Learning from history: Why Bacossi Part 2 will fail

Candour: Nqaba Matshazi

WITH inflation skyrocketing, the government thinks it has its “eureka moment” with a plan to launch cheap shops under the Silo brand, which they think will be the answer to rising food prices.

So excited is the government that Information minister Monica Mutsvangwa took this message to an investment meeting in the United Kingdom.

Mutsvangwa did not realise the irony of her pitch, as she was taking a patently communist idea to a nation that extols the virtues of neo-liberalism.

Furthermore, by reforming parastatals and working to rid the government of non-performing State enterprises Finance minister Mthuli Ncube is sending a message that Zimbabwe is going on a more neo-liberal trajectory, thus the idea of these cheap shops contradicts this message.

With this new plan, the government says it has invested ZWL$70 million in the Silo company to manufacture basic commodities.

I will not even attempt to look at the issue of government bureaucracy and inefficiencies that could all, but scupper this drive for cheaper shops, as this can be a story for another day.

The problem, it seems, is that this government does not seem to be learning from history and with that it is bound to repeat history’s mistakes.

Yugoslavia, before Zimbabwe, piloted such a scheme when its citizens were faced with rising food prices and could not afford basics.

Faced with political and economic problems in the 1980s, Yugoslavia scrambled for answers to fix skyrocketing inflation, high unemployment, a huge foreign debt, and serious food shortages.

A foreign currency black market, or as we euphemistically call it, a parallel market, thrived, where piles of the increasingly worthless dinars were changed for the German mark.

Instead of fixing the problem, Slobodan Milosevic, who first came into power in 1989 as President of Serbia — a constituent republic within Yugoslavia, blamed United Nations sanctions for the country’s woes.

The government then set up State-owned shops that were supposed to sell affordable goods.

However, these shops irregularly received supplies, long queues formed and obviously discontent arose.

Generally, the economy was characterised by massive scarcity and the more the government intervened the worse the situation became.

Sound familiar?

To cut a long story short, Yugoslavia does not exist anymore.

Back home former Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono, came up with what he thought was a bright idea, the Basic Commodity Supply Side Intervention — which was known by its more lofty acronym Bacossi.

Gono was the poster boy for quasi-fiscal activity at the central bank and his plan was that the RBZ would help shops and retailers with the supply of basic commodities so that they could afford to sell them at a cheap price to the public.

Gono even came up with a basket that consisted of Bacossi goods, to be sold to the public, but this, like in the Yugoslavia case, did not work.

As he tried to stem the tide Gono introduced the Foreign Currency Licensed Wholesalers and Retailers, but the Zimbabwean economy was far too gone and dollarisation had set in.
Shortages did not end and prices continued to rise in spite of Gono’s interventions.

In the end, his motto failure is not an option, sounded quite hollow and meaningless.

Ten years after Gono’s disastrous policies, the government is coming back with a solution that, at face value, looks like the Yugoslavia solution, raising the question whether they have learnt anything from history.

Instead of ploughing public funds into hare-brained ideas, government needs to make sure that it creates a conducive environment for the private sector to operate in.

We have seen that State interventionist policies do not work and instead, what is needed now, is not for the government to be player and referee at the same time, because it cannot be a regulator of the private sector, while at the same dabbling as a private sector player.

In addition, government surely cannot sell neo-liberal policies to the West when looking for investment, while at the same time it is implementing half-baked interventionist policies for locals.

It is imperative that the authorities choose a path, while also taking lessons from history, because surely they cannot have it both ways.

What Zimbabwe needs is a government that opens space for innovation, entrepreneurship and that allows the best minds to thrive, not stifling independent minds for political correctness.
Too much government intervention in the economy breeds corruption, creates patronage networks and above all stifles innovation and entrepreneurship.

The new version of Bacossi will not work and before long, there will be questions centred around the tendering process and corruption allegations will take centre stage.

It is time the government dealt pragmatically with economic problems facing the country because populist interventions and half measures will only serve to confuse both the locals and the foreign investors that the country has gone all out to court.

 Nqaba Matshazi is AMH head of digital. He writes in his personal capacity.

3 Comments

  1. Farai J Nhire

    I am afraid the writter has been overtaken by events. Investors from the east and west are already scrambling for investment oportunities in Zimbabwe. And there is nothing bacossi about the intervention by the government because it is meant to tackle nothing but economic subotage by those who are planning anarchy in the country. There was no economic reasons for inflating the prices of all basic commodities at the same time and those comming shops will still make profits by selling those goods at affordable prices. Do not forget combis who had started charging 8 dollars from Chitungwiza to the city and what happened to them. There is nothing now to compare with Gono’s polices since the Rbz is not printing money and removing zeros. We have a genius minister of finance who knows what to do, when and why so please just give him the necessary space. I am also happy with the observation that dollarisation began during Gono era in contrast to the popular wrong view that us dollars were brought in by Mdc during Gnu.

  2. A factual and brilliant posting/observation/installment by Matshazi the regime will not learn from history as it has remained with the same disastrous policies and beliefs since 1980 to call it a second republic is a sick joke.

  3. ZanuPf is trying to reinvent the wheel – economics illiterate. If it was that easy then every country in the world would be doing it – the bacossi nonsense.

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