Colonial economy refers to all total of colonial activities such as mining, transport, trade, industry as well as banking and agriculture, which was established in Africa during colonial domination.


Colonial economy was an extension of capitalist economies into their colonies in Africa. It refers to all the activities done by colonialists on their colonies.


Colonial economy started to be established after the establishment of colonial governments in African colonies (from 1900s). However, the establishment of colonial economy differed from one colony to another in terms of period.

Brought by the imperialists after the imposition of their rule, the colonial economy was intended to meet capitalist demand of raw materials, market, cheap labor, land for Europeans surplus population and land for capitalist’s investment

Colonial economy converted African self–sufficient economy into externally dependent economy which continues to exist to date.


Colonial Economy was characterized by numerous characteristics that differentiated it from the Pre-colonial African economy. The following are the main characteristics of colonial economy: –

  1. Land alienation

During colonial economy, colonialists used to alienate land from on the hands of African in order to establish their activities such as agriculture, mining and settlement.

  1. Production of cash crops

Colonial economy was mainly based in cash crop production and not food production. This was done in order to get raw materials for the industries in Europe.

  1. Taxation

It was characterized by introduction of different kind of taxes in order to influence exploitation. Some of the examples of those taxes were hut tax, cattle tax, head tax etc that Africans were required to pay to the colonial government..

  1. Migrant laborers.

Colonial economy preferred the use of laborers who were taken from far distant areas to production zones. For example, in Tanzania, laborers were taken from Tabora, Shinyanga to Tanga where they worked in sisal plantations.

  1. Money economy

During colonial economy, money was introduced and used as a medium of exchange in the society in terms of buying and selling of different kind and the system of circulation of money was on the hands of whites.

  1. Development of infrastructures

Colonial economy was characterized by the development of infrastructures that were built to facilitate colonial exploitation and basically to simplify transportation in the colonies.

  1. De-industrialization

Colonial economy discouraged the development of industries in Africa. During colonial economy only smaller industries were emphasized, these were:

  • Processing Industries: these industries dealt only with processing the raw materials ready for exportation to Europe.
  • Import-Substitution Industries: These were industries that dealt with the imported goods before being taken to the markets for consumption.

Mono-culture economy

Colonial economy was characterized with production of a single type of crop in all colonies. For example, in Ghana (cocoa), Kenya (coffee) etc.

Export–Import Oriented

The economy was import-export economy. Colonialists imported their manufactured goods in Africa and exported the valuable raw materials to Europe.


Colonial economy was established in Africa due to various reasons (objectives). Some of those reasons were directly linked with the industrial revolution as follows:

To get raw materials

Colonial economy was established in order to get raw materials for the industries in Europe. This was the reason why cash crop production was dominant in Africa.

To get cheap labor

Colonial economy was also established in order to get cheap labor that could produce the raw materials at low cost so as to maximize profit.

To get markets

Colonial economy was established in order to get markets to sell their manufactured goods that lacked markets in Europe.

To get areas for settlement

Colonial economy was aimed at getting areas for settlement. This is the reason why settler economy was emphasized for example in South Africa and Zimbabwe.

To get investment opportunities

Also colonial economy was established in Africa as a way to get investment for surplus capital in Europe.

To colonize Africa economically

Colonial economy was established in order to colonize Africans economically and help them fulfill their objectives of coming in Africa.

To create a dependent economy

Colonial economy was introduced in Africa in order to create a dependent economy (import-export economy) in Africa.


In establishing colonial economy, colonialists applied different methods. There were three main methods used by colonialists, and these were: –

  1. Creation
  2. Preservation
  3. Destruction


Through this method, colonialists introduced new colonial elements in Africa that could facilitate their interests. Colonial economy was introduced by imposing some elements of capitalist’s economy into African self–sufficient economies. Such elements are:

Creation of money economy

By so doing, many Africans were forced to enter colonial production process. Everything had to be obtained through money something which Africans did not have. In order to get money, they had to cheaply sell their labor on colonial plantations and mines hence providing cheap labour for capitalists.

Labour power

Labor was highly needed in colonial production. To get cheap labor, capitalists used many ways to trap Africans to offer their labor at a very low or no price. Such ways include the use of force, use of contracts, use migrant labor etc.


Tax was collected in form of cash. To get the money, Africans had to sell their labor or produce cash crops which were then bought at very low price

Land alienation

To fulfill their economic interests, capitalists took vast fertile land from Africa in order to establish investments and settlements

Introduction of cash crops

Cash crops like cotton, tobacco, sisal, coffee were introduced in Africa in order to help availability of raw materials for the industries in Europe.

Construction of infrastructure

In order to facilitate fully and smooth colonial exploitation, various infrastructures like railway lines, roads and ports were laid down. These were used

  • To transport raw materials from production areas to the coast for shipping
  • To transport armies used to calm down any African resistance and ensure maximum security to whites
  • To transport missionaries, colonial officials and supervisors
  • To transport European industrial readymade commodities from the coast to the interior for marketing, and
  • To transport laborers from labor reserve areas to the production areas


Through this technique, colonialists destructed some of the African economic elements which they saw could hinder achievement of colonial objectives. The technique involved intentional killing the base of African science and technology. In this way African local industries died completely. Europeans succeeded this by:

Importation of Europeans industrial goods

In large quantities goods were imported from Europe to Africa. Locally produced goods could not compete with those imported in terms of quality and price

Destruction of African culture

This was achieved by the introduction of colonial education and Christianity whose role among others was to turn Africans mind against their culture

Destruction of Handcraft (local) industries

In some cases, traditional craft was declared illegal. In Belgium Congo for instance craftsmen were cut off their hands

Interference on local trade

Colonialists destroyed self – sufficient African economies by liquidating the African trading interest as middlemen. E.g. in West Africa, imperialists destroyed local merchant’s monopoly over trade. European monopoly companies like the Royal Niger Company could open or shut any market at their will.


Through this technique, colonialists decided to preserve or retain some elements of African economies especially those which they saw to be advantageous to them. In this technique, colonialists took advantages of some elements of local economic systems that were then tactically re – orientated to suit and benefit colonial interests. Such elements of the local economic systems involved:

Use of local technology

The use of primitive and crude technology of Africans was applied in the colonial economic production. E.g. the use of hand hoe, axes and panga were preserved

Preservation of the family as a basic unit of production.

Especially where peasant’s production predominated, family was still used as unit of production

Preservation of pre–capitalist’s relation of production

Especially in feudal societies like Buganda for example Nyarubanja, Ubugabire etc.


Since colonial economy was established to solve capitalist problems (shortage of raw materials, land and market, as well as labor) that resulted due to industrial revolution, it appeared exactly in such forms that would adequately solve those capitalist problems.

Thus, colonial economy specifically appeared in the form of

  • Agriculture
  • Mining
  • Commerce
  • Trade
  • Industry
  • Transport and Communication
  • Financial Institutions


It was the most significant form of colonial economy as it provided a great deal of raw material needed by European industries.  Colonial agriculture was divided into three forms which were: –

  • Settler agriculture
  • Peasant agriculture
  • Plantation agriculture


This was the type of colonial agriculture which was practiced by white settlers in African colonies. Settler agriculture was a foreign owned and controlled form of agriculture.

It was dominant in Kenya (tee, coffee and pyrethrum) Zimbabwe (coffee and tea), Algeria (groundnuts), Ivory Coast (groundnuts) and South Africa. Therefore, these colonies were called Settler Colonies.


(Factors that favored Settler Agriculture)

The establishment or introduction of Settler agriculture depended on the following conditions or factors:


Settler agriculture was dominant in a good climatic areas such as in Kenya which had cool climate that attracted the white settlers.

Low populations

It was established in areas where the local population was low

Absence of strong political systems

It was dominant in areas where there were no strong political organizations because in such areas resistance was low

Existence of settler before colonial rule

In areas where settlers had been in existence even before colonial rule, settler agriculture was promoted

Soil fertility.

Good fertile land of Kenya supported the growth of various crops especially tea and coffee attracted settlers to establish settler agriculture.

Low rate of tropical diseases

In addition, settler agriculture was introduced in areas with low rate of tropical diseases like malaria, typhoid, cholera etc.

Absence of resistances

In areas where there was no sign of further resistances from Africans, settler agriculture was established.

Presence of means of transport

The Uganda-Kenya railway after its construction in 1902 made the transportation of raw materials and labourers to be easy hence encouraged the establishment of settler economy in Kenya.


Qn.  How did the colonial state in Kenya favor the interest of white settler in Kenya?

Qn. Show how the colonial state ensured development of settler agriculture in Settlers colonies?

The colonial states in Africa favored the white settler in different ways during colonial economy. The White settlers were favored by the colonial states in the following ways:

Intensive land alienation.

Large areas were needed for opening settler’s plantations and for their settlement. Africans were either turned landless or pushed into reserves to be used as squatters who would offer cheap labor and the land was given to the white settlers.

Prohibition of Africans from growing cash crops.

This would ensure the availability of constant labor. Also Settlers wanted to avoid competition in selling raw materials to colonial powers.

Introduction of taxation.

Among others taxation was intended to force Africans sell their labor on settler farms so as to have money for taxes, hence it ensured constant supply of laborers in settler’s plantations.

Construction of infrastructures

To move settlers, raw materials, commodities, government officials and armies.

Creation of labor reserve areas.

Also the colonial state created labor reserve areas in order to ensured constant supply of labor to settler plantations.

Provision of soft loans to settlers.

In maintaining settler economy, the colonial state also provided soft loans and aid to the settler so as they could run smoothly their activities.

Exemption of settlers in paying taxes.

The white settlers were exempted from paying taxes but was paid only by the Asian and Africans.

Provision of better social services.

The colonial state provided better social services in the areas where settlers settled e.g. water supply, electricity, schools and hospital services.

Right to own land.

The white settlers were given right to own land for long time for example, the white settlers were given rights to own Kikuyu land for 99 years and later this law extended up to 999 years.

Passing of laws / acts.

The passed laws were aimed at ensuring there is constant supply of labor on settler’s plantations. Such acts include:

In Kenya

  • Master – Servant Act 1906, that forced squatters to work for 90 days on settler’s farms with very low payment.
  • Native Registration Ordinance 1918 in which the number of days were raised to 180
  • The “Kipande System” of 1921 it demanded all Africans to walk with a pass (Kipande) to prove that they work under a certain settler without which Africans were not allowed to move on their land
  • The White Paper Devonshire 1923. It demanded all Africans to vacate all fertile lands of some parts of Kenya for white Settlers. Such area included the kikuyu high lands.

In Zimbabwe

Land Appropriation Act 1923. This ordinance demarcated areas for blacks and white settlers. It provided for the alienation of more than 80% total land, mostly productive areas in Zimbabwe was taken by whites who were only less than 20% of the total population. Africans who were more than 80% of total population were left with only less than 20% of total land mostly unproductive areas.

In South Africa

Land Act 1919. It abolished all Africa land ownership in over 90% of the country. It further barred squatters from farming on white owned land. This meant that black South Africans who were more than 80% of total population had only 10% of total land and others who were less than 20% of total population had more than 90% of total land.


Plantation agriculture refers to the large-scale commercial farming that introduced by the colonialist in the colonies in Africa.

This was a form of colonial agriculture organized and controlled by the colonial government who employed Africans to work in as laborers. Africans were receiving orders from the colonial government on what and how to produce.

It was dominant in Liberia (rubber production) and in some parts of Tanganyika (sisal, tea, cotton and coffee), Ghana (Cocoa), Nigeria (Palm oil) etc.


Plantation agriculture was featured by the following characteristics: –

Based on the opening of very large farms owned by foreigners.

Largely depended on mono-culture

i.e. growing of only one type of crop on the same piece of land season after season

Based on intensive use of Migrant labor

In some colonies, special areas were reserved as sources of laborers. In Tanganyika for instances such areas are: Rukwa, Tabora, Lindi, Shinyanga, Mtwara and Kigoma.

Based on cash crop production.

Plantation agriculture basically was established for cash crop production and not food production. This aimed to get raw materials for industries in Europe.

Characterized by the use of modern farming method.

Plantation economy went hand in hand with the application of modern farming methods like fertilizers, the use of pesticides etc.

Establishment of infrastructures.

Also plantation economy was featured by establishment of infrastructures such as roads and railways in order to simplify transportation from production areas to the coast for exportation.

Establishment of labour bureau.

During colonial plantation, different labour bureau were created in order to deal with organization of laborers and ensure constant supply of laborers in plantations. For example, in Tanganyika Sisal Labour Bureau (SILABU) was established in Tanga.


Presence of large piece of land.

For example, Tanganyika had large area for plantation agriculture.

Presence of tropical diseases.

Tropical diseases like malaria, bilharzia, tsetse fly, etc. discouraged settler agriculture in Tanganyika.

Tanganyika was a mandatory colony.

Unlike Kenya, Tanganyika was a mandatory territory hence the British had no settler policy in Tanganyika.

Presence of strong resistance.

Tanganyika had strong resistance such as Maji maji war which discouraged settler agriculture.

Poor communication system.

The absence of reliable means of transport also discouraged the establishment of settler economy in Tanganyika.


Peasant agriculture was the small scale farming in which African peasants left by the colonialist to produce cash crops and food crops on their own.

Peasant agriculture was the system of colonial agriculture which was conducted and supervised by Africans themselves.

It is a type of colonial agriculture on which pre–colonial systems of agricultural production were preserved and that peasants were allowed to continue owning land for agricultural activities.

The role of the colonial government was to control production by determining what to be produced and at what quantity. However, Africans were encouraged to grow cash crops and food crops in low quantity.

In East Africa, it was more dominant in Uganda than in any other colony. Other colonies with peasant agriculture were Ghana, Northern Nigeria, Malawi, Benin etc.


Qn. Why peasant agriculture was introduced?

The use of peasant agriculture was not accidentally rather there were various circumstances that influenced peasant economy. Some of them were as follows:

Climatic factors.

It was practiced in areas with bad climate that would not favor production for European settlers for examples high temperature of Nigeria, Ghana, and Uganda and in some parts of Tanganyika.

Reduction of production costs.

Production under peasants was cheaper than plantation because it was done by the African themselves.

To avoid resistance.

Production under peasants had lower opposition than plantations and settler agriculture. The areas where resistances were predominant, colonialists preferred the use of peasant agriculture to get raw materials.

Small number of settlers.

In some colonies like Nigeria and Uganda the number of settlers were too small for settler agriculture, hence peasant undertook the vacant.

Experience of Africans in agriculture.

Some areas had started growing of cash crops before colonial rule. They were thus left to continue with the production

Population pressure.

Some areas like Nigeria had a very high local population. This could prove failure for settler agriculture as it demands large scale land alienation.

Strong political organization.

Areas with strong pre–colonial political organizations like Uganda Nigeria and Ghana had to be undertaken under peasant agriculture because it was impossible to grab very large piece of land.


Peasant economy had characteristics different from plantation and settler economy. Some of the characteristics were as follows:

Production of cash and food crops.

Peasant agriculture produced both cash crop and food crop production in the same farm. However, cash crop production was dominant than food crop production.

Poor farming methods.

Peasant agriculture did not apply modern scientific methods such as fertilizers, pesticides in production.

The use of Family labor.

During peasant agriculture, labor force was provided by the family. Family members involved in production of raw materials and food in their farms.

Small scale farming.

Peasant agriculture was conducted in small scale and therefore did not involve large farms.

Absence of infrastructures.

Peasant agriculture did not involve establishment of infrastructures in the production areas.


  1. The peasants were forced to grow cash crops as much as possible.
  2. Price of peasants produced cash crops was determined by the capitalist and not the peasants.
  3. Peasants maintained themselves through production of their own food.
  4. Instrument of production were purchased and maintained by the peasants themselves.
  5. Colonial officers were maintained by the peasants themselves through taxation tributes.
  6. Separation of peasants in production was done by traditional rulers who were given low wages by the colonial government.


  • There was no link between agriculture sector and industries

Thus discouraged agricultural production in their colonies because these two sectors depend each other on their development.

  • The colonial policy of land alienation

Due to this that African peasants lacked enough fertile land for agricultural production as a result production remained poor.

  • The African were forced to use crude tools in agriculture

Such as hand hoes, this led to agricultural production in the colony to remain poor.

  • The colonial education not taught African about agricultural knowledge and skills.

This discouraged development of agricultural sector since the African peasants continued to use poor agricultural methods.

  • The colonial policy of forced labour.

This made the African to lack enough time to produce in their farms because most of time the African worked in the colonial economic project.

  • The African peasants were not given the soft

Loans, which could help them to buy fertilizers, pests sides and modern tools for production in their farms.


It was a trade/business conducted by whites and Africans in Africa during the colonial period. Commerce was among the most important activity of colonialist in Africa during colonial economy. It was unbalanced due to unequal exchange. The major aim was to market industrial made commodities from Europe


It was import–export based.

Colonialist exported agro- raw materials and mineral products from colonies, and imported industrial raw materials from metropolitan states (Europe)

Absence of link in trade and relationship between colonies.

All the link was between colonies and metropolitan states.

Crude relationship between urban and rural areas.

In most cases commercial activities were conducted in urban areas only and rarely in rural areas.

Exploitative in nature.

Africans were paid very low or no for their raw materials and labor. In addition, the prices were determined by capitalist who intended to keep production and transportation costs as low as possible

Money economy.

Colonial commerce involved the use of money as a medium of exchange. Before colonial commerce, barter system was common in Africa.

It was conducted by the foreigners.

The majority Africans became the reliable markets for the imported goods.


Colonial labour were the Africans who were working in various sectors of colonial economies in Africa i.e. agriculture, industries, mining and commerce. All types of colonial economy required/demanded African labour power.


  1. They were forced labour i.e. they were forced by the colonialist to work in colonial economic sectors.
  2. They were relatively paid low wages.
  3. They were forced to pay taxes to the colonial government in form of money.
  4. The colonial labourers became the markets of the industrial goods.


As settler and plantation expanded the demands of labor also increased. To meet the demands various ways were introduced to ensure constant supply of labor in plantation and settler agriculture. Those were as follows: –

Introduction of tax.

Tax was paid in forms of money, this forced the Africans to work in European farms so as to get money for paying tax.

Land alienation.

The Africans were divorced from their land, hence remained landless. Those landless were forced to seek for employment in European farms so as to earn money for their survival.

The introduction of manufactured goods.

Manufactured goods such as clothes and wines were sold in form of money, for the Africans to get those goods were required to sell their labor power in European farms so as they can gat money for buying imported goods.

The creation of various laws.

Different laws were created by the European capitalist to the Africans such as Kipande system which forced the indigenous of Kenya aged from 18 years to work in settler farms for 90 days in every year.

Regionalization of the area.

The colonialist divided a territory into land reserved area and labors to work in land reserved areas where plantations were established.

Introduction of forced labor.

The colonialist introduced forced labor in order to get constant supply of labor of which Africans worked in European farms with nor or little payments/wages.

The introduction of money economy.

Money replaced barter system and become a driving force in the society, this forced Africans to sell their labor in European farms so as to get money for buying consumer goods.

Prohibition of African from growing cash crops.

African were prohibited to grow cash crops in their farms, this was intended to make African to depend only on selling their labor in settler and plantation farms.



It is the type of colonial labour in which capitalist recruited workers locally. Normally all members of the worker’s family could be allowed to stay at the master’s camp. Although workers stayed at camps they were not allowed to do any work of their benefit but they produced for the masters only with little pay and food rations.


In order to ensure constant supply of labourers who were required in large number, some non-producing areas were created as labour reserve areas. Labourers were taken from those areas to distant places where mining or farming activities were carried out. Labour law were made by the colonialist to force people to go to work for capitalist interests.

Migrant labourers Refers to system of labor where laborers were recruited from far distant areas and taken to work in production areas. It was a system of colonial labor where laborers taken from their areas of origin to different areas in order to work in colonial plantations and mines.

In Tanzania for examples, labourers were recruited from labor reserve areas such as Tabora, Kigoma, Shinyanga, Rukwa and taken to work in plantation areas like Tanga, Morogoro, Moshi etc. where sisal/coffee was produced. In Tanga, labour administration was established in order to organize and ensure constant supply of labor in the plantations, it was called SISAL LABOUR BUREAU (SILABU)


Qn. Why the colonial government preferred the use of migrant labor?

Plantation agriculture preferred most the use of migrant labor in production. Some of the reasons for the use of migrant labor were as follows:

Ensured constant labor supply.

Migrant laborers were recruited from areas far from plantations. This assured farm owner of the availability of labors as they would neither escape nor resign as they came from far away

Cheap accommodation.

Migrant labor moved without their families, it was very easy to accommodate them in labor camps

Low skills of migrant labor.

Migrant laborers were unskilled so they were paid very low wages. Skilled labor demands high payment.

To suppress resistance.

Migrant laborers came from different areas using different languages, so it was very difficult for them to organize resistance against colonial production

Easy to control.

Since they were all living in one place, it became very easy to control them

To ensure high production.

Migrant labor was used in order to ensure high production of raw materials because laborers had long working hours in the plantations.


  1. Many Africans lost their lives in the process of providing labour for European in mines areas and railways constructions.
  2. Some Africans acquired important skills such as gardening etc.
  3. Land alienation i.e. this caused a lot of bitterness among Africans against colonialism in many African countries as a result they became landless and homeless.
  4. The Africans united against exploitation by establishing trade unions that enable them to bargain for better terms of services.
  5. It created great disparity between African men and African women which gave rise to the social evils such as prostitutions etc.


It was the extraction of minerals by the whites in Africa during colonial period. It was developed in areas where minerals were available. For example, in South Africa (Gold and Diamond), Ghana (Gold), Zimbabwe (Copper, Coal, lead etc.), Tanganyika (Mwadui – Diamond, Geita – Gold).


  1. It was opened by the colonial companies e.g. BSACO operated mining activities in South Africa and Southern Rhodesia (Zimbabwe and Zambia).
  2. It demanded operation of sophisticated machines. Mineral extraction required mechanization to produce effectively.
  3. It involved the use of migrant labourers. The main principal labour was migrant labourers.
  4. Production was for export. Minerals mined were exported to capitalist countries.
  5. Land alienation. Africans (natives) were forced to leave from areas where mineral deposits were found.


  1. Land alienation.
  2. Brought taxation.
  3. Building of infrastructures.
  4. Environmental degradation i.e. air pollution, water pollution and land pollution.
  5. Building of minimal processing industry.


Colonial industries were processing industries established during the colonial era. The processing industries were to reduce the business of raw materials for exportation to the capitalist countries.

Examples of processing industries included Tobacco processing industries in Malawi, Zimbabwe, Copper refineries in Zambia and Zaire, Tea processing industries in Malawi and Kenya Spinning Mills and Cotton Ginneries in Nigeria, Mozambique and Uganda.

The only industries which developed in Africa were in South Africa where Boers settled. There were colonial laws which did not allow colonies in Africa to build factories. Colonies in Africa were just made to be producers of raw materials where industries were developed in Europe only.

However, processing industries were allowed to operate in Africa colonies which were used to reduce unwanted/bulkiness of the raw materials and make storage possible and shipment for the export.


Colonial communication system included roads, ports, railways and air transport. Example, Mombasa – Kisumu railway built in 1904, In Tanganyika the railway line from Dar es Salaam to Tabora – Kigoma and later on to Mwanza was built from 1889 to 1929.

During the colonial period the railways and roads started from coast towards the interior of the raw material production areas. The sizes of roads and railways were very small in length extended especially to the center of raw material production area.

The most influence of colonial state was to transport raw materials and not African passengers.


  1. To transport raw materials (cash crops and minerals) form production areas to the coast for shipment to Europe.
  2. To transport imported goods and spare parts from the coast to the interior of Africa.
  3. Transport of African labourers to distant places in the colonial economy e.g. labourers were transported from Kigoma to work in Tanga, Sisal Plantations.
  4. To transport troops and administrators to the interior to keep peace and oders.
  5. To serve mission centers because their roles were to civilize the Africans so as to accept western values and consequently changing pattern of production.


In general colonial transport and communication systems were not intended to develop the Africans but to fulfill the demands of the imperialist.


  1. Destruction of traditional self-sufficient economy.
  2. Introduction of money economy.
  3. Introduction of taxation.
  4. Introduction of cash crops.
  5. Creation of external dependent economy.
  6. African economic production become export-oriented.
  7. Development of infrastructures that were used for transportation.
  8. Introduction of forced labour, labour reserve and commercialization of labour.
  9. Introduction of mono-culture economy.
  10. Creation of processing and extraction industries.


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