payments problems out into foreign reserves and financial
stringency produced a domestic credit squeeze. Thus, the need for
an efficient socialised trading system became more pronounced
just when S.T.C. was beginning to show its major weaknesses; its
abilities to operate under constrained foreign and domestic finan-
cial conditions and fill the gaps created by emmigrating traders
became less as they were needed more. By the middle of 1972 it
was recognised by Parliament and Government that S.T.C. as it
was then constituted had proved a failure and that major recon-
struction was necessary.

In a study of management and management agreements, the
main question to arise is why S.T.C. failed, especially in light of
the fact that other parastatals, formed at the same time (namely,
the financial intermediaries) were nearly unqualified successes.
The easiest answer would be to claim that the latter had access to
more qualified personnel at all levels (many of whom had been
working in the system for years) and that their nationalisation sim-
ply entailed taking over existing organisational structures, while
S.T.C. required nearly all new manpower and a new organisation
to accomplish what had not been attempted before. While there is
a certain amount of merit in such an explanation, it does not an-
swer the question of how it was that S.T.C. did not succeed after
it had been provided by McKinsey & Co., with an organisational
structure, a set of detailed management systems and assistance in
recruiting experienced manpower from overseas, as well as
receiving nearly unlimited financial support at home.

This chapter suggests that there were two immediate causes for

the collapse of S.T.C. first, McKinsey & Co. provided S.T.C. with
an organisational structure and, a set of management systems that
were unsuitable, even for the tasks as perceived by the con-
sultants; and second, a variety of policy problems occurred which
were either overlooked or dealt with incorrectly by S.T.C.
management and Government bodies responsible for policy
related to S.T.C. With this discussion as a background, S.T.C.’s
impact upon the Tanzanian economy will be sketched. It will then
be possible to address the most basic issue relating to the S.T.C.
failure, viz: the Corporation was designed to support the structure
of the commercial sector in existence in 1970 and had no
mechanism for changing its organisation and systems as the struc-
ture of the Tanzanian economy moved away from serving the

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