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Saturday, 29 May 2010 01:34

Economy of Jinja

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Economy of Jinja


Originally Jinja was the largest industrial centre in Uganda. Due to a number of reasons including expulsion of the Asian entrepreneurs in 1972, the civil wars that ensued, unfavourable macro-economic policies and developments at national level and the influence of changes in the world market this economic base drastically declined.


Presently the main economic activities in Jinja Municipality comprise of commercial activities that take place in the Central Business District (CBD) where markets, supermarkets, wholesale and retail shops, commercial institutions, industries, service shops, workshops and garages are found. Commerce is the dominant component of the economy followed by the Service Sector, Manufacturing Sector, Construction and then Agriculture. The greatest concentrations of commercial activities occur in the Town Centre especially along Main Street.

Main industries in Jinja include cotton, timber, and sugar production, sectors which were and still are largely dominated by two Indian families: The Muljibhai Madhvani and the Nanji Kalidas Mehta (see for the following: Jinja Hand Book 2009: 13 et seq.). The Madhvani family is the owner of Kakira Sugar Works and of a 22.154 acres sugar cane estate and arguably one of the largest benefiters of cheap (exploitative) labour in general and child labour in particular, since in sugar cane cutting median daily wages are at about 1000 UGX .

The Mehta family runs a sugar cane estate in Lugazi about 25 km south of Jinja-Town and recently attempted to purchase about one third of Mabira Forest (the largest connected forest in Uganda) along Jinja-Kampala road from the federal government for sugar cane growing. This move was highly opposed by the Baganda and their Kabaka.


Besides that these two Indian families own large parts of Jinja-Town and, in addition, almost each and every supermarket in Uganda is run by Indians. Thus, the distribution of economic assets today reminds very much of the distribution before the Amin-Regime.


Up to 1954 Jinja has been a small town but at that time the Owen Falls Dam (later re-named into Nalubaale Dam) was completed. Central government enacted a policy supplying Jinja and its people with cheap energy. In addition, Jinja was sought to become Uganda’s main industrial area. Textile manufacturing industry, the first East African plywood factory, and a Brewery in Njeru made the start followed by a copper smelter processing copper from Kasese in Western Uganda, a tobacco factory, and the first East African steel rolling plant opened in 1963. In 1964 the Jinja Flour Mill was constructed, in 1965 the Madvhani family opened the second textile mill, Mulco Textiles. Later large scale printing and paper bag manufacturing, manufacturing of matches, soap and oils, saw milling, furniture making, and steel tubing industries were established. Dunlop East Africa built a tyre and tube factory, Chillington Tool Company established an agricultural tools plant. At that time over 50.000 persons found employment in Jinja’s industries (Ministry of Finance, Planning and Economic Development. 2002: 7).


Then from the 1970s onwards political unrest and abrupt changes in economic policies, followed by reforms disturbed Jinja’s growth significantly. First in 1972 Idi Amin expulsed over 32.000 Ugandan Asian of British Citizenship and took over several British and other foreign owned industries. Second, Obote II in cooperation with IMF’s and World Banks Washington Consensus policies destroyed the foundation of Jinja’s economy: cheap electricity, leaving havoc in its wake. Suddenly a situation arose similar to that described for the Austrian town of Marienthal in 1933 with many unemployed and people without prospects: by 1985 close to 86 per cent of the industrial basis had collapsed and over 70 per cent of the jobs had been lost (Ministry of Finance, Planning and Economic Development. 2002: 7).


Out of the 38 existing industries 21 were either closed and shipped to destinations with more favourable framework conditions, are under receivership or do not operate at full production capacity. Right now only oil and soap producer Bidco Uganda, Nile Agro Industries, Nile Ply Limited, Bread Limited, and some fishing companies are operating. Recovery from these shocks still persists. Many people have not yet found another source of income remaining in agony and relying on “Waragi” (local Gin).

Population figures for Jinja Municipality showed in the year 1991 when the last Population and Housing Census took place 65.169 persons, with 32.578 males and 32.591 females. Projections for the year 2000 is a total of 92.539 persons, 48.048 males and 44.491 females (ibid.: 2).


Main socio-economic activities include commercial activities in the Central Business District, Markets, wholesale and retail shops, commercial institutions, industries, service shops, workshops, garages, etc. (ibid.). However, lack of opportunity for formal sector employment and a decline in wages has brought many inhabitants to rely on informal sector work, including subsistence farming on Jinja’s periphery. The Napier Market Site Report states that “most of Jinja’s inhabitants survive with at least one foot in the informal sector”(ibid.), a statement that the author of these lines can confirm though he cannot deliver the empirical material needed for a sound and well-based analysis.

Currently a new power project is being planned (cf. Bujagali Hydro-Power Dam, Jinja, Uganda). AES Corporation (USA), which stepped back in 2003 due to economic reasons, and Madhvani International (South Africa) are developing a 250MW private hydro-electric power plant which should be installed at Bujagali Falls. The estimated investment volume is $530 million. The Ugandan Parliament approved the project in 1999 after a year-long debate while construction was due to begin in January 2003. However, construction was suspended when World Bank's Fraud and Corruption Unit and the US Department of Justice started corruption investigations.

Financing is said to be secured by various institutions including the International Finance Corporation (IFC), the World Bank, IDA, African Development Bank (AfDB), Deutsche Entwicklungs Gesellschaft (DEG), and West LB. The Norwegian Guarantee Institute for Export Credits (GIEK) has in principle consented to give security as did the Guarantee Institutes of Sweden, Switzerland, Italy and Finland. Approval by the IFC and the World Bank is a prerequisite for further involvement by the guarantee agencies.

Read 6242 times Last modified on Sunday, 07 November 2010 20:00

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