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By Marina Lopes
MAPUTO, Sept 21 (Reuters) – Mozambique’s cashew industry is
ailing, and the symptoms point to a bad bout of “Dutch disease.”
In a nutshell, this illness strikes an economy when the
discovery of a resource such as oil draws in a flood of dollars,
boosting the local currency but making all other exports
uncompetitive.
The term was coined to explain the decline of manufacturing
in the Netherlands after the discovery of North Sea oil and gas
in the late 1950s.
In Mozambique’s case, an investment boom in the nascent coal
and gas sectors hoisted the metical by a whopping 33
percent against the dollar from September 2010 to the end of
2011. It has since held on to the bulk of those gains.
Foreign direct investment soared to $2.1 billion last year –
when the metical was the top-performing currency against
the dollar – compared with just $7.8 million in 2010, central
bank data showed.
While the government will welcome the money, it has crushed
any cashew comeback and put the livelihood of tens of thousands
of peasant farmers at risk in a country where agriculture still
accounts for a third of gross domestic product.
The tropical southeast African nation and former Portuguese
colony was once the world’s top producer of the coveted nuts,
but – as with most of its economy – the industry was gutted when
civil war erupted after independence in 1975.
Continued…
