Silo foods, a wholly owned subsidiary of the Grain Marketing Board has opened 84 shops nationwide with the goal of availing cheaper commodities to the consumer. Silo, which operates as a fully fledged commercial business started the process from 1 April 2019. They have also opened additional satellite shops that are already operational
According to the Herald the shops stock items such as mealie-meal, rice and samp among others. As the shops were established to stabilize prices of basic commodities they do offer cheaper alternatives for their in house-branded products.
The theoretical unbundling of Silo from the GMB has been lauded by Information, Publicity and Broadcasting Minister Monica Mutsvangwa as the pay off of the Public Enterprise Reform Programme. Government has since injected ZWL$70 million and plans to invest another US$95 million over a three year period to ensure the viability of the project.
We’ve seen this before
This approach isn’t new, perhaps it is a little fine-tuned but bears little difference from former Reserve Bank Governor Gideon Gono’s Basic Commodity Supply Side Intervention (BACOSSI) – a catastrophic failure in its time. The key differences between the Silo initiative and Gonos idea are the involvement in processing that Silo does they are not simply selling the same product cheaper. However, this approach does nothing to tackle the ultimate problems from its predecessor as they can still be taken advantage of. Given conditions are fast approaching the same conditions that existed in the 2000s.
Recently social commentators and journalists unearthed a scandal at the GMB in which the management at their depots (the same depots Silo uses) we’re taking advantage of a pricing inconsistency where the GMB paid more for maize, for example, than it sold it for. Depot managers were selling depot maize to each other recording profits which they pocketed in the process but also gravely overstating the grain reserve. Perhaps resources dedicated to Silo May have been better used simply plugging the leaks in the bucket before adding water to it.
A recent example that is relatable is the ZUPCO situation at a time when fuel price increased by 50% the fares were slashed by 50%. Commuters celebrated until the other shoe dropped as private operators had increased prices in line with the fuel price increase. Commuters waited for hours on end for ZUPCO which simply does not have the capacity to handle all consumers yet. Passengers jumped into buses through windows as shown by videos circulating social media. The business model is not sustainable long run. It is unclear how the buses are being paid for but it is highly unlikely ZUPCO is earning enough money to pay for them.
The crux of the matter comes down to viability. Silo is set to suck US$95 from the government, taxpayers to be earnest. Ultimately the consumer is hurt more when the tax revenue which could be used to revive hospitals and water infrastructure is used to subsidize cheaper yet largely unavailable commodities. In the immediate term, the cheaper prices are appreciated but the long term results are things such as the 2% tax.