economy refers to the system of production and consumption which were introduced in the colonies by the colonialists in order to fulfill their economic demands such as raw materials, markets, area for investment and areas for settlement. It included Agricultural, mining, communication, and transportation of Commerce and Trade.
The purpose of establishing colonial economy was to ensure a constant supply of raw materials, cheap labor, market, area for investment, and area for settlement. During the colonial economy period, African economy was transformed and made inferior.

Colonies were expected to provide raw materials, both agricultural products and minerals to the factories of the European countries. Examples of agricultural products were cotton, coffee, sisal, pyrethrum, tea, cocoa, and palm oil.
Colonies were expected to import manufactured goods like clothes, shoes, blankets, and utensils from Europe.
Colonized people were expected to provide cheap labor for the benefit of colonial masters.
Colonized people were expected to raise revenues that could support administrative costs of the colony.

It was export – import oriented economy, specialized in the production of raw materials for the Metropolitan industries and importation of manufactured goods to Africa.
Establishment of small and weak processing industries, few factories that were established was for import substitution because colonies had to remain in producers of raw materials.
Some of the colonies were mono culture, they specialized in the production of one major commodity, for example, Mauritius specialized in the production of sugar, Ghana produced cocoa and Liberia produced rubber.
It involved the construction of the physical infrastructure such as roads and railways in order to transport raw materials to the coast laborers, to the plantation, and to the mining centers.
There was an introduction of money economy which replaced batter trade which involved exchanging of goods with goods.
There was the establishment of European trade companies such as IBEACO under         Karl Peter and British Smith African companies and GEACO these companies had the responsibility of controlling trade activities conducted in the colonies.
It practiced through the use of force, forced labor was introduced in order to get man power.
It had a very limited capital, it depended on local revenue and capital.
There was the use of migrant labor in different parts of the colonial estate.
[*]By Destruction

The colonial economy destroyed self-sufficient African economy.
Through the destruction of African barter trade system and African long distance trade.
Prohibition of African to produce food crops by increasing the price of cash crops.
Destruction of traditional handicraft industries.
[*]By Creation

The introduction of money as a medium of exchange.
The introduction of tax collection.
The introduction of land alienation, African moved from their fertile land so as to open up plantations and mines.
Construction of physical infrastructures such as roads, railways, harbors and ports, others were social infrastructures such as schools, hospitals, bomas, prison, and courts.
The introduction of different cash crops and new commodities.

[*]By Preservation

The use of primitive and crude tools such as hand hoes, panga, and axes, were preserved.
The unity of production was left to be family, especially in the peasant economy.
There are five main sectors of colonial economy introduced in Africa;
*Agricultural sector
*Mining economy sector
*Transportation and communication
The colonial agriculture economy was mainly based on the production of cash crops such as coffee, sisal, cotton, cocoa, Tobacco, rubber. By ensuring the proper production of those raw materials they used one of the following types/ systems of agriculture;

These were the small scale agriculture productions where by farmers produced both food crops and cash crops in their farms. In some of the areas, Africans were left to continue on the production of cash crop at small scale, for example, Peasant economy was introduced in Uganda (cotton and coffee in Tanganyika’s Sukuma land and Cocoa and Palm Oil production in West Africa).

Peasant Agriculture based on small scale farming with no confiscated technology.
There was the use of crude tools which were formerly used in the pre-colonial African societies such as axes, hand hoes, and pangas.
There was individual ownership of land by the peasant, the land was owned by the family led by the husband.
There was the cultivation of both cash crops and food crops in a farm.
There was low production due to a poor method of farming.
There was a lack of social infrastructure in the areas of production.
Production was based on family labor as a major source of labor supply.
There was the occurrence of famine because of over concentration of cash crops only and ignoring of food crops.
It led to the development of nationalist ideas through peasant cooperative unions.
It led to the occurrence of classes between peasants’ i.e. progressive peasants, middle-class peasant, and lower class peasants.
It led the intensive exploitation of African resources.


This was the form of cultivation in which cultivation specialized in commercial crops, this type of agriculture employed a large number of unskilled labor who were brought to supervise work. These large plantations were either owned by colonial government or capitalists who had their representatives to supervise the plantations. This type of agriculture was practiced in Zaire, Gabon, Tanganyika (Kilimanjaro- coffee, sisal -Tanga, Morogoro and Usambara, Tea -Iringa Ivory Coast and others.
Establishment of large scale plantations which covered over 100 acres of land.
Employment of large unskilled labor to work and supervise in the plantations.
It was also characterized with monoculture i.e. specialized in single crops example coffee, cotton, and tea
There was the establishment of different infrastructures such as roads, railways.
Plantations were owned by capitalist in Europe who did not come to live in the colony.
Capital was owned by the colonial state and foreign companies
The presence of scattered fertile land in the colonies, for example in Tanganyika some places possessed fertile soil while other did not.
Fear of tropical diseases due to high temperature, examples of those diseases are malaria, small pox, and jiggers.
The desire of the colonial government of collect taxes from the laborers, migrant labors were the sources of revenue.
It was very profitable.
The existence of strong political organizations so there was no need for European to come and stay.


The settler economy involved production by foreigners who usually represented the interests of the metropolis. It was operated by European immigrants who came to settle in African countries. It was practiced in places like Botswana, Mozambique, Algeria, Angola, South Africa and Kenya.
Production was done for export, all the materials produced were transported to the Metropole.
There was an establishment of large scale farming.
It was characterized by the growth of the single crop, each company was specialized in the production of the specific commodity.
There was the establishment of transport and communication systems in areas where settlers were dominated.
There was the use of a large number of unskilled labor in the production who were paid low wages.
There was private ownership of the plantations by the European who came as settlers.
Land alienation was practiced in many places, African were moved from their fertile soil to unfertile soil places.
Mining was another area of colonial economic activities and one of the major demand was obtaining minerals in African societies such as Gold, silver, diamond, copper, tin, and others.
Areas, where mining economy was taking place, were; South Africa- (Kimberly where diamond was discovered in 1867) and Wit water where gold was discovered in 1886, In East Africa Tanganyika – (Mwadui where Diamond was discovered, Geita and Musoma Gold was discovered, Copper was found at Kimbe in Uganda and other places.

Precolonial African trade was based on exchange of goods for goods, but after the colonial trade, trade activities were characterized by the following;
Characteristics of Colonial Trade
It was organized and conducted by the colonial government and Imperial trading companies such as IBEACO, GEACO, BSACO and RNCO.
In East Africa, dominant of colonial trade was Arabs and Indians and Syrians and Lebanese in West Africa.
It based on the exploitation of raw materials such as minerals and agricultural products.
Money became the means of trading and replaced the colonial barter trade.
There was an establishment of marketing boards so as to control trade transaction and price of the commodities.

Construction of transport and communication facilities such as railways lines, ports, and roads were done in order to simplify the transportation of products from mining and farming activities. For example from 1890 – 1926 many railways lines, roads, and ports were built in Africa. For example Mombasa to Kisumu line to Uganda was built in 1904, Uganda built Jinja to Masangali line in 1902, Dar es Salaam line from Tabora to Mwanza and these were constructed during Germany and British respectively.