Maputo, Mozambique — Mozambican Planning and Finance Minister Luisa Diogo Thursday held out little hope that any of Mozambique's large scale cashew processing factories could survive the effects of economic liberalisation in the cashew industry.

Speaking to reporters on the government's plans for 2001, she argued that the cashew industry needed to modernise its factories to cut down on cost of production.

The most modern of the large factories, Mocita, in the southern city of Xai-Xai, closed its doors earlier this year.

Mocita was the last of the major factories. The others had succumbed much earlier to the withering impact of the World Bank's dictates on liberalisation of the cashew nut trade.

The practical result of liberalisation has been to encourage the export of raw nuts to India, where they can be hand shelled, often by child labour.

Starved of their raw material, the Mozambican factories have closed down, throwing thousands of workers into the unemployment line.

Diogo did not envisage the large factories reopening. "The situation has already happened," she said.

The future lay in "reconversion" to other types of processing units, while the money from the 18 percent surcharge levied on raw nut exports should be ploughed into planting more trees to rejuvenate the cashew orchard.

When it was pointed out that small, supposedly more efficient cashew plants were also closing along with the large ones, the minister could only answer: "We have to continue to work. We have to believe in ourselves, and that Mozambique has a comparative advantage in cashew production."