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1886 a provisional agreement as to spheres of interest was reached between Germany and Great Britain ; the agreement of July 1890 defined definitely the bound aries of British and German East Africa respectively. North, the British sphere reached to Abyssinia; on the east it adjoined Italian Somaliland, on which side the river Juba was fixed as the frontier in 1891. Meanwhile the plan of leasing the main land of Zanzibar had been revived, and in May 1887 Bargash granted to an association formed by Mackinnon a concession for the administration of his mainland territory not included in the German sphere of operations. Subsequently the Benadir ports were leased to Italy, and in the German and Italian spheres the Zanzibar Government sold its sovereign rights. The territory acquired by Mackinnon continued to be held on lease.
By international agreement the mainland territories of the sultan had been defined as extending io m. inland from the coast. Mackinnon's associa tion, whose object was to open up the hinterland as well as this 10 m. strip, became the Imperial British East Africa company, and received a royal charter in Sept. 1888. To this company the sultan made a further concession dated Oct. 1888. On the faith of these concessions and the charter a sum of £240,000 was sub scribed, and the company received formal charge of its conces sions. The path of the company was speedily beset with diffi culties, which in the first instance arose out of the aggressions of the German East African company, which had received the lease of the southern part of the Zanzibar mainland, i.e., the coast of what is now Tanganyika Territory. The Germans proved uncom fortable and somewhat unscrupulous neighbours, and claims put forward to certain coast-districts, notably Lamu, included in the British concession, gave much trouble. In conditions of great – , – difficulty the company carried on its work. In 1888 it sent an expedition under F. J. Jackson to the far interior. Jackson reached the Victoria Nyanza, and hearing there that a German party under Karl Peters had run a blockade of the ports and reached Uganda, Jackson also went on to Uganda. Rival treaties were signed; but the Anglo-German agreement of 189o, already mentioned, placed Uganda in the British sphere. The next step taken by the company was to send Capt. F. D. (later Lord) Lugard to Uganda. For events in that country see UGANDA. Here it should be noted that the activities of the company in Uganda gravely crippled its resources. To open up its territories the company planned to build a railway from Mombasa to the Victoria Nyanza, an enterprise which Mackinnon rightly held was essential. A preliminary survey was made in 1892. But there
was strong opposition in parliament to any aid for railway build ing from imperial sources, and even to the retention of Uganda, and the company's scheme was wrecked.
Further difficulties now arose which led to the extinction of the company. Its pecuniary interests sustained a severe blow owing to the British Government—which had taken Zanzibar under its protection in Nov. 1890—declaring (June 1892) the dominions of the sultan within the conventional Congo basin free trade zone. The result for the company was that dues were swept away without compensation, and the company was left saddled with the payment of the rent, and with the cost, in addition, of admin istration, the necessary revenue for which had been derived from the dues thus abolished. Moreover, a scheme of taxation which it drew up failed to gain the approval of the Foreign Office.
In every direction the company's affairs had drifted into an impasse. At this crisis Sir William Mackinnon, its guiding spirit, died (June 1893), and after protracted negotiations it was decided that the British Government should purchase the property, rights and assets of the company in East Africa for £250,000. Although the company had proved unprofitable for the shareholders (when its accounts were wound up they disclosed a total deficit of £193,000) it had accomplished a great deal of good work. Mac kinnon and his colleagues were largely animated by the desire to suppress slavery and to improve the condition of the natives. With this aim they prohibited the drink traffic, started industrial missions, built roads, and administered impartial justice.
The formal transfer of the country to the British Crown took place on July 1, 1895, the Foreign Office assuming responsibility for its administration. The territory, hitherto known as "Ibea," from the initials of the company, was now called the East Africa Protectorate, and the chief local official was styled commissioner. Coincident with the transfer of the administration a dispute as to the succession to a chieftainship in the Mazrui, the most important Arab family on the coast, led to a revolt which lasted ten months and involved much hard fighting. This revolt, or rather its suppression, was of more than passing importance. The defeat of the rebels definitely substi tuted European for Arab influence. Before the rebellion the coast was in reality a protected Arab State; after its suppression, though no legal change was made, British influence was paramount. The Arab population, about io,000, found it hard to cope with the new conditions.