Mozambique’s Cashew Nut Industry SWOT Analysis

Recent developments in the cashew nut industry in Mozambique bear a visible and undeniable testimony of its extraordinary recovery. It has certainly been thanks to the execution of a well-planned market driven strategy, strongly led by private processors and supported by a committed and

well-97 prepared international development organisation. This growth has been attained in a surprisingly short period of time and there is potential for the continuation of this trend looking forward in time. These rapid developments make it worth continuing to study the sector with a view to reaching a clear and accurate understanding on the critical factors that need to be dealt with, in order to revamp the competitiveness of such an important industry in Mozambique, an industry that is a very effective tool of fighting against poverty in the country, especially in the rural areas.

The sense of success in this phenomenal recovery is mixed with feelings of fragility and of the need to keep caring for the success of all these endeavours. Developments in areas such as access to credit and improvement of the quality of the nuts are definitely in need of further work. On the other hand, there is a clear vision in terms of invigorating its industry through marketing and branding. The establishments of AIA in 2004, followed by the creation of Zambique in 2005, are two positive steps that solidify the grounds for further development. In the end, the enforcement of proper regulatory mechanisms for the purpose of protecting and improving the quality of Mozambique’s cashews will result in the possibility of commercialising the product at a higher price. In overall terms, the industry has a strong sense of direction. It is, therefore, under this backdrop that a SWOT analysis is performed.

SWOT is a strategic planning technique applied to assist managers or organisations in the identification of the best ways of dealing with strengths, weaknesses, opportunities, and threats related to business competition or project planning. It is a simple but useful framework for analysing an organisation’s strengths, weaknesses, opportunities, and threats, helping it to build on what it does well, to address what it is needed to deal with risks, and to take the greatest possible advantage of chances for success. It is a vital process that helps a business to evaluate its internal and external environment by testing out its own ideas, identifying areas of business that are performing well, which are of critical importance for business success, and they give the business its competitive advantage.

Identifying these strengths can help managers and decision makers to make sure they prevent losing competitive advantage. What is true for a business is also true for a product, an industry, a company, a sector, and a country. Considering that this thesis is about the Export Competitiveness of Mozambique’s Cashew Nut Industry, an adaptation of the preceding analysis that has been made to suit the needs of evaluating an industry using this same technique, as shown in Table 3.10.

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Table 3. 10: Mozambique's Cashew Nut industry SWOT Analysis

Table 3.10: Mozambique’s Cashew Nut Indus

Sources: Technoserve Database (2020); IAM Report (2005);

Ali Deboua (2007); Author’s adaptation and updating.

STRENGTHS

1. A strong and fast increase in the processing capacity, over a few years;

2. The successful introduction of a private sector-led strategy, despite the fact that additional measures are needed to ensure industry sustainability over the long term;

3. Kernels price on the international market higher than that of in-shell cashew nuts;

4. Most processing plants located in areas of concentrated production, cutting on costs of intermediation between processors and producers, thus reinforcing their links;

5. Adoption of small and medium sized plants which:

5.1. Are manageable without sophisticated managerial skills, which is good for the Mozambican reality;

5.2. Require significantly smaller initial capital;

5.3. Use manual cutting technology that results in a better-quality product;

5.4. Are easily adaptable for expansion;

6. Through their association (AIA), processors have gained scale and embarked on a dynamic collaboration;

7. A strong institutional and legal framework established.

WEAKNESSES

1. The need for a short-term solution to reverse the processing profitability erosion by improving the quality and efficiency of old trees through chemical or otherwise treatment;

2. Limited availability of capital for processors to take advantage of the profitable use of cashew by-products (They don’t extract CNSL and don’t use the shell as fuel);

3. The nature of investment and financing in the country is very shallow;

4. Very poor physical infrastructure in the country, which impacts on the costs of product transfer to the ports;

5. The processing capacity is very limited, which results in insufficient capacity to penetrate high consumption markets (demand of several containers a year, ex: USA);

6. Inefficient public extension, given the loss of expertise over long years of no production;

7. Climate prone to pests and diseases;

8. Limited availability of highly trained and experienced professionals in the industry;

9. Significant levels of bureaucracy, corruption and high operational costs.

OPPORTUNITIES

1. SADC, especially South Africa, offers opportunity for market expansion, with excellent roads and large store chains;

2. As a result of the rapid processing capacity increase, the government is paying attention to the sector, and Zambique was launched in Baltimore with the presence of Mozambique’s Head of State;

3. The industry provides a significant number of jobs and income, especially in rural areas, and local economic development takes place around the plants, with a tremendous social impact in improving rural population’s living standards, and poverty alleviation;

4. Because of the novelty of cashew processing in some areas, best practices that come with it in all areas of production can be more easily incorporated to the industry (quality supervision, technological developments, marketing, etc.)

THREATS

1. The cashew nut industry will become unsustainable or even disappear if new trees are not planted at a massive scale;

2. Given the inadequacy of finance and financial services in the country, processors are severely burdened by debts and face cash flow problems, due to the lack of working capital, resulting in:

2.1. Their production being ultimately less competitive, at least at the level of pricing;

2.2. Volatile commodity markets that heighten the chance of processors withdrawing their investment or closing their processing facilities;

3. Recent history has shown the limited government ability to sustain public support to the cashew industry, which creates some degree of uncertainty among processors;

4. The loan guarantee fund provided by some donors could be terminated at any time, making access to financing more difficult;

5. Private entrepreneurs could find better attractions elsewhere and leave Mozambique with a higher unemployment rate;

6. Increasing consumer standards requirements, severe climate shocks, and terrorist attacks.

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