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The dynamics of informal cross-border trade between Cabo Delgado and Mtwara

The conflict in Cabo Delgado has shifted traditional trade arrangements either side of the Ruvuma river. Local merchants in Cabo Delgado now buy mostly manufactured goods in Tanzania, while food is bought domestically, mostly in Pemba

From Cabo Ligado Monthly: October 2021, published 15 November 2021

In May 2010, the then-President of Mozambique, Armando Guebuza, and the then-President of Tanzania, Jakaya Kikwete, inaugurated the Unity Bridge over the Ruvuma River connecting the two countries. The inauguration of the bridge symbolized the union of two countries that worked hand in hand in Mozambique’s liberation struggle. Yet promised development around the bridge has not come to fruition. On the Mozambican side, the connecting road to Mueda remains unsurfaced, while on the Tanzanian side, the upgraded road and new rail links to Mtwara envisaged in the Mtwara Development Corridor plans have not been implemented. Despite not becoming a massive trade hub, today the bridge represents an important driver of commercial, social, and cultural relations between the people of Cabo Delgado province and Mtwara region.

The Unity Bridge connects the Cabo Delgado province in Mozambique and the Mtwara region in Tanzania through the border posts of Negomano and Mtambaswala, respectively. It is currently the only crossing point open for commercial exchange between the people of both countries. The only other official border crossing is 200km to the east, the Kilambo/Namoto crossing that links Mtwara town to Palma district by ferry boat. Since the insurgent attack on Palma in March 2021 forced the closing of the Kilambo/Namoto border post in April, more Ruvuma-basin trade has been routed through the Negomano border post. Traders who mostly hail from the districts of Mueda, Montepuez, and Pemba travel across the Unity Bridge to Tanzania to buy products such as clothing, electronics, and cosmetics, which are then sold on the Mozambican side.

Some traders who cross at the Negomano border told Cabo Ligado that Tanzania remains a good destination for shopping, because of the affordable prices and their close relationships with Tanzanian suppliers. They also said that the treatment of Tanzanian authorities towards Mozambican traders remains positive.

Traders from Palma, who before the insurgency often traveled to Mtwara town to trade fish and other goods, have found it more difficult to access Mtwara since last April, when the Namoto border was closed. Despite the closure, however, residents of Quionga, northwest of Palma, continue to illegally access Tanzania despite increased efforts by Tanzanian security forces to prevent illegal crossings. Local sources told Cabo Ligado that essentially almost all of the products arriving there come from Tanzania.

Between the two official border posts are a number of unofficial border crossings.  Chikongo, in Tandahimba district, is a well-established crossing point linking Tandahimba with Nangade district by canoe. Kitaya in Nanyamba township to the east is a well-known trading post, serving the Palma district, with numerous unofficial routes across the border in that area.  Tandahimba and Nanyamba have been the sites of all but one of the incidents in Mtwara Region in ACLED’s database that have been attributed to Islamist militia, including the spectacular attack on Kitaya in October 2020. This pattern should be no surprise. Established but informal trading and transport links build networks and relationships that operate out of view of the state. Insurgent operations in these areas may have built on the relationships and knowledge developed on porous borders.

The conflict has shifted traditional trade arrangements in the region. At one time, for example, the formal trade in food staples in Palma relied on Tanzania as its main base of supply. Now, Tanzania has introduced a ban on the entry of its food products into Mozambican territory via the Namoto border due to the conflict in Cabo Delgado. As a result, local merchants in Cabo Delgado buy mostly manufactured goods in Tanzania, while the purchase of food is done domestically, mostly in Pemba.

Since the pro-government coalition’s military successes in northeastern Cabo Delgado from August 2020 onward, the informal trade between Pemba and Palma has begun to pick up again. In October, traders started moving again between Palma and Pemba via Mocimboa da Praia and Mueda. Traders are accompanied by Rwandan escorts on the leg of their journey between Awasse, in Mocimboa da Praia district, and Palma. The cost of transport from Palma to Pemba ranges from 2,000 to 2,500 meticais ($31 to $39) per person, not including cargo. Before the conflict, the cost of transport from Palma to Pemba was 700 meticais ($11). High transport costs will ultimately impact the prices of goods and further increase the cost of living for displaced people returning home.

Another factor that has made the resumption of trade between Pemba and Palma more difficult is the prohibition against using the sea lane off the coast of Mocimboa da Praia and Palma for shipping. Traders who have tried to move products from Pemba to Palma by boat have been intercepted by naval forces, and sometimes suspected of supplying the insurgents. Fishermen who have managed to return to Palma have gone back to their fishing activities. The re-establishment of electric power has facilitated the refrigeration of the fish, and the opening of the Palma-Mueda road via Mocimboa da Praia has allowed them to travel to Mueda where they sell the fish at a profit.

In Cabo Delgado, the traders are adapting their strategies according to the dynamics imposed by the authorities in Mozambique and Tanzania, as well as by the ongoing conflict in the country itself. Informality is also seen as a strategy for obtaining livelihoods in a context where local youth are mostly excluded from the major economic driver in the province: large natural resource extraction projects. Some traders in Palma have reported to Cabo Ligado that due to lack of integration in the district’s natural gas projects, they have chosen to engage in small businesses such as informal sales, moto-taxis, and other less profitable activities.

The absence of a concrete strategy to integrate youth into the formal economy can make them vulnerable to the insurgency. The Northern Integrated Development Agency (ADIN), a government entity created to promote development and reduce asymmetries in the northern region of the country, offers no clear strategy in its Action Plan regarding informal traders in northern Mozambique and Cabo Delgado in particular. However, it recognizes that the lack of jobs makes young people vulnerable to recruitment networks, and as a solution, it says it will develop job opportunities for youth.

The Cashew Trade: A Case Study

Cashews represent a particularly important segment of both formal and informal trade between Cabo Delgado and Mtwara. That trade has been slowed by the conflict, but hardly halted. As informal trade expands, Mozambique’s and Tanzania’s approach to the cashew trade will shape how cross-border trade networks function going forward.

On both sides of the river, cashew nut is an important cash crop for poor smallholders. Prior to the insurgency, trade, small scale investment, and basic livelihood activities in the Ruvuma corridor straddling Mtwara and Cabo Delgado operated relatively freely. It was common for Tanzanians to lease farmland in Cabo Delgado on a seasonal basis, while for Mozambican producers, Tanzania was an important market for cashews and other goods. As recently as 2019, up to half the cashew nut crop from Nangade district was smuggled to Tanzania. A state-managed marketing system in Tanzania provides a higher price for Cabo Delgado cashews than can be obtained in Mozambique, particularly for more isolated producers in the north.

Yet accessing that system, even in a time of economic crisis in Cabo Delgado, requires utilizing both formal and informal market mechanisms. A Mozambican truck with 15 tons of cashew nuts being stopped at the end of October 2021 in Mtwara’s Nanyumbu District highlighted how resilient cross-border cashew trade has been, even during conflict, and illustrates the difficulties of the trade.

According to Nanyumbu District Commissioner Mariamu Chaurembo, the truck was first sent back to Mozambique, presumably over Unity Bridge, to correct its paperwork, before being allowed to proceed. Chaurembo warned traders to be sure to comply with regulations, and to avoid ‘njia za panya’, or unauthorized routes. Such routes -- or more likely, the use of bribes along established routes -- is presumably how the crop entered Tanzanian without proper paperwork in the first place.

For the 15 ton crop to finally be allowed to pass into the Tanzanian market, it will need to be declared as being of Tanzanian origin in order to enter Tanzania’s Warehouse Receipt System -- part of an auction system managed by the Cashewnut Board of Tanzania and local producer cooperatives. As the nuts are Mozambican, some more paperwork will have to be fudged along the way to ensure that the crop gets sold.

Tanzanian politicians have more than once recommended that the two states actively support and encourage freedom of trade and movement as part of post-conflict reconstruction in Cabo Delgado. Actually doing so however, especially in the cashew sector,  would go against significant vested interests. Free trade along the Ruvuma would negatively affect those benefiting from existing rents on market entry into Tanzania, as well as driving down prices for Tanzanian cashew farmers. On the Mozambican side, the state and private sector both have concerns over the smuggling of cashews, identifying it as a key supply side constraint to domestic cashew processors. Complicating matters further is that significant market actors, such as ETG and METL, buy large quantities of raw cashew nut and operate processors in both countries.

Free trade would likely lead to a decline in cashew smuggling and the informal networks that enable it, but it might be politically untenable to bring about. In many ways, that makes the issue a microcosm for the post-conflict future of cross-border trade. Any efforts to better integrate economies as part of a reconstruction plan may require a re-balancing of infrastructural development towards eastern Cabo Delgado and Mtwara, where natural gas projects are driving economic growth. Ultimately, integration will mean a return to the relatively free movement of people and goods pre-insurgency. With security forces’ priorities now likely to dominate planning on both sides of the border, if reintegration is to be part of the reconstruction, it will require a significant political push.