Commercial Specialisation and Adaptation of Ethnic Groups

Matthias A. Ogutu

The Journal of Modern African Studies, Vol. 11, No. 3. (Sep., 1973), pp. 465-469.

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 AFRICANA 465
stantially understate the growth of N.D.P. between 1969-70, the last year
of the war, and 1970-1.
Secondly, I consider the gap between the actual G.D.P. during the
Nigerian civil war, and a 'hypothetical G.D.P. with the pre-war [i.e. 1958-9
to 1965-61 rate of growth'.l It is indeed curious, as O'Brien suggests, 'that a
projection of the 1965-6 G.D.P. at a 6.1 per cent annual rate of growth
produces a figure of ?C;N2,201million for 1971-2, exactly the total reported
in the most recent Economic and Statistical Review'. In subsequent years,
Nigeria probably partially atoned for output foregone in the early years of
the crises, 1965-6 to 1968-g.2 But even if the figures of the Economic and
Statistical Review are assumed, the summation of G.D.P., 1965-6 to 1971-2,
at the pre-war growth rate - discounted at any non-negative interest rate -
is still much more than the summation of actual G.D.P. for the same period.
I n the final analysis, though, I agree with O'Brien that 'No one can know
the answer' to 'what course the Nigerian economy might have followed had
there been no civil war'.

Commercial Specialisation and Adaptation of Ethnic Groups

by Matthias A. Ogutu, Department of History, State University of New York
College at Brockport
With the expulsion of Ibos from Northern Nigeria and Asians from Uganda,
the intriguing question of ethnic commercial specialisation and adaptation
has increasingly occupied the minds of many scholars. One aspect of economic
continuity from the pre-colonial period onwards has been an ethnic domi-
nance in certain occupations and enterprises. Although some groups have
lost their traditional commercial specialities, others have continued to be
disproportionately influential in a particular sector, and have often main-
tained an effective monopoly, despite major changes in commerce and local
political control. During the November 1972 African Studies Association
meeting in Philadelphia, these developments were analysed by a panel
organised by Barbara Lewis of Livingstone College. As she pointed out in
her paper on 'The Adaptation of Commercially-Specialised Ethnic Groups
to Colonial and Post-Colonial Political Economics' :
Some scholars see cultural predispositions and social organizations as explanatory variables,
attributing only marginal effect to the colonial experience.. .Others argue that external
political factors were central: that colonial policies facilitated the extension of such networks,
either by explicit policies and practices, or by establishing order and stimulating commerce,
or that the ideologies and policies of independent national governments altered the social
organization of commerce.

One is tempted to conclude, certainly from the research findings presented

by this panel, that it is the r61e of the government, more than anything else,
which has determined the commercial specialisation and adaptation of any
ethnic group, whether alien or indigenous.

Nafziger, loc. cit. pp. 241-2.

Ibid. p. 228.

 466 M A T T H I A S A. O G U T U
As Beverly and Walter Brown of De Pauw University reminded us in their
paper on 'Commerce and Consequinity: a study of merchants in East
Africa', although Asians had had contact with that coast of Africa for
centuries, it was not until the Omani era that a significant 'number of Indian
traders and artisans settled permanently in Zanzibar and mainland coastal
towns'. This immigration 'was actively encouraged by the island's Omani
ruler, Seyyid Said, who guaranteed their religious liberties, eschewed dis-
criminatory restrictions, and bestowed crucial financial powers on prominent
Indian businessmen'. Such privileges caused the Indian population to in-
crease from 2 0 0 in I 819 to more than I ,000 in 1944, and was over 5,000 by
I 960.
Supporting this line of argument, Reginald Coupland long ago maintained
that Seyyid Said's ambition in acquiring Zanzibar was to create a n economic,
not a territorial, empire in East Africa.l Consequently, W. G. Palgrave adds
that the Sultan, having realised that 'whatever might be the energy and
enterprise of his own subjects [the Arabs] the commercial transactions would
never attain real importance except by the cooperation under the lead of
the Indian merchants', then allured the Banians of Clutch, Guzerat, and
the Concan to Muscat, 'and by absolute toleration, special immunities, and
constant patronage, rendered the port a half-Hindoo colony ' . 2
The Browns assert that as a result of increased European involvement with
the East African interior during the latter half of the nineteenth century, the
Ithnasheries and Ismailis in particular began a westward thrust along the
traditional trade routes. The success of this new movement was not based
solely on 'the intimate linkages of kinship ties, immigration patterns, and
relations', but on the European colonial policies which enabled these Mus-
lims to establish their dominance as the leading merchants of East African
long-distance trade. Their commercial strength had been secured as early
as the I 830s; after I 841, however, more and more travelled and settled along
the caravan routes. I n the words of the Browns: 'the security provided by
the presence of the Sultan and the British Consul undoubtedly encouraged a n
increase in the number of trips and longer sojourns at the coastal settlements '.
By the turn of the century, Asians had an upper hand in the whole of the
growing commercial sector. By 1910, there were nearly 7,000 of them in
East Africa, and such a rapid increase can be attributed to the policy of the
German Government. According to John Iliffe, 'The Indians were central
to Rochenberg's programme. They were the local traders who were to buy
the peanuts and sell the cheap consumer goods, mediating trade between the
railway and the villages.'3 I n Kenya, as in Tanganyika, Asians were en-
couraged to establish businesses in the main towns, and in specially-gazetted
trading centres - indeed, the law forbade Africans from indulging in such
activities in certain prescribed 'alien' areas. SO the popularity of Asians
could not be attributed to 'the understanding and exploitation of the estab-

1 Reginald Coupland, East Africa and Its Invaders, From the Earliest Times to the Death of
Seyyid Said in 1856 (London, 1938),p. 301.
2 W. G. Palgrave, Narrative of a Year's Journey Through Central and Eastern Africa (London,
1864),vol. 11, pp. 369-70.
3 John Iliffe, Tanganyika Under German Rule, 1905-1912 (Cambridge, 1g6g),p. 58.
 AFRICANA 467
lished trading patterns' alone, as the Browns seem to wish us to believe, but
mainly because of the protective governmental policies which checked
African competition.
Barry L. Isaac of the University of Cincinnati, in his paper on 'The
Changing Positions of Lebanese, European, and African Traders of Pen-
dembu, Sierra Leone', saw the Lebanese as essential for local economic
growth, and attributed their success to 'the old-fashioned virtues of hard
work and frugality'. He asks, 'What choice did the emigrants have except
to work hard and reinvest their ~rofits?'But while it is true that some of the
Lebanese had this sense of entrepreneurship, they were favoured by two other
conditions. First, as Isaac himself admits, 'vigour, integrity, and astute
business sense' leads to prosperity only in situations of opportunity. In other
words, the Lebanese, though empty-handed, arrived in West Africa at an
opportune moment, when the desire for imported trade goods could be
stimulated in exchange for forest products, such as kola nuts and palm
kernels. Secondly, the incoming Lebanese found opportunities to begin a
number of commercial activities - since most had at least some commercial
skill and capital -because they were aided by the British colonial Govern-
ment's enforced collection of a hut-tax, and the construction of a long-
distance railway.
As a visitor from Sierra Leone pointed out during the panel discussion,
the rapid amassment of wealth was not due to any superhuman and inherent
in the Lebanese as such, but rather because bf the favourable treat-
ment they received from the colonial administration: notably an easy method
of receiving loans, and monopolistic policies that restricted African com-
petition and gave alien businessmen a chance to control the sale of agricultural
produce, the most lucrative form of all trade prior to 1945. According to
Isaac, the Lebanese and European traders depended heavily on coffee and
cocoa which had since the 1930s replaced palm oil as the main source of
income. Instead of promoting the co-operative marketing of African crops,
the Government encouraged and protected the Lebanese traders and
European firms as the surest dealers who could promise a better return to
the colonial treasury.
Despite lack of governmental encouragement, as Isaac points out clearly,
African traders, small and large, existed in colonial Sierra Leone, and into
the independence era :
the Lebanese traders and European branch-firms of Pendembu have had to contend with a
growing number of African traders of various types. In 1957, besides.. .three large-scale
African [wholesale] traders. . .there were 28 small-scale African retailers, 26 African hawkers,
and six small-scale produce-bulkers operating in Pendembu.

Notwithstanding competition from better capitalised enterprises, Sierra

Leone entrepreneurs have survived the colonial era only to threaten alien
businessmen under the new rtgime: 'Under these altered conditions, all but
two of the European branch-firms in Pendembu closed their doors around
I 960.'
It is tempting to ask why European enterprises should have declined since
independence in Sierra Leone. The answer might be found in a comparative
 468 M A T T H I A S A. OGUTU

analysis of Lebanese and European firms in Pendembu towards the end 0,.
the colonial rCgime. According to Isaac, the Lebanese were more successful
because they readily made adjustments whenever the necessity arose; their
overheads were much lower, and they could operate profitably 'on the
basis of wholesaling relatively inexpensive, low-profit items by the half-gross,
quarter-gross, or dozen'. The Lebanese owned a large part of their operating
capital, and being semi-accultured to Sierra Leone had the language, skill,
and determination to have permanent roots in the local community. This,
then, reveals that the success of European firms under colonialism depended
largely on official protection and promotion. Any superimposed form of
commercial activity will lack the ability to grow naturally, not having a n
indigenous backbone.
The true economy of Sierra Leone will not, therefore, depend on a foreign
'enclave', but rather on the construction of national enterprises which reflect
the very nature of the local society. Hence the question raised by Isaac:
'Would a comparable number of African traders soon take over the niche
vacated by the Lebanese? I n Pendembu, for instance, would there soon be
eleven large-scale traders where there were in 1967 three large-scale African
and eight large-scale Lebanese businesses?' The answer can only come from
the Government, which has the ability to take crucial policy decisions on
economic strategy and tactics.
Anthony Oberschall of Yale University, in his paper on 'African Traders
and Small Business in Lusaka', came to the following conclusion:
During the colonial period, established Asian and European businesses with large resources
controlled markets and blocked entry to newcomers. Not until the advent of independence
and the economic reforms were Zambians able to move into business because competition
by non-Africans was curbed through political and legislative means and because admini-
strative encouragement and some resources were provided for entry into trade.

What may be considered a source of strength for businessmen in Lusaka is

the fact that 'Alternative means of advancement through the civil service
And political offices are closing, while high urban wages and rapid urbaniza-
tion sustain demand for consumer goods and high business earnings.'
Overschall's findings merely confirm that 'theories of entrepreneurship
based on achievement motivation, social marginality, and tribal and cultural
factors' did not account for the success or failure of commercial enterprises
in Lusaka. O n the contrary, he suggests, like Peter Marris and Anthony
Somerset in their African Businessmen: a study o f entrepreneursh$ and development
in Kenya (London, 197I ) , that indigenous enterprise had always existed
among a certain segment of the local society - prior to colonisation, then
during foreign rule, and afterwards in post-independent Africa. The degree
to which entrepreneurs became involved in the business culture, and the
extent to which they were successful, was dictated by the political and
economic environment. For example, even the rather pessimistic Isaac
admits :
In fact, it is no exaggeration to say that many of Pendembu's small-scale traders are able to
operate viable businesses because of - and not in spite of - their having numerous ties of
kinship in the community.. .And I wish to point out that among traders of all types, drain
by the extended family does not figure a prominent cause of business failure.
 AFRICANA 469
Oberschall himself gives examples of elderly businessmen who had carried
out trade during the colonial era, and then concludes:
A11 in all, N's example shows that the situation afforded opportunities, albeit limited, for
some Africans to accumulate capital and learn skills sufficient to undertake a retail business:
and that problems arising for the extended family, from the lack of education, from com-
petition with larger expatriate businesses could be and indeed were overcome.
The paper by W. Ibekwe Ofanagoro of Columbia University, on 'The
Aro and the Delta Middlemen of South-Eastern Nigeria and the Challenge of
the Colonial Economy', demonstrated even more critically the place of
indigenous entrepreneurship. Discussing one of Africa's oldest and most
elaborate commercial systems, he agrees with Oberschall that neither culture,
social organisation, nor any peculiar ethnic or kinship advantage was the
fundamental characteristic of the region's specialisation. After the establish-
ment of colonial rule, the Aros and Delta traders, who had been the successful
middlemen of the South-East, found themselves cut off from the mainstream
of their trade when the railway and roads were constructed through areas
beyond their control. Instead, this era now witnessed the rise of new com-
mercial specialists, such as the Nkwerre, Nnewi, Onitsha, Oguta, and Abiriba
groups. In other areas, including Uzuakoli, the local inhabitants began to
trade directly with the Europeans, doing away with Aro middlemen after
1915.
It is tempting to accept the hypothesis that the Government's policy of
building roads, railways, and harbours, notably Port Harcourt, deprived
traditional entrepreneurs in this part of Nigeria of the chance to compete
on equal terms with new rivals, who had the overwhelming and sudden
advantage of being close to the growing urban centres and modern means
of transportation. Ofanagoro concludes: 'The establishment of British rule in
South-Eastern Nigeria drastically altered the terms and conditions of com-
mercial life, and generated forces which enhanced the decline of the major
pre-colonial commercialists of the region.'
I am inclined to conclude that cultural predispositions and social organisa-
tion cannot be established as significant explanatory variables. Neither the
Asians of East Africa nor the Lebanese of Sierra Leone, for example, would
have succeeded in becoming as wealthy as they did, if the colonial admini-
stration had not granted them the opportunity to control their local com-
mercial sectors. Having accumulated capital, and having acquired a high
standard of living, they became a distinctive and privileged socio-economic
class, like their European masters, thus creating for themselves future in-
security and resentment in societies wishing to become more prosperous in
the same competitive fashion.
Ethnic specialisationwas useful, and perhaps inevitable, under colonialism.
But today the independent governments of Africa have a duty first and
foremost to their citizens, and thus an obligation to create an economy that
reflects the growth and development of all classes and groups in the nation.
Consequently, in a capitalist-oriented economy, entrepreneurs are encouraged
and protected, irrespective of their ethnic background.