THE STATE TRADING CORPORATION: A
CASUALITY OF CONTRADICTIONS

I.N. Resnick

Introduction.

In 1967, not long after the Arusha Declaration was issued, the
Tanzanian Government nationalised nine import-wholesale firms i
and set up the State Trading Corporation (S.T.C.) to operate them |
and move towards the socialisation of trade.! For the first two i
years, S.T.C., working basically with the organisations of the i
nationalised firms, operated fairly smoothly and managed to 1
produce surpluses sufficient to carry out its capital programmes
during the second and third years. In 1970, the tide tumed against
the Corporation. Early in the year the number of products for
which S.T.C. was responsible (i.e. those which were ‘confined’ to
it)2 was increased enormously as President Nyerere ordered the
rapid advancement of the pace of socialisation in the trade sector.
At the same time, an American management consultant firm,
McKinsey & Co., was contracted to provide S.T.C. with a new
corporate structure and set of management systems.® The im-
plementation of their recommendations was begun in July 1970.

Within a year S.T.C. was in deep trouble. In order to avoid ex-
pected shortages, large orders were placed for a variety of goods,
resulting in severe overstocking and a drain on the Corporation’s
financial resources (and those of the banking system from which it
was borrowing). At the same time, many items began to disappear
from retail shelves — some of them had not been ordered, others
were ordered late, and still others were available in S.T.C.
warehouses but could not be found. Some manufacturing firms

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