The World Bank and

Mozambique's Cashew nut

Industry

Presented by: Usman Dewan

Haris Noman
Zahid Latif
 MOZAMBIQUE’s CASHEW NUT INDUSRTY

One of the largest in the world.

Country’s second largest
export.
Cashew nuts have a hard and
acidic outer shell that must be
removed.
Processing industry consisting
for more than 9000 people.
Collapsed after the world
banks decision.
SUBSIDIES

Small compared to the

guaranteed prices
promised to farmers in
the United States.
Barter trade.
These small-scale
schemes made sense.
But they offended the
economic model
brought by
international
economists to
Mozambique.
WHAT
ACTUALLY
HAPPENED!
Privatization of
factories in 1994-5.

High bidders were local

businesses and not
transnational
corporations.

World Bank revealed a

secret study.

Raw cashew nuts

should be exported to
India.

The shells contain an

acid which damages the
fingers of workers.
WHAT
ACTUALLY
HAPPENED!
Mozambique had
imposed a 20%
export tax.

Agreed a phased
reduction down to
10% over five years.

But this was not

enough for the World
Bank.
 DEMANDS OF
MOZAMBIQUE
•Mozambique seek
compensation

•People lost their

jobs.

•Privatization led to
bankruptcy

•Still not sufficient

even if policy is
reversed.
CONDITIONALITY AND WORLD BANK’s REFUSAL TO TALK

 World Bank showed

great resistance to
Mozambique’s case.
 Mozambique is most
poorest and most aid
developed country in
the world.
 The "necessary
condition“ posed by WB.
 WB conspiracy seemed
working.
 WOLFENSOHN TO THE RESCUE?

 Wolfensohn favored
Mozambique.
 The new study was carried out
by international consultants
Deloitte & Touche, its has
following points:-
1) Competition unfair.
2) Peasants have no gain.
3) Improved management
practices continue to
contribute to factory
efficiency" in the newly
privatized Mozambican
factories.
4) Mozambique can support itself
by processing themselves.
 WAS IT TOO LATE?

The export tax was cut to 14%

 Factories ran out of nuts
Most of the 14 factories are now closed
7000 of the 9000 workers (most women) are now
out of work
 "In the past two years we have lost more than
$15 million," said Kekobad Patel, head of the
Cashew Industry Association
The industry wants
two things:
1) It needs a
commitment to a long
term policy with at least
some protection.

2) The World Bank or the

government must provide
a long term low interest
loan to allow the industry
to clear
its debts and modernize
FINALLY MOZAMBIQUE
WON THE BATTLE………

Mozambique banned the

export of unprocessed cashew
nuts, ending a five-year battle
with the World Bank and
International Monetary Fund.

IMF also allowed Mozambique

to protect its expanding sugar
industry.

IMF directors overrode

opposition from their own staff.
Five Years of campaign against the ban.

New Policy of IMF on December 18,2000

Some cashew factories will be closed, but
the rest will be protected

The protection is two-fold, an 18 percent

export duty on unprocessed cashew nuts,
plus the local industry given the right of
first refusal -- to purchase nuts before they
are exported.

Government banned the export of raw

cashew nuts in mid-January,2001
 WHICH ENTITY IS RESPONSIBLE?

•ARE THE IMF AND WORLD BANK THE GUILTY

ONES?

•ARE MOZAMBIQUE'S AUTHORITIES TO BE

BLAMED TOO?

•OR IS IT JUST A PLAIN FAILURE IN

THE DECISION MAKING PROCESS PERFORMED
BY THE PROCESSING UNITS' MANAGEMENT
STAFF?