Tracking East Africa’s Indian Business Elite

Indian Business Elite
Indians dominate trade in Kenya because Africans fail to practice group economics

AFRICANGLOBE – Indians in Kenya, or Wahindi as they are known in Swahili, have come to epitomise trade across the country. From small shops in towns all over Kenya, selling basic household commodities, to massive manufacturing companies, the Wahindi dominate. What is even more interesting is that, in a country of 40 million people, there are only 100,000 Wahindi – less than a quarter of a percent of the total population. But their contribution to the economy far outstrips their numbers.

Writing in Awaaz magazine in 2006, Sunny Bindra, one of Kenya’s leading management consultants and a Muhindi (the singular form for the plural Wahindi) himself, said the following: “The success of the Muhindi entrepreneur in Kenya is not in question. South Asians run many things: from small shops to sprawling multinationals. They own workshops and contracting firms. They build roads and control hotels. They sell lots of stuff: from bicycles to broadband; from sukuma wiki to satellite dishes.” So how did these South Asians become such a force in business?

In the same article Bindra wrote: “There is a fable that is widely heard in Kenya. This fable has two versions, depending on who is telling it.” Kenyan South Asians tend to view themselves as the most perceptive, most driven, frugal and respectable business people, while Kenyans might sometimes label the Wahindi miserly, crude, corrupt businesspersons that have built their financial success by underpaying their hard-working African labourers.

Strings of insults peppered with expletives fill the air at Shamas Motors, the largest used car parts dealership in Nairobi, where an animated Muhindi owner is shouting at a customer who offered too low a price for a used part. “Wahindi ni watu wabaya sana,” says Xavier Wanyoike, which means “the Indians are very bad people.” Wanyoike is a hawker, selling a random assortment of toys and plastic items at a roundabout near Nairobi’s Industrial area. He tells of how he quit his job working at a chemical factory in the industrial area because he could not stand the name calling his Indian-Kenyan factory manager employed. “He called everyone stupid. And used to lock us in the factory when he went out, so that we would not steal from him,” Wanyoike continues, his wares swinging wildly as he gesticulates. “They used to pay us so little, I had to walk to work so as to have enough money left over for food.”

Gijsbert Oonk, the Head of the Department of History, Erasmus University Rotterdam, and the author of Settled Strangers: Asian Business Elites in East Africa (1800-2000), has a different view from the commonly held perception that the Kenyan-Indian business elite succeeded by exploiting their Kenyan employees. “It’s more of a stereotype than anything else,” he says. “In any capitalist set up – Indian, African or European – the relationship with labour tends to be one of some form of exploitation. While there are social entrepreneurs that understand how to treat their employees, there are those that take every possible advantage they can. In Kenya, it is particularly enforced by the stereotypes that have been carried from colonial days – that Kenyan-Asians took opportunity from the native Kenyans. However, there is no evidence or research that supports the view that Asian, European or African capitalists are more exploitative than others.”

Labour, not trade, is what initially brought the Indians to East Africa. They originally came as carpenters and masons, from as far back as 1593 when the Portuguese shipped them in from colonies on India’s West coast to help build Fort Jesus in Mombasa. Between 1896 and 1901, the British brought 31,983 labourers to build a railway line from Mombasa to Uganda – the Uganda Railway. Nearly 2,500 people died during its construction. Almost the same number chose to remain upon its completion.

When the railway reached what is now Nairobi, the city was just a collection of tents. Over the next 30 years, the labourers built the capital city and other towns along the railway line. They also built the towns off the railway line, which the British would use as colonial administration centres.

Over the next 50 years, at the encouragement of the British, more than 250,000 Indians migrated to Africa. They were the essential instrument of British rule over the indigenous population and had greater contact with the Africans than did the British. They occupied the middle position between Africans and Whites in the colonial hierarchy, operating the railway and serving in the civil service as clerks, health workers and teachers. They lived in their own large communities and received more privilege than Africans, but perhaps also earned much more of the African resentment than the colonists did.

Separated from both Whites and Africans, the Indian was alienated from both power centers in colonial Kenya. Author VS Naipaul, following his visit to East Africa in the 1970s, wrote: “The Asian is the eternal ‘other’.” Naipaul, a native of Trinidad, where Indian immigrants had assimilated, was struck by how “the Indian in East Africa brought India with him and kept it inviolate.”

Resentment came to a head in the three decades following independence of the three East Africa countries. In Idi Amin’s Uganda, it led to the expulsion of 80,000 people of Asian heritage. In Tanzania, it fuelled the 1970s and 1980s nationalisation of Asian-owned businesses. In Kenya, Asian-owned shops and homes were looted in the chaos that followed an unsuccessful coup attempt in 1982. Unable to rely on either British colonialists or post-independence governments for protection, the Indian community grew self-reliant, building social welfare organisations and networks of their own, but upon which all Kenyans have come to depend.

So what has contributed to the enduring success of the Indians in East Africa in business? Some would say family and culture. In their earliest years, the immigrants had many advantages. They came to East Africa at the invitation of the powers that reigned at the time. The Sultan of Oman had recently moved to his headquarters from Muscat to Zanzibar, and had come with his Indian staff, appointing an Indian harbourmaster. Under the patronage of the harbourmaster, the Muslim Indians thrived. To attract more Indians traders to the island, particularly the Hindu, the Sultan gave them preferential treatment. He lowered their tax rates and created a section within the island where the Hindu upper-caste men, who considered Africa “unclean” for Hindu women, could house their wives.

Their exposure to the western financial structure, from interactions with Europeans going as far back at the 16th century, was an added advantage. The Indians either knew how to structure their business and make use of available financial services or they created their own. Eastern Africa’s largest bank by branch reach, Kenya Commercial Bank (KCB), dates back to 1896 when its predecessor, the National Bank of India, opened an outlet in Mombasa. However, even with these advantages, a guarantee of success for the East African immigrants was their close family ties, and caste system.

“Arriving at his future scene of business with little beyond the credentials of his fellow caste men, after perhaps a brief apprenticeship in some older firms, the Indian entrepreneur starts a shop of his own with goods advanced on credit by some large house,” wrote Sir Bartle Frere, colonial administrator, in 1873. “After a few years, when he has made a little money, generally returns home to marry, to make fresh business connections, and then comes back to Africa to repeat, on a large scale.” The eldest man in the family would not be the one to leave India for Zanzibar. Rather, he would send his second or third-born son to try his luck.

At the turn of independence, when Indians were given the option to take either British or East African citizenship, they would distribute the citizenship with one of two family members taking Kenyan citizenship while the rest took British passports. This allowed them to access British education and health facilities but retain a foot on the continent. When Kenya imposed a rule that a business had to have at least one Kenyan owner, the one family member with Kenyan citizenship prevented the families from losing their businesses outright.

When they were forced to leave the country, one or two members of the family were left behind to take care of the family businesses. Upon their return, they had created a very large diaspora network of family members in Africa, the United States, Canada, Great Britain and of course, India. These networks allowed for rapid business expansion.

Just as with business anywhere in the world, there were failures. Between 1860 and 1910, about 70 percent of businesses started by the Indians who settled in Zanzibar at the invitation of the Sultan failed, with 1,600 bankruptcies filed over that period. These unsuccessful businessmen either moved on to South Africa to try their luck or went back to India and took up other professions. The ones who succeeded remained in Zanzibar and invited their families to join them, starting the legacy of a successful East-African-Asian business elite.

In the modern day, close family ties again help businesses from collapsing. “When one brother gets into difficulties with his business, his brothers, father, uncles and grandparents may step in to help prevent total collapse, and to maintain the business relationships intact. If the business fails, it’s not just the single entrepreneur that looks bad, but the family gets a bad name and the community as well,” says Professor Oonk.

The history of the Indian business elite in East Africa is a long and chequered one, and is undoubtedly a study in resilience, patience and the strength of community and family in sustainability of business. From their close family ties, the Wahindi have built global business networks which span decades and continents; networks that have provided exposure, support and flexibility and allowed this small percentage of the East-African populace to attain such remarkable business success.