Ugandan Officials Urge Asian Investors to Return

Ousted business community is seen as crucial to economic recovery

TWENTY years after former President Idi Amin ousted the country's 70,000 Asians, President Yoweri Museveni is inviting them to return in a bid to jump-start the country's failing economy.

The streets of Kampala are cracked and crumbling, and half-built, large-scale construction sites, untouched since 1972, are now covered with lush vegetation. Only now is the government making a concerted effort to rebuild the capital, laying new telephone and electricity lines.

But by most accounts, total rehabilitation of the country's infrastructure will require investments that only the ousted Asian business community can bring.

This presents two problems for the government: how to assuage African resentment toward the returning Asians and how to restore Asian property rights. Solving both will require political nerve.

"When Amin expelled 70,000 Asians, it was an enormously popular move," says a senior Western diplomat. "Twenty years later, the same attitude persists. It is difficult to overestimate the collective resentment of Asians by Africans."

One reason for the government's renewed interest in Asians is its acknowledgment of the critical need for Asian business. Asian companies once employed thousands of workers and were the backbone of the nation's economy.

"Before Idi Amin, it is no exaggeration to say that all the economy was in the hands of the Asians," says a World Bank economist here. "They stimulated production and could secure credit."

The government has paved the way for new investment by streamlining the system for big investors, who are mostly Asian. The new Investment Authority, which approves applications for projects that require a minimum $500,000 investment, has put an end to the previous process of visiting 30 separate and often unhelpful offices that, in the end, deferred most projects for years.

During the last six months, 100 new applications from foreign investors have been received and 25 approved.

Responding to pressure from the World Bank and Western aid donors, the government is also moving to return the 7,470 properties the Asians left behind. (See story below.)

Last year foreign assistance contributed 60 percent to Uganda's government spending, according to the 1991 United States State Department Human Rights report.

The Investment Authority is processing Asian repossession claims more quickly now. Of the 1,700 claims made since 1982, more than 400 have been approved. The World Bank, however, wants nearly three times that many more handed back by June.

The return of the Asian properties - valued at $1 billion and constituting most of downtown Kampala - is vital if Uganda is to lure Asians capable of reviving the economy back to Uganda, according to economic observers and government officials.

Asians have a broad base of commerce, reaching to Kenya, Tanzania, India, and Europe. In 1972, Asians were responsible for at least 35 percent of Uganda's gross domestic product, according to estimates from the World Bank. Others say that figure could be as high as 60 percent. Asians now contribute about one-fifth of their community's prior input to the Ugandan economy.

"There can't be civilization here as we knew it before 1972, if these properties are not returned," says the head of the Uganda Chamber of Commerce, George Rujojo. "Most of the untrained black Ugandans who took them over have been business failures."

The stereotype among Africans is widely believed, however, that Asians come to Uganda only to milk the system - their system.

In two recent incidents that have underscored suspicions here, Asians from the two most prominent foreign exchange offices here were caught trying to smuggle $1 million out of Uganda at Entebbe Airport. Their exchanges subsequently were closed down, and the price of foreign currency shot up 40 percent as a result. Many African Ugandans were furious.

The shadowy Uganda African Trade Movement, a group of Ugandan businessmen and others who benefited from the property the Asians left behind, has made clear in a statement to diplomatic missions here that its members "intend to wage a atrocious war everywhere in Uganda on any Asian returnee.

"We intend to harm, maim, cause them a lot of suffering, even killing them in the most despicable way ever ... if they don't leave our land and country immediately," the statement said.

In the last year, the Museveni government has dismissed such threats as a minority view voiced by disgruntled Africans, many of them in high places, who have used the 7,470 properties the Asians left behind.

Nonetheless, only about 700 Asians so far have accepted the government's encouragement to return.

About 2,000 Asians are in Uganda today; most remember well the abuse they received when they were forced to leave in 1972. When President Milton Abote gave Asians 90 days to claim their land and return in 1982, few did.

"Fear among Asians is growing. The government is more responsive to Asian property claims, but personal security is still a consideration," says Mumtaz Kassam, a British-trained lawyer who held a Ugandan passport until Idi Amin's immigration officials tore it up in front of her in 1972. She is still a Ugandan citizen, and now works to reclaim Asian properties for clients and her family.

"The threats do harm because they exist," says Ms. Kassam. "For Asians, they undermine faith in Uganda."