Some progress on Mozambique cashew, sugar liberalisation

5 April 2001

Mozambique has won more flexibility in its five-year battle with the World Bank and IMF to restrict the export of unprocessed cashew nuts. In late February the government denied press reports that it had reimposed a full ban on raw cashew exports. But it will restrict exports from traders suspected of under-reporting export prices to avoid taxes.

Whilst traders have benefited from under-reporting export prices, union and industry leaders argue that prices to producers have fallen, from US$700 a tonne to US$415 from 1999 to 2000, because of low demand from India. Boaventura Mondlane, general secretary of the Cashew Workers Union, commented that “the producers are earning less and less, contrary to the arguments of the World Bank and the government”. “Now that the industry has been put out of action, prices are tumbling” reports the Mozambique News Agency. 8,500 of the 10,000 workers have been made unemployed since liberalisation. In December the IMF accepted a compromise involving the closure of some privatised processing factories whilst protecting the rest with an 18 per cent export duty on unprocessed cashew nuts. The local processing industry will also have the option to purchase nuts before they are exported.

Meanwhile, the IMF Executive Board, contrary to staff advice, have agreed that Mozambique will be allowed to retain tariffs which protect its sugar industry, currently being rehabilitated with major foreign investment. IMF staff had argued that since Mozambique could import sugar more cheaply than it can produce it, the government should allow duty-free sugar imports.

For debt and adjustment issues contact

Mozambique Debt Group

The Britain-Mozambique Society