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Cashews and Conditionality:World Bank Policy and Mozambiques
Cashew Industry
Submitted by Philip H. TroutmanSPO #1204
In Partial Fulfillment of the Requirements forMB765 Colonialism
and Neo-colonialism
Dr. Michael Rynkiewich, professor
Asbury Theological SeminaryWilmore, KentuckyDecember 16,
2005
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CONTENTS
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 1
I. Cashews and Colonialism . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
II. Cashews and Independence . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
III. Cashews and Conditionality . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
IV. Implications for Christian Mission . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 17
Appendix: . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 19
References Cited . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 21
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 23
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Cashews and Conditionality
World Bank Policy and Mozambiques Cashew Industry
Introduction
In Mozambique, cashews are importantso important, in fact, that
the 1997 national
census included the question, Do you have any cashew trees?
(Hanlon 2000).
This paper explores a specific case of neo-colonialism in the
form of the World Banks
structural adjustment policies regarding Mozambiques cashew
industry. Although there are
many disturbing aspects of this saga, the key issue in the
Mozambique cashew nut case, which
marks it so clearly as neo-colonialism, is the World Banks use
of conditionality, the conditions
that international lenders imposed in return for their
assistance (Stiglitz 2003:9). By the
conditions it imposed on Mozambiques sale of raw (unprocessed)
cashew nuts, the World Bank
unwittingly crippled Mozambiques most export important industry
in just two years. The
resultant job losses and suffering of thousands of Mozambican
families has led to this case
becoming a cause celebre for the anti-globalization movement
(Macmillian, et al 2002:1).
Our consideration of this case proceeds according to the
following plan: First, we review
the history of the cashew nut and its rise to commercial
prominence in Mozambique under
Portuguese colonial rule in the 20 century. Next, we see how the
cashew industry fared from theth
time of independence until the mid-1990s. Thirdly, we look at
the World Banks interference in
Mozambiques cashew industry, as the insistence on mindless trade
liberalisation (Hanlon,
2001a) led to the cashew processing industrys near-total
collapse. Finally, we explore some of
the implications of this case for the practice of Christian
missions.
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Troutman / MB765 Research Paper: Cashews and Conditionality /
page 2
I. Cashews and Colonialism
The cashew (Anacardium occidentale), a tropical and sub-tropical
evergreen related to
poison ivy, is not native to Africa, but rather to Central and
South America. In the 16 century,th
Portuguese missionaries carried the tree from Brazil to
Portuguese settlements in East Africa and
India. Growing conditions in eastern Africa were favorable, and
the tree gradually spread
throughout the eastern African seaboard (The New Encyclopedia
Britannica, 15 ed. 2:920). th
As was true of other European powers, Portuguese colonial policy
was built on exploiting
the natural resources of its colonies. While Mozambique did not
have great mineral wealth, it
did offer vast tracts of fertile land with abundant water. Among
crops that grew well were
cashew trees. We know very little about the uses made of the
cashew for several centuries after
its introduction into the area. But in the late 19 century,
Portuguese companies made goodth
profits from kachasu, a distilled liquor made from sugar cane
and/or cashew fruit, which was
sold and used for trade both inside Mozambique and in the
Transvaal region of South Africa
(Vail & White 1980:83, 116, 126-127).
In the 20 century, cashews became an increasingly important
export for Portugal inth
Mozambique, as the US and Europe developed a taste for the
luxury nut. After World War II
caused the closure of sea lanes to Indiathe other major cashew
producing country at that
timePortugal saw its chance to develop a cashew kernel
processing industry in Mozambique.
In 1950, in Loureno Marques (Maputo) Caju Industrial opened the
first commercial cashew
processing factory in Mozambique, and cashew production
increased in the following decades.
The year 1965 was a banner year for cashews in Mozambique, with
Cajuca de Machava (now
Mocaju), Procaju-Manjacaze and Procaju-Inhambane all opening. In
addition, Anglo-American
Corporation opened a cashew subsidiary, Mocita (McMillan et al.
2002:55).
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page 3
African peasant growers were aware of the increasing profits
available from growing
cashews. In the Maganja da Costa area of Zambesia province, for
instance, over 1,000,000 trees
had been planted by 1966 (Vail & White 1980:385). In 1969
more processing plants were
opened, by Antonio Eanes (later CC-Nacalas Angoche facility) and
Socaju (later CC-Nacalas
Nacala facility). During the 1960s Mozambique produced up to
half the worlds cashew nuts
(McMillan et al. 2002:1).
In 1971, two other processors opened: Cajuca de Angoche (now
Angocaju), and CC-
Monapo. Finally, in 1973 the Inducaju processing factory was
established. In all, 14 processing
factories were established between 1950 and 1973, able to
process 150,000 tons of raw cashews
per year. Mozambiques production of raw cashews peaked in 1973
at 240,000 tons, and that
same year production of processed cashew kernels hit its
all-time high with 149,800 tons
processed for export (McMillan et al. 2002:4).
Throughout the colonial era the cashew industry in Mozambique
was heavily regulated by
the Portuguese to insure maximum profitability, with producer
prices and market margins
controlled by the government (McMillan et al. 2002:4). However,
starting in 1974 cashew
production in Mozambique went into a decline from which it has
never recovered. Some of the
reasons for this are will become evident as we continue our
study.
II. Cashews and Independence
After a military coup in Lisbon in April, 1974 led to the
reversal of Portugals policy of
fighting to retain its colonies, in September of that same year
the Mozambique Liberation Front
FRELIMO and the Portuguese government signed an agreement in
Lusaka, Zambia, which
granted Mozambique full independence in July, 1975. The new
government was led by
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Troutman / MB765 Research Paper: Cashews and Conditionality /
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FRELIMO, and was a one-party state. From its founding in
Tanzania 1962, FRELIMO had been
profoundly influenced by African Socialism, especially by Julius
Nyereres concept of ujamaa
(Newitt 2002:189, 197). At its Third Part Congress in 1977,
FRELIMO officially declared itself
as Marxist-Leninist (Newitt 2002:198). Mozambique was a member
of the Non-Aligned
Movement (Newitt 1995:559), and it allowed black nationalist
movements from South Africa
and Rhodesia to operate in its territory (Newitt 2002:208).
At the time of independence, Mozambiques economy, including the
cashew processing
industry, was left in near-total disarray, as white Portuguese
and South African owners,
managers, administrators and skilled laborers crucial to the
operation of many enterprises
abandoned their stores, offices and factories, and fled the
country. In an attempt to stave off
complete economic collapse, the FRELIMO-led government
nationalized all industries and all
land ownership, and took over the day-to-day operation of
abandoned enterprises. Hanlon (1996)
asserts that FRELIMO halted the economic collapse by 1977 . . .
and returned the now planned
economy to pre-independence levels by 1981.
The cashew industry had already begun to decline during the war
of liberation, as many
peasant growers, especially in the north of the country, fled
their farms for the safety of towns
and cities. This slide in production was exacerbated by the loss
of Portuguese capital and the
breakdown of the marketing networks the Portuguese had employed
to export the cashews. In
order to protect the cashew industry from foreign competition,
primarily from India, in 1978 the
Mozambican government banned the export of raw cashews,
requiring local producers and
traders to sell only to the national processing industry. In
1979 the government created a state-
owned holding company, Caju de Moambique, incorporating the
companies that had been
abandoned by their owners (McMillan et al. 2002:5, 55). However,
the decline of the cashew
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industry continued. The Antnio Eanes company went into
receivership and SOCaju went
bankrupt; Caju de Moambique was forced to assume management of
both.
Relations between Mozambiques FRELIMO government and the West
had been uneasy
ever since independence, but they worsened after Mozambique and
the USSR signed a friendship
treaty in 1977. This treaty did Mozambique little good
economically, however; most of the aid
received from Eastern Bloc countries and Cuba was in the form of
advisors and skilled personnel
such as medical doctors. But this alliance served to confirm the
Wests fears, and the US and its
allies . . . began to look on Mozambique as another domino that
had fallen to communism.
(Newitt, 2002:206). In the 1980s the Cold War intensified under
the Reagan administration,
(Hanlon 1996) and South Africa, already angered by open FRELIMO
support for the African
National Congress, began destablisation attacks on Mozambique
(Newitt 1995:561-562).
In 1981, Anglo-American pulled out of Mozambique, and Caju de
Moambique took over
management of the Mocita factory (McMillan et al. 2002:55).
In 1982, Mozambiques civil war began in earnest, as RENAMO
rebels, with US and
South African backing, began a 10-year-long struggle against the
FRELIMO government, which
was being aided by Soviet military advisors and arms. The war
was an especially brutal one,
with horrific incidents of systematically orchestrated terror
(Newitt 2002:185), resulting in one
million deaths out of a total population of 15 million (Hanlon
1996).
The civil war, which lasted until 1992, virtually destroyed the
Mozambican economy, and
this was particularly evident in the cashew industry. Hundreds
of thousands of peasant farmers,
many of them cashew growers, were forced to abandon their farms
and seek shelter in refugee
camps in neighboring countries. Much of the cashew crop was not
harvested, leaving factories
with no nuts to process; new trees were not planted to replace
those that died; and a fungal
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Troutman / MB765 Research Paper: Cashews and Conditionality /
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infection, Oidium anacardii, spread to cashew trees nationwide,
greatly reducing yields from the
remaining trees.
By the mid-1980s, finding itself in need of urgent financial
assistance, Mozambique
began a turn to the west, and in 1984 the FRELIMO government
agreed to the conditions
necessary to join the IMF and World Bank. In 1987, in an attempt
to curry the favor of the US,
who was seen as having the power to reign in the RENAMO rebels
via their South African
support network, as well as to influence IMF and World Bank
decisions, the Mozambican
government began limited structural adjustment with its Programa
de Reabilitao Econmica
(Economic Rehabilitation Program), which included devaluing the
currency, liberalizing markets,
and curbing government spending and tightening the money
(credit) supply (Hanlon 1996).
Among other steps taken, the government-established producer
price for cashews was increased
from 10 Mt /kg to 105 Mt/kg, which represented an effective
decrease in the level of subsidy to
the processing industry.
In 1989, the Mozambican government initiated the process of
privatizing all state-owned
enterprises, and in 1990, Mozambique accepted full-blown
stabilization and adjustment packages
from the IMF and World Bank. By 1990, Mozambique was the biggest
aid recipient in sub-
Saharan Africa, receiving more than $1 billion a year (Hanlon,
1996). Unfortunately, since
most of this money was in the form of loans, this aid had the
effect of dragging Mozambique
further and further into debt.
Continuing with the structural adjustments required by the IMF,
in the 1991-92 crop year
the export ban on raw cashews was lifted. In its place, a
quantitative restriction (QR) was
established, limiting exports to a maximum of 10,000 metric tons
per annum, with a 60% tax on
the difference between FOB (free on board) price and the factory
gate price. While this tax was
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still sufficiently high to discourage an explosive growth of
exports, the slow collapse of the
cashew processing industry continued, as in 1991 Socaju was sold
to CC-Nacala, and in the
following year, bankruptcy forced Antnio Eanes to be sold to
CC-Nacala as well.
The year 1992 was a critical one for Mozambique: In October, the
FRELIMO government
and RENAMO rebels signed, in Rome, the General Peace Agreement,
which effectively ended
Mozambiques civil war. To stimulate the cashew sector into
recovery, the government lowered
the export tax for the 1992-93 crop year to 30%, while the QR of
10,000 tons continued in effect.
For the 1993-94 crop year, the export tax remained at the same
level, but the QR was loosened:
After 10,000 tons had been exported, licensed exporters could
bid for two additional 5,000-ton
lots (McMillan et al. 2002:6).
III. Cashews and Conditionality
As part of its continuing privatization program, the sell-off of
the state-owned Caju de
Moambique began in 1991, and by 1994 the Mozambican government
had sold all the countrys
cashew processing plants to private investors. Some of the
plants were purchased by foreign
investors, but most were bought by Mozambican firms (McMillan et
al. 2002:7). Among the
foreign investors, Anglo-American re-entered Mozambique and
partnered with the Italian agency
Oltremare to rehabilitate the Mocita processing factory.
The new or reorganized processing companies sought protection
for their industry from
the Mozambican government while they modernized factories and
renewed the planted base of
trees. The government responded by introducing a graduated
export tax equivalent to about 30 -
32% of FOB export value. The tax was not intended to be
permanent, but was set to diminish
progressively over a period of years. The Mozambican government
did not forget the needs of
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the growers: It raised the government-mandated minimum producer
price from 700mt/kg to
1,500mt/kg, and also removed quantitative restrictions on export
of raw nuts.
But the World Bank, with its extremist view of free trade, was
not satisfied. In 1994 it
commissioned a study by Hilmar Hilmarsson, which was released in
mid-1995. McMillan et al
(2002:5-6) explain:
Based on the comparison with other countries and the technology
employed . . . [Hilmarssons report] concluded that the Mozambican
processing industry, asstructured in 1994, was unviable. . . . It
assumed that liberalization would increasethe producer share of the
FOB price to 5070%, and increase cashew production,export value,
and farmers income. . . . While the report outlined several
policiesfor improving cashew production and increasing producers
income, the WorldBank focused on eliminating the export tax on raw
cashews.
In short, the World Bank saw the export tax as the governments
subsidizing an
inefficient industry at the expense of poor peasant growers. So
in 1995 World Bank required
Mozambique to liberalize cashew marketing and exporting in order
to satisfy base case lending
conditions to receive $400 million in pending aid (McMillan et
al. 2002:5).
The government resisted, noting that when it had privatized the
processing factories it had
promised investors the processing industry would be protected
for several years while it
modernized, lest the recovering enterprises be unable to defend
themselves from competition
especially from India. Entrepreneurs, most of them Mozambicans,
who had purchased the
processing factories were outraged, especially since the World
Bank had actually carried out the
study before some of the factories were privatized, and without
revealing this to potential
investors (Hanlon 2000). Another negative aspect the Mozambican
cashew processors
highlighted was the danger of Mozambiques whole cashew
production sector becoming
dependent on India, which was virtually a monopsony buyer
(McMillan et al. 2002:2). But India
had a state policy of expanding its own cashew orchards so as to
eliminate the importation of raw
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nuts. When that happened, asked processors, Who will buy
Mozambican nuts then if the
factories are already closed? (Hanlon 2000). The new factory
owners threatened to default on
their loans and simply turn the factories back to the
government. Since the government had
received only the first instalment of $850 thousand on the loans
(McMillan et al. 2002:7), it was
extremely vulnerable to this threat.
But the pressure the World Bank brought to bear on the
Mozambican government was of
the highest order. It made dropping the tax on the export of raw
cashews a necessary condition
for certifying Mozambique for further IMF loans. Commenting
about this, the Roman Catholic
Bishop of the northern city of Nampula, where cashew growing and
processing was a major
source of income for thousands, stated:
Mozambique is threatened politically, economically and
culturally. The mainthreat is the World Bank and IMF, who represent
the rich countries the G7. . . .The international community is
creating a new type of colonialism; we have gonefrom one
colonialism to a much stronger one economic colonialism. At least
theold colonialism had a face; this one does not (Hanlon 1996).
The cash-strapped Mozambican government had no choice but to
yield to the World
Banks demands. In 1995 the trade in raw cashews was liberalized:
In the 1995-96 crop year, the
export tax was set at 20%. For the 1996-97 crop year, the export
tax on raw nuts was reduced to
14%. The lower tax rates encouraged the proliferation of both
formal (i.e. licensed) and informal
(unlicensed) traders, who bought cashews from peasant growers in
their villages and then resold
them to exporterswho shipped them to India!
The effects of the liberalization policy took some time to
manifest themselves fully. The
environment for cashew producers was confused, as some factories
closed in 1996-97, while at
least one company, INVAPE, started up its operation only in
1997. During 199798, the tax on
the export of raw cashews remained at 14%, but the rate was too
low to prevent further decline in
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the processing industry. Hobbled by debt incurred during their
remodeling, unable to obtain
credit for operations (due to the IMFs insistence on tight
credit policies inside Mozambique),
and above all, because they could not compete with Indias
rapacious appetite for raw cashews,
Mozambiques cashew processors folded one by one. In1998, joint
venture KMC (Korea-
Mozambique Cashews), established just three years before, was
forced to close. Long-time
processing firm Procaju closed its plants in Inhambane and
Manjacaze.1
In 1997 World Bank president James Wolfensohn (who had only
become World Bank
president in 1995 , and thus was not responsible for the Banks
previous hard line in
Mozambique) made a visit to Mozambique, during which he
publically declared the World
Bank's commitment to a domestic cashew processing industry. In
the face of growing evidence
that World Bank policy was having disastrous consequences for
the cashew industry, while not,
in fact, helping the peasant growers, the World Bank
commissioned an independent study of
cashew processing sector by Deloitte and Touch. Deloitte and
Touchs report came out in favor
of protecting Mozambiques cashew processing industry for some
time to come (McMillan et al.
2002:7). 2
Deloitte and Touch demonstrated that Hilmarssons original report
on Mozambiques
cashew sector suffered from serious flaws. It was based on the
1993 harvest, which had been
poor, and on industry performance less than two years after the
civil war ended, so the data used
in its analysis was not a fair representation of the industry.
Projections of the percentage of FOB
price the growers would receive, and hence the amount they would
benefit, had been grossly
unrealistic. In actual fact, on average each grower family
received only about $5.30 more per year
(McMillan et al. 2002:2), an insignificant amount even in the
poorest country in the world!
Instead, most of the benefits were absorbed by traders (licensed
and unlicensed) who bought
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from the peasant farmers at prices little higher than before,
and then sold to export companies,
thus enriching themselves, not the growers (McMillan et al.
2002:2).
And besides these and other factors internal to Mozambique, the
Indian government
subsidized its own cashew industry (Hanlon 2000), which made the
export trade in cashews
anything but free. Hanlon (2001b) notes, The World Bank and IMF
had forced Mozambique
to allow the free export of unprocessed nuts if India was
prepared to pay a higher price than local
industry. As predicted, once the factories in Mozambique closed,
the Indian price plummeted to
less than half the earlier price. In effect, India was using it
monopsony position to control the
world price of cashews to its own advantage, to the detriment of
Mozambiques cashew industry.
However, despite Wolfensohns assurances, no change in World Bank
policy resulted.
By 1999, 8,500 of the former 10,000 cashew processing workers
had lost their jobs, and only one
large cashew processing factory was still open, employing less
than 1,000 workers (Hanlon
2000). Finally, in September, 1999 under pressure from trade
unions, and factory owners, the
Assembly of the Republic (Mozambiques parliament) approved a law
calling for export tax
between 18-22% for next five years. The export tax was initially
set at 18% (Hanlon 2000).
The year 2000 saw some positive signs. The former KMC, now
renamed Socaju,
resumed its operations. And in December Mozambique finally won a
major concession from the
World Bank/IMF. In exchange for the governments allowing some of
the least efficient
processing factories to close, the IMF Executive Board agreed to
allow Mozambique to protect
its cashew industry. The protection was in the form of an 18%
tax on exports of raw cashews,
as well as guaranteeing national processors the right of first
refusal on the crop (Hanlon 2001a).
Having won this concession, in January, 2001 the Mozambican
government felt
sufficiently emboldened to issue an indefinite-term ban on all
raw cashew nut exports, pending
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page 12
investigation of charges by the Customs service that exporters
were guilty of underinvoicing
(stating a lower price than actually received) their sales by as
much as fifty percent of their actual
market value (AIM Reports no. 200). Unfortunately, the IMF was
furious, and forced the
Mozambican government to lift the ban again in two months time
(Hanlon 2001b).
From 2002 through 2004, the only movement in Mozambiques cashew
processing
industry was the opening of several small processing factories,
such as one opened in May, 2002,
in the town of Namige, in Nampula province, with support from
TechnoServe, a Norwalk,
Connecticut-based NGO (TechnoServe News Center 2002). By April
2004, TechnoServe had
helped to establish and was assisting seven
small-to-medium-scale cashew processing plants in
Nampula Province, with a total projected annual processing
capacity of 8750 tons of raw nuts to
be purchased from about 42,000 smallholders, and employing
approximately 1100 workers.
All these processing plants extract the cashew kernels by hand,
rather than by machine.
In 2005, on a positive note, the Mozambique News Agency reports
the cashew nut
harvest from the 2004-05 growing season was the best in a
quarter of a century. The National
Cashew Institute (INCAJU) reported total production of 102,000
tons. The planting of new trees
in recent years and the spraying of older tress to treat fungal
infections contributed to the
excellent harvest. Sadly, 60% of this, approx. 60,000 tons, was
still exported raw to India. Only
14,310 tons were sold to the small processing plants in
Mozambique, yielding approximately
3,000 tons of processed nuts. Exported to the US, Europe and the
Middle East, this produced
estimated earnings of only $11 million, or about $3,600 per ton
(AIM Reports no. 304).3
Mozambiques cashew processing sector currently consists of 22
small plants, mostly in
the North of the country, employing between 2,000-3,000 workers.
All plants process cashews by
hand. At most, these could process about 24,000 tons per year if
that many nuts were made
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page 13
available to them (instead of being exported). As for the large
processing plants, AIM Reports
(no. 304) states bitterly, None of the large mechanised
factories show any sign of re-opening.
IV. Implications for Christian Mission
The implications for Christian mission of the World Banks
scandalous handling of the
Mozambique cashew industry are numerous, especially as this case
is illustrative of the way
Western governments and institutions typically behave in the
world today.
The most obvious implication for Christian mission arises from
the increase of poverty
around the world, as rich nations continue to enrich themselves
at the expense of poorer nations.
When government policies or the decisions of international
financial institutions cause an
increase in poverty and suffering, the Westernand especially the
Americanchurch has a
responsibility, firstly, to send aid to those who are suffering,
in whatever form the local churches
and/or aid agencies operating in the country are best able to
receive and distribute it.
By and large, Christians in the US are generous to give to those
suffering due to disasters
such as earthquakes or drought. But many of us are essentially
oblivious to the suffering caused
by the economic and foreign policies of our own government
and/or the IMF and World Bank.
Christians in the US must educate themselves regarding the
policies of our own government and
the international institutions we support, and the consequences
those policies have for the
security and livelihood of the people and countries in whose
affairs our government so often
meddles. And then we must seek to influence our nations policies
through every means at our
disposal, whether letters, email, phone calls, visits,
demonstrations, finally most importantly by
voting for legislator and presidents who will support policies
which build up other countries
instead of tearing them down.
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But it is not only Christians living in the US who have the
responsibility to educate
themselves. My wife and I were in Mozambique from 1992 through
2003, precisely the years
when the World Bank was wrecking the cashew industry. I remember
hearing about some
factories closing, and thinking, How tragic! Thats not right!
Even though I would express
disgust toward the IMF and World Bank, I actually did nothing to
inform myself about the
situation. My opinions were not backed up by any actual
knowledge of the situation, even
though much was being written about it in the local press. I
simply followed the standard line of
most conservative evangelical missionaries everywhere that, Its
not our job (or place) to get
involved in local politics.4
Neither I nor the missionaries I worked with in the north of the
country did anything
specific to address the suffering of those who lost their jobs.
Neither did we encourage the
pastors and churches under our supervision to seek out and
ministery to those in need of help.
So, we missed a wonderful opportunity to show Christs love to
hurting people, and perhaps, to
win some of those unemployed cashews workers to Jesus. In fact,
as I look back on it now, our
missions inactivitymy own inactivitywas a a real, if
unintentional, denial of Christs love!
Returning once again to the consequences of poverty in the
Two-thirds World: I have
seen first-hand how extreme poverty makes it difficult or
impossible for Christians in poor
countries to support their own churches and pastors at even the
most basic level, much less to
build churches or other buildings they need. So, while we work
through political channels to
change government policies that impoverish their nations, on the
church and personal level, we
have a responsibility to support financially our Christian
brothers and sisters in the Two-thirds
World in the ways that will do the most good (and the least
harm).
After 15 years in Lusophone Africa, the number one area in which
I believe we should
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support our Christian brothers and sisters in the Two-thirds
World is in infrastructure. That is,
the US church should partner with local churches and
jurisdictions in poor countries to provide
finances to enable the local people to construct situationally
and culturally appropriate churches,5
parsonages, schools, clinics, workshops, etc. But these finances
would have to be provided in
such as way as to preserve the dignity of the recipients, and so
as to get them involved in their
own infrastructure development. Double or triple matching funds
would a possibility.
Secondly, we can support the education of Christians, both lay
persons and clergy,
through donating funds for bursaries and scholarships for study
at all levels, from elementary
school to graduate studies. Again, care would need to be taken
to involve the students in their
own support, for instance through work-study programs financed
by US Christians.
Another implication of the behavior of the World Bank in
Mozambique and elsewhere for
Christian mission and witness is in the area of the
relationships of missionaries and their sending
agencies with the churches they serve. Western churches and
mission agencies have had a neo-
colonialist or paternalistic attitude in their handling of money
and leadership decisions. We
frequently are willing to give financial assistance only on the
condition that we determine for the
recipients how they must spend it. Or, we are willing to send
missionaries on the condition that
the missionaries maintain control over the projects they work
on.
Just as the World Banks used conditionality to enforce its will
on Mozambique in its
handling of raw cashew exports, thus undermining its national
sovereignty; so I have personally
observed, and even been the agent of, our US-financed missions
threatening to pull our funding
if the missions wishes were not carried out, thus undermining
the sovereignty of the church and
district leaders to minister according as they believed the Holy
Spirit was leading them. And just
as the World Bank was able to gain compliance because Mozambique
desperately needed the
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money, so our districts toe the mission line (usually!) because
they feel they need our money to
minister to their own people.
All of this behavior brings up another implication of the misuse
of conditionality, whether
by the World Bank, the IMF and the US government, or by US
missions and missionaries: When
we abuse nations and their people by enslaving them with debt,
we provide more grist for the
mill of anti-American and anti-Western sentiment. Thus we play
right into the hands of radicals
and even terrorists who can, quite rightly, say, See how the
West helps? They are evil! They
only want to exploit us. We must destroy them! Or, in the case
of US or Western missions and
missionaries, our use of conditionality to ensure that the
church is run according to our standards
and cultural preferences, plays into the hand both of those who
cry, Missionary, go home! Or,
of those who cry, See how Christianity is? They only want to
control you, just as their country
wants to control our country. Christianity is a Western,
colonial religion! Embrace Islam
instead. Islam is the brown-skinned mans religion!
One final implication of the Mozambique cashew nut case for
Christian mission, which I
mention briefly, regards American Christians patterns of
consumption. As we inform ourselves
about the policies of our government, we should also inform
ourselves about the behavior of US
and multi-national corporations and their abuse of the poor. In
light of what we learn, we should
consider altering our consumption habits, to support fairness
and justice by buying fair trade
products and investing in companies which observe just and fair
business practices.
Further, since most of us American Christians are wealthy by
world standards, we could
consider a simpler lifestyle, spending less on ourselves so we
have more to give for the needs of
others. The price of one restaurant meal per month not eaten
would pay to sponsor two or even
three children through World Vision, FHI, or Nazarene
Compassionate Ministries.6
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Conclusion
To conclude this paper, I return to the actual situation under
study. The Mozambique
cashew nut case is without a doubt one of the most disgraceful
incidents in the history of the
World Bank. Joseph Hanlon in his 2000 article, Power Without
Responsibility: the World Bank
and Mozambican Cashew Nuts, exposes the heart of the matter:
The issue of free export or not is, in many ways, a side-show
imposed onMozambique by the World Bank. Mozambique has never been
able to have apublic debate and set its own cashew policy. The
issue is extremely complex andneeds extensive discussion. But the
1995 change in policy was imposed in adictatorial fashion by a
single person, . . . [the] World Bank country operationsdirector
for Mozambique. There was no public debate. There was never
aparliamentary hearing which tried to balance the interests of
industry, workers,and peasant growers (indeed, the peasant voice
has not been heard at all in thediscussion, so far). The World Bank
never defended [its] policy to parliament orthe public, and simply
imposed it. Once the policy had been imposed by theBank, the IMF
joined in again without discussion. . . .
[I]t appears that the World Bank violates all the guidelines for
goodgovernance that it tries to impose on developing countries. The
result is anagency with overwhelming power, but whose decisions
cannot be challenged and which takes no responsibility for its
mistakes.
Stiglitz (2003:247) recognizes the blatant injustice of
conditionality: Countries are
effectively told that if they dont follow certain conditions,
the capital markets or the IMF will
refuse to lend them money. They are basically forced to give up
part of their sovereignty . . .
But, he insists (247-248):
[C]ountries do have a choice, and among those choices is the
extent to which theywish to subject themselves to international
capital markets. . . . Becausealternative policies affect different
groups differently, it is the role of the politicalprocessnot
international bureaucratsto sort out the choices. Even if
growthwere adversely affected, it is a cost many developing
countries may be willing topay to achieve a more democratic and
equitable society.
The question of the extent to which Mozambique, in the midst of
the suffering caused by
a decade of war and years of natural disaster, could have chosen
to refuse the World Banks
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page 18
policy is one which we might debate forever. Mozambican leaders
did what they felt they had to
do, but the cost was very high indeed. Whatever else we may
learn from the World Banks
disastrous mishandling of Mozambiques cashew industry, one thing
is unmistakably clear:
Cashews and conditionality dont mix!
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page 19
Appendix A: Timeline of Mozambique Cashew Industry since
1950(Adapted from McMillan et al. 2002:55)
Date Event/Policy Change1950 Caju Industrial (now Polycaju)
processing factory established in Maputo, as first
commercial cashew processing factory in Mozambique1965 Cajuca de
Machava (now Mocaju) established; Anglo American establishes
Mocita
processing factory in Xai-Xai; Procaju-Manjacaze and Inhambane
processingfactories established
1969 Antonio Eanes processing factory (now CC-Nacala-Angoche
facility) established;Socaju processing factory (now CC-Nacala
-Nacala facility) established
1971 Cajuca de Angoche (now Angocaju), CC-Monapo processing
factories established1973 Inducaju processing factory
established1975 Mozambique gains independence from Portugal1975
Portuguese owners of Cajuca de Angoche, Cajuca de Machava,
Polycaju, Procaju
Inhambane and Manjacaze abandon processing factories1975 FRELIMO
Government intervenes in Cajuca de Angoche, Cajuca de Machava,
Polycaju, Procaju Inhambane and Manjacaze1978 Raw cashew exports
banned1979 Government creates Caju de Moambique, a state-owned
holding company, and
incorporates Cajuca de Angoche, Cajuca de Machava, Polycaju,
Procaju Inhambane,Manjacaze into Caju de Moambique
1979* Antonio Eanes factory in receivership; Caju de Moambique
assumes management1979* Socaju factory goes bankrupt; Caju de
Moambique assumes management1981 Anglo-American pulls out of
Mozambique1981 Mocita enters voluntary receivership and Caju de
Moambique takes over daily
management1982 Civil war in Mozambique begins1984 Mozambique
joins IMF and World Bank1987 Structural adjustment begins with the
Programa de Reabilitao Econmica (PRE)1987/88 Government-established
producer price increases from 10mt/kg to 105mt/kg1989 Program
begins to privatize all SOEs (State Owned Enterprises)1991/92
Export ban on raw cashews lifted1991/92 QR (Quantitative
Restriction) of 10,000 tons export of raw cashews and tax of
60%
on difference between FOB and factory gate price1991 Bankruptcy
court sells Socaju to CC-Nacala.1992 Bankruptcy court sells Antnio
Eanes to CC-Nacala1992 Civil war ends with the Acordo de Roma (The
Rome Accord)1992/93 Export tax (on difference between export FOB
and factory gate price) lowered to
30%; QR of 10,000 tons maintained1993/94 Export tax maintained
at 30%; QR loosened: Initial QR maintained at 10,000 ton, but
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Troutman / MB765 Research Paper: Cashews and Conditionality /
page 20
two additional 5,000-ton lots are auctioned off to registered
exporters1994 World Bank commisions study of cashew industry by
Hilmar Hilmarsson1994 Cajeba processing factory established1994
Government sells Cajuca de Machava (Mocaju) to HAS-NUR Group1994
Anglo-American re-enters Mozmabique and partners with Oltremare to
rehabilitate
Mocita processing factory1995 World Bank requires Mozambique to
liberalize cashew marketing and exporting in
order to satisfy base case lending condition1995 Government
enters formal agreement with World Bank to reduce export
taxes1994/95 Government-established minimum producer price
increased from 700mt/kg to
1,500mt/kg; QR on export of raw nuts removed; Government
introduces graduatedexport tax equivalent to about 30 - 32% of FOB
export value
1995 Adil-IC processing factory established1995 Government sells
Polycaju and Procaju factories at Inhambane and Manjacaze1995
KoreaMozambique Cashew (KMC) begins operations1995/96 Export tax
(on FOB value) of raw nuts set at 20%1995 Trade in raw cashews
liberalized, allowing new traders, exporters to become involved1996
Cabo Caju processing factory established1996/97 Export tax reduced
to 14%1997 CC-Nacala ceases operations1997 INVAPE processing
factory begins operation1997 Wolfensohn visits Mozambique,
announces World Bank's commitment to a domestic
cashew processing industry1997 World Bank commissions
independent study of cashew processing sector by Deloitte
and Touch1997/98 Export tax remains at 14%1998 KMC ceases
operations; Procaju/Inhambane and Manjacaze cease operations1998
Madecaju processing factory begins operation1998/99 Abt Associates
perform study on cashew processing industry for the Mozambican
Ministry of Industry, Trade, and Touris1999 Sept. 30, Parliament
approves law calling for export tax of 18-22% for next five
years1999 Export tax raised to 18%2000 KMC renamed Socaju, resumes
operations2001 January, 2001 Government temporarily bans raw nut
export, pending investigation of
underinvoicing (stating a lower price than actually received) by
exporters2001 Mocita factory closes2001 World Bank Consultant
Jaikishan Desai completes study on cashew production and
marketing
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REFERENCES CITED
2002 Cashew. The New Encyclopdia Britannica. 15th ed. Vol. 2.
Chicago:Encyclopdia Britannica Inc.
Hanlon, Joseph1996 Strangling Mozambique: International Monetary
Fund stabilization in the
worlds poorest country. Multinational Monitor [electronic
edition]. Vol. 7,issues 7-8, July/August, 1996. Washington DC:
Essential Information, Inc.Accessed Dec. 16, 2005 at
http://multinationalmonitor.org/hyper/mm0796.06.html.
2000 Power Without Responsibility: the World Bank and Mozambican
CashewNuts. Accessed Dec. 8, 2005 at
http://www.jubileeresearch.org/analysis/reports/roape100400.htm
2001a Mozambique Wins Long Battles over Cashew Nuts and Sugar.
AfricaAction, Africa Policy E-Journal. 010219 (Feb. 19, 2001).
Accessed Dec. 14,2005 at
http://www.africaaction.org/docs01/cash0101.htm.
2001b Mozambique Forced to Reverse Cashew Export Ban While World
BankDefends Its Cashew Policy. Africa Action, Africa Policy
E-Journal. 010405(April 5, 2001). Accessed Dec. 14, 2005 at
http://www.africaaction.org/docs01 /wb0104.htm.
McMillan, Margaret, Dani Rodrik and Karen Horn Welch2002 When
Economic Reform Goes Wrong: Cashews in Mozambique.
John F. Kennedy School of Government, Harvard University,
FacultyResearch Working Papers Series RPW02-028. Accessed Dec. 13,
2005
athttp://ksgnotes1.harvard.edu/research/wpaper.nsf/rwp/RWP02-028/$File/rwp02_028_rodrik.pdf
Mozambique News Agency2001 Raw cashew exports banned. AIM
Reports. No. 200, Feb. 7. Accessed
Dec. 15, 2001 at
http://www.poptel.org.uk/mozambique-news/newsletter/aim200.html#story9.
Newitt, Malyn1995 A History of Mozambique. Bloomington, Indiana:
Indiana University Press.
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2002 Mozambique. A History of Postcolonial Lusophone Africa.
Bloomington,Indiana: Indiana University Press.
TechnoServe2002 New Cashew Plant May Signal Rebirth ofCashew
Processing Industry in
Mozambique. TechnoServe News Center. May 17, 2002. Accessed
Dec.16, 2005 at
http://www.technoserve.org/news/MZcashew0502.htm.
Stiglitz, Joseph2003 Globalization and Its Discontents. New
York: W. W. Norton & Co.
Vail, Leroy and Landeg White1980 Capitalism and Colonialism in
Mozambique: A Study of Quelimane District.
Minneapolis: University of Minnesota Press.
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page 23
1. Almost unbelievably, one new processing company, Madecaju,
still started operations in 1998!
2. Since then, two additional studies have been undertaken: In
1999 the Mozambican Ministry ofIndustry, Trade and Tourism
commissioned Abt Associates to study the cashew processingindustry.
And in 2001 Jaikishan Desai, a consultant working for the World
Bank, completed ananalysis of cashew farmers. However, I was unable
to find any reference to these studies actualfindings, which leads
me to mention them only here in the notes.
3. The news article gave no indication whether this was gross or
net earnings.
4. Working for the World Mission Dept. of the Church of the
Nazarene, we signed a contract stating,among other things, that we
would refrain from involvement in local politics. This sort of
contractmade any involvement on our part problematic. But we have
never protested this clause nor tried toget it changed. This
reality has given me pause as I think about how one can be a
Nazarenemissionary and a social-conscious witness to Christ and
advocate of Gods justice in the world aspart of our working to make
His Kingdom come, and His will be done in earth as it is in
heaven.
5. I do not advocate simply giving a local church enough money
to construct a building totallywithout their own involvement. The
partnership pattern is the only viable one over the long term.
6. In fact, this is one area where my wife and I have made a
decision. We still eat out some, butstarting in November we began
to sponsor a child through NCM.
NOTES
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