Asian expulsion: 54 years later, the lessons remain
Uganda’s 1972 expulsion of Asians devastated the economy, as businesses collapsed, factories shut down and thousands of workers lost their jobs. More than five decades later, the consequences remain a powerful reminder of the economic cost of driving away investors, entrepreneurs and skills.
David Mukholi (File)
___________
OPINION
This week marks 54 years since Uganda’s Asians were expelled. On August 4, 1972, then President Idi Amin abruptly announced the expulsion. He claimed the decision had come from God in a dream and gave the Asian community 90 days to leave the country.
Amin accused the Asians of sabotaging and exploiting Uganda’s economy and described the exercise as an economic war. In an interview with Drum magazine in March 1973, he said: “We embarked on the economic war because the Asians were milking Uganda’s economy. Some were engaged in economic sabotage while others were busy taking money out of the country.”
What Amin failed to understand was that Asians were the anchor of Uganda’s economy. They were the investors, entrepreneurs and industrialists who had built much of the country’s commercial and manufacturing base. He believed Ugandans would take over their businesses and prosper. That never happened.
Many Ugandans welcomed the expulsion and praised Amin. Had he organised elections and contested, at the time, he would almost certainly have won overwhelmingly.
By the end of the three-month ultimatum, the Asians had left. They abandoned their homes, businesses, cars and much of their wealth. More painfully, they left a country that had become home for places where they were strangers.
Although they left Uganda with little or no money, they carried with them something far more valuable — their entrepreneurial skills, business acumen and experience. In their adopted countries, many rebuilt their lives from scratch and created successful businesses and considerable wealth. Their greatest asset had never been the factories and properties they left behind, but the enterprise they possessed.
The flaws in Amin’s thinking quickly became apparent. He assumed that simply transferring ownership would automatically create prosperity. Instead, shop shelves emptied, while factories requiring raw materials, technical expertise and regular maintenance ground to a halt. One after another, businesses and factories shut down. Many of the once prestigious boutiques along Kampala Road and Main Street in Jinja were reduced to ordinary grocery shops.
Despite these realities, Amin remained optimistic. He told Drum that the economic war was succeeding and that Ugandans had embraced it.
“Shops vacated by departing Asians are being allocated to Ugandans. The banks are ready with money to give to those African traders who apply for overdrafts. There are so many African countries ready to help Uganda with personnel to replace the non-Ugandans who have left.” That optimism never translated into reality.
The banks did not provide the promised financing, nor did African countries supply the personnel Amin expected. Instead, recruits from Sudan and the Democratic Republic of Congo, then Zaire, were absorbed into the army and security forces, with many believed to have become Amin’s trusted henchmen.
The Asian presence in Uganda dated back to the late 19th century. Many were brought by the British to build the Uganda Railway, while others arrived independently. Some remained after the railway was completed and others followed, recognising opportunities that many locals had not yet envisaged. Some Asian traders had arrived even before the railway.
Among them was Allidina Visram, who opened one of Uganda’s earliest shops. He later expanded to about 70 outlets across Busoga and parts of Buganda. He also established an informal banking network that enabled traders to move money across East Africa at a time when no formal banking system existed.
Others followed, including Shri Najibhai Kalidas Mehta, founder of the Sugar Corporation of Uganda at Lugazi, and Muljibhai Madhvani, whose investments gave birth to Kakira Sugar, one of Uganda’s largest industrial complexes. Muljibhai is regarded as one of the pioneers of Uganda’s industrialisation.
By expelling the Asians and closing their businesses, Amin rendered thousands of Ugandans jobless. Workers who had depended on Asian-owned enterprises suddenly found themselves unemployed because the new owners could not keep the businesses running.
The events of 1972 bear striking similarities to what is happening in South Africa today. Xenophobic activists often overlook the fact that many of the foreigners they target are investors and employers. As they leave, businesses close and jobs disappear. The parallels with Amin’s economic war are difficult to ignore. Amin claimed Asians were exploiting Uganda’s economy. South African vigilantes argue that foreigners are taking their jobs. Yet, in many cases, the foreigners leave with the very entrepreneurial skills that created those jobs. Like the Asians in Uganda, many arrived with little, identified opportunities and built businesses that provided goods, services and employment. When they were forced out, they left behind an economic vacuum.
The expulsion of the Asians devastated Uganda’s economy and derailed its growth trajectory. Had they not been expelled, the economic collapse that followed would almost certainly not have occurred.
Today, Kakira Sugar Works stands as a powerful reminder of what Uganda lost. During Amin’s era, the factory fell into ruin and production ceased. It has since been revived and now employs more than 13,000 people.
Sugar production is only one part of its operations. The company also manufactures alcohol, generates electricity and produces other sugar by-products. Its alcohol is exported to the US and UK. Of the 51 megawatts of electricity it generates, 14 are consumed internally, while the remainder is supplied to the national grid.
Kakira’s success illustrates why the expulsion of the Asians was such a costly mistake. It also explains why reversing that decision and welcoming them back was the right course of action. Many who returned brought not only capital, but also the entrepreneurial skills and international business networks they had developed while in exile. Today, although Uganda’s Asian community numbers only about 40,000 people, it is estimated to contribute about 65% of the country’s tax revenue.
One cannot help but wonder what Uganda’s economy would look like today had the Asians never been expelled. The expulsion did not just remove a community; it disrupted businesses, skills and investments that were driving Uganda’s industrial growth.
X - @dmukholi1 dmukholi@gmail.com