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When Asian traders were sent packing from Kenya

The passing of the Trade and Licensing Act in 1968 implied that Asians with Kenyan citizenship could trade but those without could not. Asians had no choice but to sell their business to elite Kenyans and flee abroad.

The passing of the Trade and Licensing Act in 1968 implied that Asians with Kenyan citizenship could trade but those without could not. Asians had no choice but to sell their business to elite Kenyans and flee abroad.

  • This was because Kenyans were side-lined from these sectors before independence in 1963.
  • This policy was first referred to as Kenyanisation and later changed to Africanisation.
  • Africansiation was further reinforced by Sessional Paper Number 10 on African Socialism of 1965.
  • The Industrial Commercial Development Corporation (ICDC) played a key role in the 1960s’ Africansiation process.
  • Asians had no choice but to sell their business to elite Kenyans and flee abroad.

In the 1960s, the Africanisation of commerce and industry arose out of the need to give Kenyans the chance to participate in their country’s economic growth.

This was because Kenyans were side-lined from these sectors before independence in 1963.

For instance, the British colonialists controlled agriculture and industry, while trade was dominated by Asians.

Similarly, in the public service, the colonialists occupied the top ranks and had higher salaries.

The Asian and Kenyans were in the middle and lower ranks, respectively.

Robert Maxton and William Ochieng’ in their 1992 book, An Economic History of Kenya, argue that Kenyan Asians dominated the large-scale manufacturing industry after World War II.

These included clothing, engineering, furniture making, metalworking, printing and soap fabrication industries.

In particular, the Chandaria, Khimasia and Madhuvani families were industrial giants in the 1950 and 60s, with large interests in the steel and beverages sectors.

AFRICANISATION POLICY

It, therefore, made sense for the first independent Kenyan government of 1963 to address this inequality by formulating an Africanisation policy, through the 1964-1970 Development Plan.

The plan argued that Kenyans should play an active role in their country’s economic growth, since the colonialists had discriminated against them in terms of economic participation because they lacked capital and business skills.

“To reverse this, the Government promised increased African participation in every sphere of the nation’s economy,” read the plan report.

This policy was first referred to as Kenyanisation and later changed to Africanisation.

Africansiation was further reinforced by Sessional Paper Number 10 on African Socialism of 1965.

It argued that Kenyans should monopolise key commercial and industrial sectors that were previously occupied by foreigners.

This implied that Kenyans would soon replace expatriates in management and business through ownership.

Kenyans could now control their investments, marketing decisions and production through private sector ownership.

REPLACE FOREIGNERS

Conversely, management was geared to give Kenyans jobs, by replacing foreign administrators in upper and middle level cadres in both public and private sectors had been.

Institutes of administration were thus established to equip local residents with skills relevant to jobs in the civil service, commerce and industry.

Kenyan beneficiaries of the Africanisation process included leaders such as Charles Njonjo, Dr Josephat Karanja, Kenneth Matiba, Kitili Mwendwa, Matere Kiriri and Simeon Nyachae.

The government also bought large farms from departing colonialists to resettle 45,000 African smallholders.

However, Africanisation was criticized for mainly benefitting one community, while sidelining others.

The Industrial Commercial Development Corporation (ICDC) played a key role in the 1960s’ Africansiation process.

Its role was to offer small industrial loans to African entrepreneurs so as to encourage ownership of their businesses, without discouraging foreign investment.

However, the then President Jomo Kenyatta clarified that the process of Africanisation needed not hinder the Kenyan economy.

FOREIGN FUNDING

This meant that foreign aid was still acceptable because Kenya as a young republic did not have its own indigenous capital necessary for development projects.

Charles Hornsby in his 2012 book, Kenya: A History Since Independence, argues that between 1964 and 1949, Africanisation was successful because it did not discourage foreign funding.

In 1964 and 1965, foreign aid from the West still accounted for 95 percent of the government’s development expenditure.

Between 1963/ and 1966, 50 percent of Kenyan private businesses were British.

The Kenyan Asian community were more adversely affected by Africanisation than colonialists.

Researchers argued that was because Kenyan Asians had risen from being illiterate coolies and dukawallahs to being powerful in a land that was not theirs.

Africanization thus targeted them. State bodies such as the Maize and Produce Board started to drive Asian traders out of the maize flour milling market.

Moreover, in 1967, the Transport Licensing Board (TLB) allowed 90 per cent of passenger service vehicles to be owned by citizens, thus sidelining the non-Kenyans and eventually leading to legal suits against State bodies.

AFRICANISATION CRITICISED

However, the opposition led by Jaramogi Odinga and Achieng’ Oneko who criticised Africanisation for being too slow.

Why couldn’t Kenyans wholly own their land and businesses?

Such criticism led to the passing of Trade and Licensing Act in 1968.

The Act ensured that non-Kenyan citizens could neither trade in important commodities nor in small towns and villages.

This implied that Asians with Kenyan citizenship could trade but those without could not.

These were forced to sell their businesses to Kenyans because they did not have trading licences.

This law was criticized by politicians such as Odinga, who argued that it would lead to corruption, unemployment and discrimination against Asians.

In January 1969, when the Act came into effect, 3,000 Asian traders were ordered by the Kenyatta regime to close down their businesses.

ASIANS EXIT KENYA

This prompted 18,000 Asians to exit from Kenya to countries where there were liberal immigration laws, such as Canada, the United Kingdom and United States. Only 139,000 Asians were left.

By 1970, 50,000 Asians had left. The businesses that Asians operated were adversely affected.

The country’s economy lost Sh35 million of Asian capital. The Kenyan Asians expulsion move progressed into the 1970s.

Whereas before, the Trade and Licensing Act of 1968 had targeted non-Kenyans in small business, in 1974, it was amended to include large ones.

Until 1975, the provincial trade officers from the Ministry of Commerce and Industry served notice to non-Kenyan citizens in large towns.

Asians had no choice but to sell their business to elite Kenyans and flee abroad.

Researchers argue that Africanisation was successful in small towns and villages, but not in big ones.

Small-scale farmers who were allocated colonial farms became successful agriculturalists by injecting over Sh42 million into the economy.

However, Prof Anyang’ Nyong’o in his 2007 book, A Leap into the Future, argues that Africansiation encouraged Kenyatta’s advisors to be corrupt.

“They indulged in corruption when they used their State power to license, approve and award contracts to Africanised businesses and enterprise to themselves,” he said.

-Kenya@50

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