Bullish Brits and the role of Big Business in the rise of Idi Amin

Tuesday September 4 2012

The old building of Bank of Uganda on Kampala Road before it was fenced. Several business parastatals, including those of British nationals, were nationlaised by the Obote regime following 1971 decrees.

The old building of Bank of Uganda on Kampala Road before it was fenced. Several business parastatals, including those of British nationals, were nationlaised by the Obote regime following 1971 decrees. PHOTO COURTESY OF FRANK MORRIS MATOVU 

By Monitor Reporter

Milton Obote’s May 1970 Nakivubo Pronouncements, which paved way for the partial nationalisation of about 85 foreign firms, was not a stroke of disastrous economic policy that some historians have attempted to paint.

In order to correct the economic imbalance in post-colonial Uganda, Obote’s government had to find a way to continue some of the affirmative-action reforms that the colonial administration had attempted in the last 10 years of colonial rule.

The overall objective of those reforms was to give indigenous Ugandans a more meaningful part in the country’s economy. Eliminating perks earlier given to Asian and other foreign firms was one initiative, as was nationalism, which would give the local population some control in the productive arms of the economy through the state.

One initiative was through trade reforms designed to keep Indians out of petty trade. In particular, the Trade Licensing Act of 1969, which required all non-citizens to acquire and hold a valid trade licence if they wanted to continue in business, was one such tool.

Nationalisation was the bigger stick, and the one that carried the bigger threat to foreign business interests. Although the Obote government announced that nationalised companies, in which the government would acquire a 60 per cent stake, would receive compensation over up to 15 years, the threat was one of the example it could set across a continent with heavily-vested foreign business interests and holdings.

Obote’s opposition to the British arms sales to apartheid South Africa rankled London. The conventional wisdom states that it was this, more than the nationalisation, that encouraged the British to support Amin’s coup.

Prof. Mahmood Mamdani argues that, “The source of Britain’s contradictions with Uganda lay not in the latter’s internal economic policy but in its foreign policy”.

Yet a wider reading suggests that while the foreign policy considerations might have been a bigger concern for London (seeing that the arms trade was of geopolitical importance and was part of a much larger trading concern with South Africa), the internal economic policy has not received as much focus as it probably deserves.

As popular historian Mark Curtis argues, “British officials were aware that Obote’s planned nationalisation was entirely legal but this was not the point – these measures were a direct challenge to British business interests. The threat was clearly understood by the Foreign Office as having ‘serious implications for British business in Uganda and Africa generally’.

“Crucially, ‘there is a danger that other countries will be tempted to try and get away with similar measures with more damaging consequences for British investment and trade’. It noted that three weeks after the Ugandan announcement, the government of Sudan nationalised foreign businesses ‘in an even more unacceptable way’.”

The East African and Mauritius Association, a lobby group representing the interests of big British firms, weighed in with a petition to the UK’s Foreign Office.

“The end result is the loss of British investment overseas and the establishment of precedents which could involve similar action by governments of other territories with adverse repercussions on the British economy,” they cried, warning of the possible danger of “the emergence of a pattern” and urging London to act to stop the developments.

Correspondence between British officials at the time shows that they acknowledged the basis and the material conditions that made Obote’s reforms understandable, if not inevitable.

Mark Curtis quotes a Foreign Office official, Eric Le Tocq, conceding: “We are prepared to believe that the policies which he [Obote] is pushing through may well prove, in time, to be in the best interests of Ugandans’.

“Also recognised was the ‘inequity’ of the pre-nationalisation arrangements under the East African Community where many companies remitted their profits to Nairobi ‘instead of “reinvesting” them in the country in which they are earned.”

The Ugandan elite, Curtis’ book shows, drawing on correspondence from the British officials, considered the proposals unpopular, although they were popular among ordinary Ugandans. Obote had not endeared himself much with the elite either by enacting stringent anti-corruption laws in June 1970.

The author argues that the British government ignored the authoritarian aspects of Obote’s rule, including his abrogation of the Independence Constitution, but sought to uphold the interests of the elite, which dovetailed with the interests of London and the big British businesses.
This series has already shown the direct involvement of the British governments and the Israeli intelligence service in the attempted assassination of Milton Obote, as well as the coup that then followed.
If there were any doubts about London’s sentiments towards Obote, these quickly dissipated in the aftermath of the coup.

“The coup was immediately greatly welcomed by British officials,” Curtis notes. “Britain was one of the first countries to formally recognise the new regime, along with the US and Israel, in contrast to some African states, such as Tanzania and Zambia, which refused to recognise the legitimacy of the new military regime. ‘Our interest in Uganda in terms of citizens, investment, trade and aid programme [sic] are best served in these circumstances by early recognition,” the Foreign Office noted.

According to declassified British government files, its officials lobbied African governments that were friendly to it “who we judge likely to be sympathetic towards General Amin’ to recognise the new regime. ‘We are hoping that we can discreetly let General Amin know of these efforts which we are making on his behalf’, the Foreign Office noted.

Curtis notes that other officials were more enthusiastic and forthright in their ‘good-riddance’ to the Obote regime. “Britain thus welcomed the violent overthrow of a government recognised by British officials to be promoting many policies ‘in the best interests of Ugandans’.”
Amin’s true colours were yet to reveal themselves but had the British and the Israeli’s made an honest mistake in supporting Amin or had they acted in their own self-interest and turned a blind eye to Amin’s alleged corrupt and murderous ways?

Continues tomorrow.

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