Cashews and Nutty Policies in Mozambique

Why does Africa continue to perform poorly, despite two decades of structural reform? Most African governments have liberalized their trade regimes, deregulated their economies, and (by most measures) improved the quality of their policymaking. Yet the results are anemic.

Western economists and aid agencies complain about inadequate implementation and lack of commitment by African governments. But shortcomings in the blueprints of reform play a greater role. Reforms designed without adequate regard to local realities and domestic politics have often produced unintended consequences or backfired.

The case of Mozambican cashews clearly illustrates this. Historically, the cashew sector constituted a big part of Mozambique's economy, providing income to several million individuals. In the 1960s, Mozambique produced half of the world's total. The sector went into long decline thereafter, as a combination of adverse policies and civil war from 1982-1992 brought new tree plantings to a halt.

Following independence in 1975, the government banned the export of raw cashew nuts to stimulate domestic processing. Mozambique became the first African country to process cashews on a large scale. By 1980, the country had 14 processing factories. When the government began to loosen restrictions on raw cashew exports in the late 1980s, workers and employers in these factories took a big hit.