The story
Coined by British author Roald Dahl. Apparently a fanciful formation in line with whimsical English words like fuzzy-wuzzy, Humpty Dumpty, etc. Perhaps reminiscent of "exotic" ethnonyms to Westerners; Roald Dahl spent time in Tanganyika, East Africa. Also compare oom-pah (genre of German folk music); the Oompa Loompas dance to quirky, rhythmic songs.
Etymology from Wiktionary, CC BY-SA 4.0.