The Asian magic that ignited  engine of Uganda’s economy

An Asian businessman in his hardware shop on Mbale Road in Namutumba Town on November 24, 2022. Photo/Ronald Seebe

What you need to know:

  • This month, 50 years ago, hundreds of Asians expelled by Idi Amin’s government flew out from Entebbe International Airport to seek new opportunities mainly in the United Kingdom and Canada.  In this fifth instalment of our new series marking the golden jubilee of the expulsion, Faustin Mugabe looks at how Asians contributed to the growth of the economy in Uganda.

While the cash economy was first introduced in Uganda in the 1840s by the Arab traders, it was the Asian traders who popularised it across Uganda’s shanty towns. 
When the Arabs arrived in Uganda, during the reign of Buganda’s King Ssuna II, they introduced the Cowrie Shell, which was the common currency at the East African Coast. However, the Arab cash economy did not gain traction partly because of the times. 
Arab traders also lacked the business acumen, which the Asian traders exhibited when they came to Uganda. The Asians had a network of contacts and were daring to establish supply chains from the coast to the hinterland and across the tiny footpaths in the deeper recesses of Uganda’s rural backwaters. 
This entrepreneurial spirit is what later set the wheels in motion as Asian restless spirit transformed the duuka to brick and mortar. 

Indian rupee becomes Ugandan currency
The Indian currency, the Rupee was first introduced as a medium of exchange in Uganda by the Imperial British East Company (IBEAC) in 1890. The IBEAC was in September 1888 granted a charter to manage Uganda as a pet economic project on behalf of the British Empire.
 The First IBEAC representative to Uganda, Fredrick J. Jackson, arrived in April 1890 to commence his administrative role in Uganda. The IBEAC, thus introduced the Indian Rupee, which became the legal tender. 

In the book: “Hand book of Uganda” published in 1913, by Mr. H.R Wallis, chief secretary of Uganda Protectorate Government, on page 168 about the Uganda currency, writes: “The standard coin of the Protectorate [Uganda] is the silver rupee of British India” And he adds: “The rupee of the late Imperial British East African Company, and the half rupee and the quarter rupee of British India, and of the late Imperial British East African, are also legal tender” 

Beginning of paid labour and the Asian trader 
The Uganda agreement of March 10, 1900, introduced the annual hut tax, which was paid by every household whose dwelling in Uganda was a hut (homestead). 
Those who defaulted paid a severe penalty. The agreement also introduced commercial cotton farming on the British and Indian-owned estates.  A Danish-Canadian missionary in Uganda, E.K Borup, in a letter he wrote on September 14, 1900 to a Ms Flint in Britain says: “There is great activity among the Baganda [Ugandans] at the present time. The tribute [tax] will be collected before very long and each man has to find three rupees; for a labourer this means a little more than a month’s work. I have not before seen the Baganda so anxious to work or to earn money by any means as they are now.” 

Although, the money was needed by the British to run their colonial enterprise in Uganda, largely, it was the Asian trader who benefited as much. With the success of the rupee, Asian traders were able to build shops, eateries and accommodation rooms around strategic areas, especially along the Uganda railway, a major tributary that linked Mombasa Port at the East African coast to far-flung areas such as Kasese in western Uganda and Pakwach in the West Nile through the stretch of eastern Uganda. 
As commercial hubs sprouted across towns in Uganda between 1900 and by 1962 when Uganda attained her independence, much of it bore the fingerprints of Asians.
There is empirical evidence in the footnotes of history about these Asian forays into the heartland of Uganda to engage in commerce.

For instance, in Rukungiri Municipality, south-western Uganda, there is a village called “Omukihindi”, which in the local dialect means the place of Indians. The township was established by Indian traders in the 1920s. 
Bulange, Mengo Hill village developed into a trading centre and later a town after Alidina Visram, a businessman from Goa, a state in the south-western coast of India, in August 1901 opened a bakery at Entebbe and opened a shop near Mengo hospital to supply bread to patients, staff of the hospital as well as kingdom officials at the kingdom headquarters in Bulange, Mengo. 
From Mengo Hill, Visram spread his business tentacles to the countryside opening up new outlets in remote parts of the country. The monthly Mengo Notes of June 1900, page 8 read: “Government stations have been established at Buruli, Fujawo, Foweira, Dufile and Fort Berkeley (not far from Lado). We hear that the Uganda administration had entered into a contract with the India trader Alidina Visram to open stores at all these places, as well as at Masindi. He is to supply cloth, wire and beads for paying the troops and will no doubt do a good business.” 

As part of his contribution, Visram was able to introduce merchandise to the rural areas as his businesses gradually transformed shabby nooks into trading centres and later towns. Not only did he push the frontiers of trade beyond Kampala, Visram and other Asians built vital communications and established a modern system of marketing, which ensured that there were supply chains that conveyed goods from the far East till the Indian Ocean and later to the land-locked Uganda and across the farthest areas that turned into melting pots for commerce and culture in the country. 
As the economy continued to steadily grow, it necessitated a commercial bank. In 1906, the National Bank of India— the first commercial bank in Uganda opened a branch at Entebbe. Incorporated in India in 1896, the bank opened the first branch at Port Mombasa at the East African coast. 

The essence of the pioneer traders and their contribution to the development of Uganda’s nascent cash economy is best documented by the British Under Secretary of State for Colonies Sir Winston Churchill’s book: “My African journey, 1908” published in London, England a year after his visit to Uganda.
Churchill acknowledges the role the Asians played in developing Uganda. He writes: “It was the Sikh soldier who bore an honourable part in the conquest and pacification of the East African countries. It is the trader who, penetrating and maintaining himself in all sorts of places to which no White man would go or in which no White man could earn a living, has more than anyone else developed the early beginning of trade and opened up the first slender means of communication. It was by Indian labour that the one vital railway on which everything else depends was constructed.”

He wrote further: “It is the Indian banker who supplies perhaps the large part of the capital yet available for business and enterprise, and to whom the White settlers have not hesitated to recur for financial aid. The Indian was here long before the first British official. He may point to as many generations of useful industry on the coast and inland as the White settlers – especially the most recently arrived contingents from South Africa [the loudest against him of all] – can count years of residence. 
“It is possible for any government with a scrap of respect for honest dealing between man and man, to embark upon a policy of deliberately squeezing out the native of India from regions in which he has established himself under every security of public faith.”