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Name: Dan Mocanu

Student number: 2776596


Date: 2 October
Subject: International Politics Writing Assignment
Group: 6

How neo-colonialist practices crushed


Mozambiques cashew industry?

In the second half of the 20th century the majority of the African colonies used their
right to self-determination to become independent states. Following these events, most
African governments have liberalized their trade regimes, developed the policymaking
process and implemented numerous structural reforms. However, African countries are still
locked in debts, poverty, diseases, illiteracy and civil conflicts. There are various ways to
explain this situation. One of them will be developed in this essay by showing that beyond the
euphoria of globalization there are examples of a dark side of our daily reality in which the
practices of neo-colonialism are perpetuated at the expense of underdeveloped countries. New
tactics and institutions substituted or successfully adapted the anachronistic practices of
traditional colonialism. The purpose of this essay is to analyze how neo-colonialism keeps
African economy subordinated to foreign interests through the example of World Banks
crushing pressure put in the 1990s on Mozambiques cashew industry.
In 1975 Mozambique became an independent state after a long Portuguese colonial
rule. At that time, Mozambique was the leading worlds producer of cashew and a big part of
its economy was based on the export of processed cashew kernels. Following independence in
1975, the government decided to stimulate domestic production by banning the export of raw
cashew nuts.1 However, by the end of 1980s a long decline in production associated with a
civil war and the degrading quality of the cashew trees created the need for urgent
investments. In the early 1990s, following the World Banks advice, the government
privatized the state-owned companies.2 In 1994, World Bank commissioned a study of the
cashew industry by a private company which concluded that the only choice for an industrial
revival was economic liberalization.3 The study was incorporated in the Banks official policy
and in the following year, while Mozambiques government negotiated the CAS for having
access to a US$ 400 million loan, World Bank demanded the complete liberalization of the
cashew trade by reducing regressively export tax from 20 per cent to 0 per cent in five years.
The agreement was seen as a fatal blow for the entire cashew sector and was highly opposed
by the civil society, trade unions, and press. However, the Bank used its dictatorial power to
maintain the aforementioned conditions. Soon after that, traders selling raw nuts to India
begun to compete with local processing factories. In three years, 2/3 of the countrys
processing factories closed. Mozambique transformed from an exporter of processed cashews
into an exporter of raw cashews. In 1997 a new study regarding the cashew industry was
commissioned. This time, it concluded that the liberalization policy suggested by the World
Bank created premises for the dismantle of the processing industry and that as a
consequence of that policy private traders benefited at the expense of the farmers. It also
calculated that by selling raw cashew instead of processed nuts the country were

1 McMillan, Margaret Stokes, and Dani Rodrik. When Economic Reform Goes Wrong: Cashews in
Mozambique. Cambridge, MA.: National Bureau of Economic Research, 2002, p. 3.
2 Nyikal, Harold. "Neo-Colonialism In Africa: The Economic Crisis In Africa And The Propagation
Of The Status Quo By The World Bank/IMF And WTO." Lecture, ENG297C: Ethics of Development
in A Global Environment (Poverty &Prejudice), June 2, 2005
3 Hanlon, Joseph. "Power without Responsibility: The World Bank & Mozambican Cashew Nuts." Review of
African Political Economy: 29-45. 6 Hanlon, Joseph. "Mozambique Wins Long Battle over Cashew Nuts &
Sugar." Review of African Political Economy: 111-12.

hypothetically losing $150 for every sold ton. By that time the cashew industry degraded
continuously.
Even though there is no unanimous consent on whether the term post-colonialism or
the neo-Marxist concept of neo-colonialism describes better our contemporary world, this
case shows how the conditions demanded by World Bank finally resulted in the
impoverishment of an underdeveloped African country. Post-colonialism assumes that
historic patterns of economic control and command ended with formal colonial rule. Neocolonialism describes an economically or politically dependent condition implying that the
capitalist exploitation of the underdeveloped countries survived the formal decolonization
process.
The institutions emerged from the establishment of the Bretton Woods System
(International Monetary Fund and World Bank) and the more recently created World Trade
Organization play a crucial role in the institutional architecture of the world economy.
However, analyzing the consequences of their neo-liberal policies in underdeveloped
countries, we can qualify their role as agents of neo-colonialism operating in the interests of
foreign powers. The case of Mozambique collaterally raises the questions of accountability of
international institutions and of the consequences related to their exercise of power without
responsibility. The origin, scope and lack of accountability of these institutions remains a
source of distrust regarding their activity. These agents of the new informal empire are
products of the former colonial powers and their actions fail to produce expected results in the
African countries. What in Western countries produced great results in the postwar years, in
Africa translates in increasing debts and asphyxiating dependency. By the same time, Western
traditional multinational corporations still exploit African natural and human resources.
The alternative view, sprung from the neo-liberalist perspective shared by the
aforementioned multilateral institutions and most Western economies, states that the only
long-term solution for reducing inequalities and promoting sustainable development is to
liberalize markets and let them auto-regulate, became part of the international division of
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