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Violent protests over food price increases cost Mozambique economy $3M, government says

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September 1: People walk past barricades of burning tires in Maputo, Mozambique after police opened fire on stone-throwing crowds who were protesting rising prices in this impoverished country. (AP)

MAPUTO, Mozambique (AP) — Mozambique's economy has lost more than $3 million because of deadly riots over the rising prices of food and other goods, the government said Friday, as state media reported new protests in two other towns.

Those losses include damaged property and lost production, state radio reported citing a government report. Computers, chairs and other equipment were looted from bank branches during riots, and loads of corn and cement were taken from railway cars.

Mozambicans have seen the price of a loaf of bread rise 25 percent in the past year — and fuel and water costs also have gone up. The increases have had a dramatic effect in the southeastern African nation where more than half the population lives in poverty.

Among those who have been hardest hit by the violence are the thousands of hawkers who make their living on the streets of the capital, said Antonio Fernando, the minister of trade and industry. Mozambique can only solve its economic woes if people are working, he said.

"These kinds of things can drive away foreign investors," Fernando said of the deadly riots.

On Wednesday, protesters threw stones, burned tires and looted shops, and police opened fire on them. At least seven people were killed and scores wounded. Traffic was returning to normal Friday, and it appeared few people were responding to calls for more protests.

State radio and TV reported police scattered protesters in two provincial towns Friday. There were no reports of injuries.

The Mozambique Workers Organization, the country's largest trade union federation, has called for workers to be allowed to get back to their factories and offices. In a statement Friday, the federation condemned the vandalism and violence that accompanied the strike, and said dialogue was the only way to resolve concerns about high prices.

The government, which sets the price of bread, fuel and water has said that it will remain firm on the higher prices. It has said keeping food prices low is difficult because so much of the country's food has to be imported: Mozambique grows only 30 percent of the wheat it needs.

Civil war consumed Mozambique for 17 years after independence from Portugal in 1975. That devastation has slowed progress in agricultural development, said Franck Black, an expert on Mozambique with the African Development Bank.

From 1994 to 2006, Mozambique saw annual GDP growth of about 8 percent, fueled largely by foreign interest in its raw and hydroelectric resources and growing confidence war would not return. Little of the new wealth, though, has trickled down to the impoverished majority.

Black said he was confident the government wanted the wealth spread more equitably, and said its macroeconomic policies were strong.

"The trickle down does take some time," he said.

Telmo Fernandes, managing partner of Portuguese consulting firm who was accompanying a delegation of eight Portuguese companies visiting Mozambique, told reporters in Maputo on Friday that entrepreneurs from his country saw investment here as a long-term proposition, while this week's disturbances "are temporary."

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Associated Press Writer Donna Bryson in Johannesburg contributed to this report.