, making them very wealthy.”

The first regime’s economic policy was import substitution, which saw the setting up of different manufacturing industries. This was partly inherited from the colonial leaders and the first regime promoted it further leading to the growth of towns like Jinja as an industrial town.
This policy, however, mostly benefited the Asian business community who amassed a lot of wealth much of which was repatriated.

As a result of this amassed wealth in the hands of foreigners, some people within the ruling UPC party had formed an alliance with the Asians in 1968 which didn’t go down well with some party members, leading to the Move to the Left proclamation.
As the wealth class of the civil service was being created, those involved in agriculture were also making their own class.

From the late 1950s to the late 1960s, this class of people - though many of them were illiterate - controlled the coffee and cotton production line. Their characteristics included huge homesteads with big compounds. The top cream of this class drove Toyota Stout pick-up trucks, those next to them rode Motorcycles which were popularly known as Mwanyi Zabala.

The Amin era (1971-1979)

With the fall of the first Milton Obote regime, his successor Idi Amin came with the Economic War as one of his major economic policies. According to Prof Mutibwa’s forth coming book 100 Years of Uganda, the Economic War had a positive and negative side to it. The economy declined by 30 per cent by the time Amin was removed from government.

“Between 1972 and 1978, the actual price of coffee and cotton fell by 63 and 49 per cent respectively. On average, the proportion of export prices going to the farmers after government got its taxes declined by 83 per cent.”

However, during this period, Ugandans had their eyes opened to the business world. According to Prof Mutibwa, one of the advantages of Amin’s Economic War was the opening up of the business sector, which had been dominated by the Asians, to Ugandans. “Asian-owned businesses were handed to Ugandans, financial institutions like Uganda Development Bank and the Libya Arab Uganda Bank for Foreign Trade and Development, now Tropical Bank, was opened on November 20 1972.”

Transferring businesses from Asians to Ugandans created a new class of wealthy Ugandans known as the Mafuta Mingi (literally translated as “too much fat”). These are people who rose from rags to riches. They were mostly Muslims who had been recipients of departed Asians’ properties.
They lived within their acquired shops while some - as they made more money - had a chain of women in different homes. Besides a few Baganda, the majority were either Nubians or Kakwa’s.

Besides benefiting from free shops in 1973 in Amin’s bid to prove to the world that the Economic War was succeeding in Uganda, through the newly-opened Libya Arab Uganda Bank for Foreign Trade and Development, they received millions of shillings to import goods.

During the 1973-74 budget, Finance minister J. Geria said through the bank, the government had given out Shs27 million to boost the economy and half of it to fund the Mafuta Mingi operations.
One outstanding characteristic of the Mafuta Mingi’s was that almost all of them were Hajjis though some of them may not have gone to Mecca. By virtue of their wealth, they drove the best cars of the time like Peugeot 404 and 504; the cars of status.

Besides these business people was the elite class of the civil service, which had replaced the one Obote had created. The civil servants were identified by the cars they drove though these came in the evening hours of Amin’s regime. The Honda Civic and Honda Accord were cars for this class of people.

The Mafuta Mingi’s were rivalled by those trading on the black market popularly known as Magendo. This class was created by the scarcity of day-to-day social requirements like sugar, salt, paraffin, soap and others. Majority of the Magendo dealers, according to Prof Mutibwa, were once civil servants who left formal employment because their salary could no longer afford them a comfortable life, hence they started dealing in scarce goods.

This kind of class thrived mostly along the border points, with the eastern border points of Busia and Malaba being the most lucrative. They had their own characteristics, some of them were driving Peugeot 404 while the lower carders were proud to own motorcycles and others having bicycles. A story is told of Magendo dealers in Busia who used to wash their motorcycles with beer, while some of them are said to have been sleeping on beds with five six-inch mattresses piled upon each other just to show they were not wanting.

Another group of wealthy people who made money during the Amin’s regime was the Kasee (Processed coffee beans) dealers. This class was mainly from the central’s main coffee producing areas. They were illegally ferrying coffee to Kenya across Lake Victoria. However, this came with a price. If one survived the long hours on Lake Victoria in a dugout canoe, one would not survive Amin’s anti Economic War police force deployed in the lake to watch out for coffee smugglers.

The first three regimes after the fall of Amin’s government made no impact on the wealth of Ugandans as they were all short-lived to have any direct economic policy that would have a trickle-down effect on the people.

During the Obote II regime, foreign exchange was “floated”, creating another class of wealthy Ugandans known as the Kibanda boys. The “floatation” of foreign exchange meant government opening up avenues of acquiring foreign currencies through auctioning. This policy opened Ugandans to international markets like Dubai and Japan.

Under the “floatation” avenues of acquiring foreign currencies known as Window I and Window II were introduced. This policy was introduced in 1981 when the official government exchange rate was $1- Shs80 while on the Kibanda market a dollar was bought at Shs300.

According to former deputy minister for Finance Henry Makmot, Window I was industrial capital investment and essential government spending, while Window II which sold a dollar at Shs300 was for government non-capital expenditure and the general public’s non-industrial needs, and importers of other general goods.

Makmot says the creation of Window II was to reign in on the Kibanda market and make foreign exchange available to traders. “Under the new policy, government sold Dollars on the open market at the same rate to cut out middle men and make foreign currency readily available to traders.”

To achieve this during a budget speech in 1983, as the Finance minister, Obote said: “Subject to availability of foreign exchange, government has decided to make available a minimum of $2m every week to be sold to the general public without any interruption through the Bank of Uganda.” However, the scarcity prevailed keeping the Kibanda market still vibrant on streets of Kampala.

Majority of the Kibanda boys were agents - some working for senior government officials who used to get foreign exchange through Window I and sell it on the black market. They used to operate on Luwum Street, William Street between former Cooperative Bank and City House. One of their characteristics is that they were always very smart, dressed in the latest fashions, like Jackson shirts and trousers, walker trousers, Raymond suits, sharpie and boots shoes.

With the availability of this money, a group of car importers also known as the Japan group came into being. These were mostly car importers who ventured to Japan and started importing vehicles. Most of them were Toyota DX with registration plates like Nagoya, Nagasaki, Yokohama among others.

Besides being identified with those vehicles, they started the French-cut kind of roofing for residential houses. They also played a part in the introduction of electrical appliances like double decker radio cassette players like Sankei, Sharp, and JVC which became a must-have items.
As the Japan group was busy doing that, their counterparts from Dubai were also making an impact on the social scene in the country. Unlike the Japan group, the Dubai team was predominantly women. Thanks to them; things like wet look and perm became part of women’s hair style.

1986 to date
With the new regime of former fighters came a different type of wealthy Ugandans. The first identity of this group was the one calling themselves the Twarire. As early as late 1986, they were driving the black Nisan Laurel for ministers while the grey Nisan Laurels were meant for the permanent secretaries. There were Santana Land Rover from Spain for the soldiers while the Special District Administrators (SDAs) were given the grey Isuzu KB double cabins. It was from these that a phrase describing them was Twatera embundutwatunga obwegerero twaviga eza Raurel (Laurel), eza Santana, twalara omu flat Kololo

This group of wealthy Ugandans was either politically or militarily connected. They evolved from Santan and the Laurels to Land Cruisers which they have nicknamed Mpenkoni after the one of the President.

From political and military connection, there are those who have come from rags to riches through supplying air. Closely connected to air suppliers are the ones who have become rich through dealing in fake travellers cheques (bichupuli) during the time when they were still in vogue.

The bichupuli trade involved individuals getting travellers’ cheques, with the use of particular chemicals wash off the original names and amount replacing them with their names and amounts of their choice before banking them or going to cash them. Many Ugandans amassed wealth through this trade, not until banks woke up.

With the liberalisation and privatisation economy, came the corporate rich people. Many of these have capitalised on the gullibility of Ugandans to make a quick buck ending up losing even the little they have. Besides the corporate class, there is the NGO world both genuine and briefcase ones. This has become a sector of its own creating many wealthy people.

With the opening up of the political space, another class of wealthy Ugandans known as Lobbyists and activists have come into being. With proper political connections, many people amassed wealth through winning government tenders which were also closely related to air supply. Government has been the biggest, if not, the sole air buyer in Uganda and in the process creating a particular class of wealthy Ugandans. They all feed off the same carcass. Politics.

The last 28 years have seen some individuals who have become entrepreneurs and businessmen and women. These have gone ahead to even form groups with which they are identified. According to Prof Mutibwa, it’s in this regime that we have got groups like the Kwagalana Group composed of the wealthiest people in Kampala. “I would like to believe that there are other such groups outside Kampala of the wealthy people”

However, through the 51 years of an independent Uganda, each regime has come with its own economic policies and created its own wealthy people who unfortunately many times have not been able to maintain that wealth once there has been a regime change.