Why were Asian merchants able to become successful almost overnight in the early years of colonial Uganda? Any attempt to answer that question needs to go back to the structure of the society before colonialism and also consider the actions of the colonial administration in setting up what came to become the colonial (and post-colonial) economy in Uganda.
Trade had been a major activity in the societies in pre-colonial Uganda. Even rivalling kingdoms such as Buganda and Bunyoro carried out trade between and among themselves, while there was also vibrant trade with Arab traders from the coast who brought cloth, guns and other items and took back ivory.
Why did most of the local enterprise disappear in the very early days of colonialism? First, the disruptive impact of war, famine and disease that heralded the arrival of the colonial era cannot be disregarded.
But there were deliberate steps taken by the colonial governments to shape the economy of Uganda and other colonies to meet its own interests, in particular the need to supply cotton and other raw materials to British companies.
More importantly, the British system of divide and rule, argues Prof. Mahmood Mamdani, required the creation of competing classes within the colony which could be played against each other.
The change in the land tenure system in Buganda, for instance, took away the incentive from chiefs who had previously been at the heart of the trade in the kingdom, drastically changing the class system in the country as argued by Prof. Mamdani.
“At one stroke the colonial state created a class of powerful but parasitic landlords,” Prof. Mamdani argues in Politics and Class Formation in Uganda.
“The Buganda landlords were a rentier class par excellence. What had been a potentially dynamic pre-colonial ruling class, increasingly deriving its surplus from trade, was at one stroke converted into a parasitic collaborating class, divorced from both trade and production, central only to the process of consumption.”
The British were anxious about the Baganda who were numerous, organised and had formidable military ability. Apart from diving them, Prof. Mamdani argues that it was important to subordinate the colonial economy to the needs of the colonialists. This would involve turning a relatively self-sustaining pre-colonial economy into a dependant post-colonial economy that consumed what it did not produce and produced what it did not consume.
For instance, while early reports about Uganda showed the potential for the development of farming, fishing, dairy and other pre-existing industries, the colonial administration pressed ahead with the growing of cotton and, later, coffee which it required but which Uganda did not really need.
It was in this context that Asian merchants arrived in Uganda. As earlier reported, the British had brought in Indian soldiers to end the Sudanese mutiny and coolies to work the railway but the merchants who came, seemed, in the main, to follow the pioneering efforts of trailblazers like Allidina Visram.
Apart from providing labour and administrative services, the British also looked to the Indians to drive commerce and encourage a consumer lifestyle among native Ugandans. “By the extension of internal commerce in which Indian traders take an active part,” the Colonial Office noted in 1920, “the natives are gradually familiarised with European products and are led to work, of their own free will, in order to find means to purchase such luxuries and conveniences.”
Prof. Mamdani notes that Sir Harry Johnston, the Special Commissioner responsible for the 1900 Buganda Agreement had earlier noted: “On account of our Indian Empire, we are compelled to reserve to British control a large portion of East Africa. Indian trade, enterprise and emigration require suitable outlets. East Africa is, and should be, from every point of view, the America of the Hindu.”
It was the cotton trade that gave many Indian merchants their best foray into the colonial economy, as the main link in what was an export-import economy, on top of trade in petty items. The cotton was largely grown by peasants on their farms but bought by British companies for export on to the mills in Lancashire.
Opportunities presented themselves in the form of ginning – the process of removing the seeds from the cotton lint – and as middlemen, buying from small farmer holdings and selling on to the British companies.
The first ginnery had been set up in Uganda by the trading arm of the Church Missionary Society and within a few years, there were five British, one French and one German ginneries.
The Indians, however got into the act in 1910 when Visram opened his first ginnery in partnership with others but by 1925, out of the 114 ginneries across the country, 100 were owned by Indians.
“The Indians thus first displaced Africans from the operation of the cotton economy other than the production of the crop and later they also took over almost completely the ginning industry from the Europeans,” noted historian Ramkrishna Mukherjee. “Thus they have fulfilled their role as intermediaries between the Africans and the British in the main economic organisation of the country as well as in the trading business.”
Divide and rule
The colonialists were well on their way to creating the classes they needed to divide and rule Uganda. Natives were to grow cash crops like cotton either on their farms or on government farms forcefully. In fact parts of the country, including West Nile, Kigezi, Ankole and the North, were planned to be reservoirs of labour to work on farms in the south.
A landed gentry of collaborators would give a human face of consumerist progress to this state of affairs but the power would lie with the British colonialists with Indian merchants creating a middle class in between. “All necessary relations between the exploiters and the exploited were mediated through this class,” notes Prof. Mamdani.
“In return for its services, the Indian petty bourgeoisie, without being members of the ruling class, became beneficiaries of the colony’s inequalities, and at the same time, like the Baganda landlords, collaborators in the colonial enterprise.”
The £10 trading license imposed in 1901, a tidy sum at the time, disarmed many of the natives who tried to venture into the new business models. Although some were able to hang on, the entry of big Indian and British capital soon placed the economy firmly in foreign hands.