Mozambique: Raising Questions at the Top; Free Market Hurts Small Farmers

Raising questions at the top Nyusi 1 – the high cost of economic liberalisation

“Economic liberalisation and the adoption of the market economy has led some to forget their main mission of defending the interests of the party and the people,” President Filipe Nyusi told a Frelimo meeting on 24 August. They only satisfy personal interests, forgetting the need to defend the people. He was specifically looking back at changes made in the 1990s. (AIM, MediaFax 25 Aug)

In the early 1990s, at the end of Cold War, the IMF, World Bank said they would help Mozambique rebuild after the 1980s proxy war imposed by the US had killed a million Mozambicansand destroyed the economy. But the condition was that Mozambique accept the same “shock therapy” that was being imposed on the countries of the former Soviet Union. Greed and oligarchs were the result, in Mozambique as elsewhere. And Nyusi admitted this was having an impact, creating space for the war in Cabo Delgado.

Nyusi 2 – Free market hurts small farmers

The maize producer is paid $180 per tonne of maize, but the price of maizemeal in Maputo is $900 per tonne, said President Filipe Nyusi at the opening a maize mill in Nampula city on 25 August. (AIM, 26 Aug) The free market means most of the final sale price is profit for millers and traders.

Indeed, $180 per tonne is not enough to pay the costs of production. A tonne of maize needs 100 kg of fertiliser, now more than $100, plus tilling and weeding of the land. Other countries such as Zimbabwe have a floor price for maize which keeps it above production costs and profitable for commercial production. There are no floor prices in Mozambique, so maize and rice have rarely been commercial crops in Mozambique.

Nyusi also opened an vegetable oil factory on 18 August in Cuamba which he said would reduce imports and stimulate agricultural production. (AIM 19 Aug) But 15 years ago we wrote about a factory in Chimoio producing oil from local sunflower seed which had stimulated production. But the factory was put out of business by cheaper imported palm oil. (“Do Bicycles equal development in Mozambique?, by Joseph Hanlon and Teresa Smart, 2008, fn 13, p 171. Available free on http://bit.ly/Hanlon-books but only in Portuguese. Still on sale in English.)

Without government support or protection, will another new factory close in the face of competing imports? This is how the free market works, and it is not enough to build factories for the president to open. Government must intervene in the market. jh

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