Indians in Uganda: economic impact and reception

This page includes information about the economic impact of Indian immigrants and their descendants in Uganda in the 19th and 20th centuries, as well as the reception and perception of the “Indians” both by native Ugandans (mostly blacks) and by the settlers of European origin (mostly British). Uganda achieved independence from their erstwhile British rulers in 1962.

Indians in Uganda are an example of a “market-dominant minority” in the jargon of Amy Chua’s World on Fire. Thus, a lot of the discussion here parallels general discussion of market-dominant minorities.


Unfortunately, very little of the material quoted here is available online, both because it’s historical (before the advent of the Internet) and because it is relative to a country (Uganda) where detailed records are not so easily available. The main references are the following books, with varying degrees of availability.

Secondary sources (relatively more easily accessible but condensed):

  • Migrations and Cultures by Thomas Sowell. Chapter 7 of this book is titled The Overseas Indians. There is a section on Uganda that covers pages 317-323.
  • World on Fire by Amy Chua: Chapter 4 covers various market-dominant minorities in African countries.

Primary sources (harder to access, may have more details):

  • A History of the Asians in East Africa by J. S. Mangat.
  • Indians in Africa by Haraprasad Chattopadhyaya.
  • The Asians in East Africa by Aghenanda Bharati.

Economic impact: the story of market dominance

Uganda’s colonial ruler, the British government, initially recruited Indians to work on railroad construction. In addition to the railroad workers, shopkeepers and small merchants also immigrated to Africa to cater to the needs of the railroad workers. Some of these stayed behind after the railroads were constructed. These shopkeepers and their descendants dominated retail, cotton production, and other industries. On Page 314-315 of his book Migrations and Cultures, discussing migration from India to East Africa in general, Thomas Sowell writes the following, that might remind modern day immigration debaters about the somewhat mis-stated immigrants do jobs natives won’t do and the situation with migrant labor in the US agricultural sector:

The East African Railway began to be constructed late in the 19th century. Of the approximately 16,000 laborers at work on its construction at one time or other, 15,000 were Indians, mostly indentured “coolies.” They were expensive laborers, however. Not only were they paid more than they earned in India, their passage was also paid both ways across the Indian Ocean, and in addition their rations and medical expenses were provided by the British. That such expenses were incurred is one measure of how much more valuable they were considered to be than Africans available locally. Africans, who owned their own land, from which they gained their chief subsistence, would work for brief periods — quitting whenever they felt the need or desire to do so to return home.

Here are some snippets from Page 317-323 of Sowell’s Migrations and Cultures:

The Indians who built the first railroad to Uganda attracted Indian shopkeepers who sold to them. These Indian shopkeepers remained after the railroads were completed, selling not only to their countrymen but to the British and — primarily — to the much larger indigenous African population.

Indians conducted the bulk of the retail trade with African natives.

Most Indians in Uganda remained small retailers, petty money-lenders, and the like, but Indians were also disproportionately represented among the few large-scale enterprises of the country. Two large Indian conglomerates, Madhvani Company and Mehta and Sons, were based on sugar production but th eformer alo spread out […] There were no firms in Africa of comparable scope or magnitude.

The enormous economic role of the Indians in transforming the economies of East Africa is all the more remarkable because of their relatively small number in proportion to the total populations of these countries. At the peak of their population size in Uganda in the late 1960s, Indians, Pakistanis and Goans together added up to fewer than 100,000 people, in a nation of more than 8 million. They were just over one percent of the population.

As of 1952, there were more than twice as many African trdaers as Indian traders in Uganda, but non-African traders (mostly Indians) did an estimated three times as much business as the Africans. This was despite government regulations which hampered non-Africans from setting up shops in some locations.

Government jobs were particularly prized. They paid substantially more than the average wage in private industry. In both sectors, however, Asians earned several times the income of Africans, even after Ugandan independence, though much less than Europeans earned.

The reception, perception, and response

The contributions of the Indians to the Ugandan economy met with mixed responses from those in power: the British colonial rulers, as well as the native Ugandans. Employing a variant of the suppression of wages of natives argument, some of the British colonial rulers teamed up with native Africans to oppose the market dominance of Indians in trade and production. Again, quoting from Page 317-323 of Migrations and Cultures:

As with the Chinese, the Jews, and other middleman minorities around the world, the economic contributions and success of the Indians in Africa have been in sharp contrast with the social and political opposition they have encountered. European settlers — who generally arrived in Uganda after the Indians — were their earliest and most vocal critics. During World War I, Europeans were able to get government controls and retsriction on the cotton industry introduced, with the net effect of benefitting Europeans who wre having difficulties competing with the Indians.

With growing African empowerment, the onus of hostility toward Indians shifted from the Europeans to the native Ugandans:

[T]he passing years saw the emergence of small native African businessmen and some educated Africans in Uganda, both of whom aspired to positions in the economy and in the civil service held by Indians. These African groups tended to be anti-Indian in outlook — and to try to turn other Africans against Indians.

After the mid-1950s, open hostility to Indian traders spread among Africans, sometimes expressed in destruction and looting.

Reminiscent of the United States debate surrounding birthright citizenship, the legal versus illegal distinction, and the doctrine of citizenism, post-independence Uganda (independence was achieved in 1962) sought to make it difficult even for Indians who were born and had resided their whole lives in Uganda to receive Ugandan citizenship:

Uganda’s 1967 constitution included a “grandfather clause” under which even native-born people could become citizens only if their parents or grandparents had been citizens — clearly an obstacle to prevent Indians from achieving citizenship. At the same time, restrictions on non-citizens in government employment and in the private economy were used to “Africanize” Uganda in accordanc with prevailing post-independence ideology.

The culmination: expulsion and the consequent restrictionist utopia

In 1969, the brutal dictator Idi Amin came to power and took the “Africanization” to new heights. While grossly mistreating Africans, he sought a public image as a champion of Africans against foreigners, both Europeans and Indians. This led to the expulsion of Asians from Uganda in 1972 (Wikipedia page). Quoting Sowell again:

Amin directed a special venom toward the Asians. He accused them, among othre things, of both “overpricing” and “undercutting,” and warnd of dire consequences if they did not collectively mend their ways. In August 1972, he ordered 50,000 Asians expelled, citizens and non-citizens alike — and severely limited how much money (55 British pounds) they could take with them. The Asian population of Uganda, which had been 96,000 in 1968, was estimated at only 1,000 at the end of 1972. Many landed destitute in England or in whatever country would take them.

Sowell continues:

The economic role of the Indians in Uganda can perhaps best be appreciated by considering what happened after they left. The economy collapsed. The Asian shops were often simply turned over to Amin’s favorites, who sold everything and then closed them down.


[E]conomic desperation and pressure from the World Bank and other Western aid donors led the Ugandan government to seek the return of Asian businessmen. Efforts to attract these exiled businessmen have centered on the restoration of the thousands of confiscated properties belonging to them. Yet relatively few of the Indians and Pakistanis returned from abroad to reclaim their businesses.

"The Efficient, Egalitarian, Libertarian, Utilitarian Way to Double World GDP" — Bryan Caplan