Cashew Smuggling and the Funding Gap
For arable countries in sub-Saharan Africa, the money made on agricultural exports is often invaluable. It can strengthen a government’s budget, benefit farmers who harvest the crops, and improve the overall the standard of living. When this source of money is removed, however, development can slow down for lack of funds.
In Cote d’Ivoire, the increasing importance of cashew exports is undermined by rampant smuggling. A United Nations panel estimated that in 2011, 150,000 tons of cashews were smuggled from Côte d’Ivoire, a trend that is unlikely to change unless foreign purchasers of the nuts crack down on smuggling practices.
Why do Ivorian cashew farmers smuggle cashews? Farmers are often unable to find desirable export prices on raw, unprocessed cashews, and instead sell to neighboring Ghana. Cashews are usually smuggled alongside cocoa, cotton, and coffee on an elaborate smuggling route through the northern and southern borders.
The export loss is staggering. The U.N. estimated that in 2011 alone Côte d’Ivoire lost US $130 million from its national economy and $3 million in fiscal revenue. The U.N. Panel asserted that the money gained from smuggling practices may be used by groups to purchase weaponry illegally, and stated that it was aware that the smuggling of cocoa to Ghana was in a number of cases escorted directly by Ivorian military forces.
Economists pinpoint the reason for low export prices as the low processing capacity for the six main nut processing factories. Less than one percent of the country’s cashews are processed, meaning shelled and sometimes roasted, in-country. Raw cashews net a lower market price. When farmers are unable to legally export their crop for the price they want, they turn to buyers in Ghana. Ultimately, this practice widens the funding gap for Ivorian infrastructure and development projects, growing obstacles to a more stable economy. Ultimately, for this country plagued with political instability and an unstable economy, the revenue created by legal cashew exports could help the country address its biggest challenges.
– Naomi Doraisamy
Source: African Development Bank Group, IRIN News, IRIN News
Photo: Jerry’s Nut House