Where cashew is king, it fails to rule the economy
Mozambique struggles to regain global reach for its nut.
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Former President Joaquim Chissano contends that the World Bank told Mozambican officials to end protective tariffs on cashews or face cancellation of hundreds of millions of dollars in loans. Although bank officials denied coercing the government, Mozambicans at the time made it clear they were cutting taxes only grudgingly. Factory owners also protested, saying that they’d been promised industry protection.Skip to next paragraph
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The price of raw cashews did rise, as primarily Indian buyers came and offered higher prices for the nuts than Higgo says local factories could buy them. So factories like Mocita, started closing.
“Despite renewed hopes, the industry was killed again by World Bank and IMF zealotry in imposing a free trade policy,” wrote Mozambique scholar Joseph Hanlon in his book, “Do bicycles equal development in Mozambique?” “Cashew became one of the emblematic examples of harmful policies imposed on poor countries...."
Later, the World Bank officials acknowledged that they’d tried to do too much, too fast, but maintained that the mission of liberalization was sound and did improve the livelihoods of cashew farmers.
In their report, “When Economic Reform Goes Wrong: Cashews in Mozambique,” professors from Tufts, Stanford and Harvard universities said that Mozambique gained about $6.6 million annually from the lowered cashew export restrictions – an amount almost entirely negated by the costs of unemployment from closed factories.
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So emotional is the cashew business here that TechnoServe, a nonprofit that tries to find business solutions for rural poverty, almost avoided it altogether. But, says Jake Walter, TechnoServe’s Mozambican director, there was no avoiding the profitability that research suggested the industry holds.
“We decided it was so important to so many peoples’ lives in Mozambique that we should tackle it, even though it was a very hot issue and there was this ideological argument around it,” he recalls. If smaller-scale factories locate closer to rural cashew stands, and if these smaller factories form cooperatives in order to fill the large container orders that are the bread and butter of the industry, industry-wide profitability is possible, Mr. Walter says.
TechnoServ helped a few entrepreneurs set up small factories as well as financing from USAID and other groups.
Now, in the country’s “cashew triangle,” a section of northern Mozambique where these new-style factories are most common, more than 6,000 cashew-related jobs have been created in the past six or seven years, Walter says. According to the government’s Cashew Promotion Institute, Mozambique produced 95,000 tons of cashews in the recent harvest; it says that two-thirds is processed in-country by factories and subsistence farmers.
Meanwhile, the government refused to cut taxes further on cashew exports – giving the smaller fledgling factories a bit of protection.
“I think this is important for development,” Walter says. “The kind of life that’s been created in the cashew industry is different than it was before, but I think it’s qualitatively better.”
Here in Xai Xai, however, it’s hard for residents to share that sentiment.
Past the Mocita gates where trucks filled with cashew nuts once lined up to make deliveries, it’s eerily quiet. Most of the people fired from the factory never found new work, people here say.
One of the few employees left from the massive 2001 layoffs, security guard and former soldier Mario Fernando Raimundo, recalls: “You’d hear the noise of the machines, the noise of people singing while they were working. It was producing, bustling.
“That’s over now.”
But he smiles when he talks about the diminished “king”: “Ah, the cashew,” he says. “When you see the cashew, your stomach sings.”
Though his cashew factory stands silent, he says he eats the nuts regularly – buying from the subsistence sellers on the street.