Accounting for the effects of neoliberalism on race relations in postcolonial societies requires analysis of processes of group formation and the meaning of neoliberal policies in relation to political contention about racial inequalities. To this end, we compare the politics of neoliberalism and racial redress in Tanzania and Fiji, examining political contention and the contextual effects of colonial legacies, post-colonial development strategies, and the timing of reform. In Tanzania, opposition politicians advanced indigenization policies as a defensive reaction against the redistributive consequences of neoliberal policies, whereas in Fiji proponents of indigenization used neoliberal economic policies as a means to advance their goals for racial redistribution. Consequently, indigenization policies and alternatives in Tanzania were framed as issues of race and citizenship, while in Fiji debate about these policies centered on the difference between race- and class-based preferences. Our findings highlight the role of political parties as an institutional terrain of identity-group formation and the importance of considering how implementation of neoliberal policies distributes costs and benefits in a manner that can remake political alliances.