Entrepreneurship in Africa

A Historical Approach

Moses E. Ochonu

• Publisher: Indiana University Press
• Year: 2018
• Print ISBN: 9780253034380
• eBook ISBN: 9780253032621
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

A tapestry of innovation, ideas, and commerce, Africa and its entrepreneurial hubs are deeply connected to those of the past. Moses E. Ochonu and an international group of contributors explores the lived experiences of African innovators who have created value for themselves and their communities. Profiles of vendors, farmers, craftspeople, healers, spiritual consultants, warriors, musicians, technological innovators, political mobilizers, and laborers featured in this volume show African models of entrepreneurship in action. As a whole, the essays consider the history of entrepreneurship in Africa, illustrating its multiple origins and showing how it differs from the Western capitalist experience. As they establish historical patterns of business creativity, these explorations open new avenues for understanding indigenous enterprise and homegrown commerce and their relationship to social, economic, and political debates in Africa today.

PART I

MERCANTILE AND ARTISANAL NETWORKS

1 Globalization and the Making of East Africa’s Asian Entrepreneurship Networks

Chambi Chachage

Asians have for the most part been solely concerned with their own economic salvation.

—Dharam P. Ghai

THE WINDS OF change blowing across Africa in 1960 were swift.¹ Within a space of five years, the East African countries of Tanganyika, Uganda, Kenya, and Zanzibar won their independence—in 1961, 1962, 1963, and 1963/1964 respectively.² Filled with anticipation and apprehension, members of the Asian community in the region participated in this transition in varying ways. What lay ahead for them was as uncertain as it had been for their predecessors a century or two ago when they left Southeast Asia. As both agents and victims of global capitalism, they had become, predominantly and stereotypically, a business community. Africa’s precolonial and colonial settings, though constraining in certain ways, had enabled a number of them to emerge as notable entrepreneurs. With the postcolonial era springing up in the context of African nationalism and the cold war between the predominantly capitalist West and primarily communist/socialist East, it was tempting to project the ideological trajectory that the newly independent nations would take since capitalism, as one economic historian has noted, was associated with colonialism.³ Business, it seemed, would not be as usual.

This chapter traces the emergence and consolidation of East African Asian entrepreneurship networks. It argues that the marginalization of pioneering Asian entrepreneurs in the first global economy paved the way for the integration of their successors in the second global economy. Even though the transition from the former to the latter constrained them, the chapter further argues that they continued to form and maintain close bonds that enabled their business community to prosper. It is this entrepreneurship networking, and not an innate entrepreneurial spirit, that explains the reproduction of East African Asian entrepreneurs and their relative business success. “Historians,” as Abdul Sheriff notes in the case of Zanzibar, “have hitherto tried to explain the rise of this section to the commercial hegemony in terms of race, ascribing business acumen to the Indians as if it were an inherent racial characteristic.”⁴ One of the leading East African businessmen, Ali A. Mufuruki, also shares such sentiments in regard to the Ismailis in Tanzania: “Their business acumen, experience and strong community network has enabled them to maintain a stronghold on many sectors of the economy.”⁵ Popular discourses also echo this stereotypical ascription, as this claim indicates: “It is an admitted fact that most of the Indian Ismailis came in Africa with industry in their blood, business in their brains and immense calibre to labour in their muscles, but with empty pockets.”⁶ Thus, it is important for this chapter to look at the concrete historical conjunctures that led to their rise.

Globalizing Asian Merchant Princes

Asians have been coming to East Africa since antiquity.⁷ Through trade in the Indian Ocean and Mediterranean Sea, respectively, they were part and parcel of the first two series of waves—one starting from China in the eleventh century and the other from the Middle East and southern Europe—that Samir Amin refers to as contributing to the long history of capitalism.⁸ However, it was after the third wave, which began in Atlantic Europe at the turn of the sixteenth century, that their presence in the region became relatively more pronounced and permanent. This last wave, as Amin notes, took the form of mercantilism for three centuries (1500–1800) after the conquest of the Americas and, later, various parts of Asia, Australia, and Africa.⁹

In the case of East Africa and South Asia, this wave buoyed the Portuguese interference in the Indian Ocean trade in the aftermath of Vasco da Gama’s circumnavigation of the continent of Africa en route to India in 1498. Instead of opening up this free-trade zone to western Europe as allegedly envisaged, the Portuguese monopolized it and contributed to its decline. Reflecting on the “Chinese retreat and the ‘Vasco da Gama epoch’” that occurred almost simultaneously, Sheriff laments, “Before the coming of the Europeans into the Indian Ocean in the sixteenth century it was indeed ‘genuinely a mare liberum where no state tried to control maritime matters,’ a sea open to all where the processes of socio-cultural integration were not hampered by monopolistic seaborne empires.”¹⁰ It was replaced by armed trading.

“By 1596,” notes Dana Seidenberg, “England and the Netherlands were challenging the Portuguese monopoly of the Indian coast, the English arriving in Surat in 1607, shortly after establishing trading centres at Bombay, Madras and Calcutta.”¹¹ Even though India, like China, had contributed ingredients of capitalism to the three successive waves of the sociotechnological innovation that paved the way for capitalist modernity, it could not curb the great divergence that was emerging between western Europe and the rest of the world.¹² The factors that led to the industrial and political revolutions in Britain and France, such as accumulation and innovation, diffused more rapidly within western Europe relative to other corners of the world, which widened the gap in technological capacity, military strength, economic power, and other relative advancements that enabled the West to colonize.¹³ Thus, “India, although well acquainted with artillery since the mid-fifteenth century, was no match for the Netherlands, England, and later France” by the seventeenth century.¹⁴

These growing European powers began utilizing the large-scale emigration of East Asians, through both force and free will, as a source of labor. This coincided with the emergence of imperial chartered companies. After the Imperial Dutch East Indian Company claimed the Mascarene island of Mauritius as an entrepôt, traders began importing slaves as early as 1641.¹⁵ These slaves were tasked with cutting and carrying ebony trees, then highly valued raw materials in Europe. After the French took over in 1721 and established sugarcane plantations, the demand for slave labor increased, particularly in 1735 when sugar production became the main industry.¹⁶ Meanwhile, the British East Indian Company and French East Indian Company were competing for dominance of the trade between Europe and Asia. Sheriff sums up the outcomes of this imperial contest and its implications for Oman, India, and East Africa:

Although commercial and diplomatic contacts had earlier been established between Oman and those European powers that were competing for hegemony in the Indian Ocean, it was the spillover of Anglo-French rivalry into Asia that began to undermine the political independence of Oman. Struggle over the trade of the East involved concessions from oriental potentates. The chartered East India companies, both British and French, were therefore backed by the political power of the European mercantile nations. Rivalry between them was particularly virulent during the second half of the eighteenth century, partly because of the disintegration of the Mughal Empire which exposed the naked struggle for political control in India and the Indian Ocean. For Britain, which had emerged as the dominant power in India, the defence of its empire and its arteries became a constant preoccupation.¹⁷

Thus, it is this crystallization of capitalism as a globalizing yet marginalizing economic system that led to what is regarded as the first global economy (1840–1929).¹⁸ It is important to note that 1840 was the year that Sultan Seyyid Said of Oman moved his capital from Muscat to Zanzibar. This move is of particular importance to a study on the globalizing dialectics of capitalism because it indirectly integrated and marginalized Asians in the first global economy. As Lois Lobo notes, many of them came to East Africa through Zanzibar around this time because the sultan and his sultanate actively encouraged them to live and work on the isle. “In fact,” she stresses, “the position of Custom Master was always given to an Asian by the Sultan.”¹⁹ The “wise Sultan,” affirms Manubhai Madhvani, “eager to speed up and encourage business transactions, invited the Indians [or Asians] to bring their families over, promising to honour and protect their religious beliefs and traditional values.”²⁰

As the Asian population in Zanzibar continued to grow steadily, notes Seidenberg—following Philip Curtin and Joel Kotkin—it formed a “capitalist diaspora” that constituted “a cohesive commercial network of uprooted merchants based on group solidarity and identity, seeking social progress” and locating its “identity in a common past.”²¹ It is the successful members of this business network, among others, who principally financed the caravan trade between the East African coast of Tanzania and its hinterland. These “merchant princes,” documents Gijsbert Oonk, included “local South Asian kings of trade and commerce such as Tharia Topan (1823–1891), Sewa Haji (1851–1897), Allidina Visram (1851–1916) and Nasser [Virji] (1865–1942).”²² Such Asian financiers, notes John Iliffe, “gave goods on credit to Arab or Swahili who undertook to repay two or three times the original sum in ivory on their return.”²³

The name that looms large is that of Topan. According to Blanche D’Souza, the self-taught trader left India at the age of twelve to join established relatives; however, he first worked from dawn to dusk for an agent of the firm of Jairam Sewji, known as Ladha Damji, before rising to own numerous enterprises.²⁴ Drawing from the biography that Topan’s son wrote, Frederick Cooper notes how he managed to travel back to India to make agreements with Ismaili firms to purchase cloves from Zanzibar.²⁵ As Alia Paroo points out, he was also instrumental in laying the foundation for the migration of fellow Ismailis from India and developing their trade network on the East African coast.²⁶ Being a pioneering patron, Topan provided them with jobs, social services, and leadership.²⁷ Iliffe hails him as the most powerful capitalist of Zanzibar.²⁸ Topan later shifted his firm’s headquarters to Bombay²⁹ and, as the following account highlights, boldly attempted to fully engage in the first global economy:

From Bombay Tharia was to enter the lucrative China trade in the 1860s. Attempts were also made to develop trade with Europe by at least three merchants who either owned or chartered vessels for the trade. Tharia Topan, who owned three large vessels, had MT$266,000³⁰ invested in his “London business” alone. He seems to have been discouraged from entering the American market directly, much to the relief of American merchants at Zanzibar. His London business, however, proved not so profitable for he clamed to have lost MT$100,000 in 1867, and he contemplated withdrawing from it temporarily.³¹

During the same decade, Topan financed Tippu Tip, a prominent trader who is still remembered as far as the Congo for his central role in the slave trade. He also financed Rumaliza, another infamous slave trader.³² Ironically, in 1875 the British knighted Topan to honor his role in ending the slave trade.³³ A new era was dawning.

However, these finances were circulating in—and thus their financiers were connected to—the first global economy, particularly through the Oman link to the British. Zanzibar had become its linking base on the East African coast as early as the 1740s, when the Busaidi dynasty seized control of Oman, “built their mercantile strength, [and] became satellites of British power in India.”³⁴ This occurred after many of the Omani merchants had reverted to peaceful trade in the mid-1730s following a stint of armed trading and raiding of the Portuguese and their allies.³⁵ The centrality the British accorded Zanzibar cannot be overstated. When the French slave trade threatened to bypass it, they reoccupied Kilwa...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Acknowledgments
• Introduction: Toward African Entrepreneurship and Business History
• Part I. Mercantile and Artisanal Networks
• Part II. Female Entrepreneurs and Gendered Innovation
• Part III. Entrepreneurship as Political Initiative
• Part IV. Unconventional Entrepreneurs
• Part V. African Enterprise in the Shadow of Colonization
• Epilogue: African Entrepreneurship, Past and Present
• Index