Dr Claver Nyuki
The Reserve Bank of Zimbabwe (RBZ) and the Tobacco Industry and Marketing Board (TIMB) assured tobacco farmers yesterday that this upcoming tobacco season, they will retain 50% of their sales in foreign currency which will not be liquidated.
In a press statement released yesterday RBZ and TIMB advised that the foreign currency entitlements for the farmers shall be treated as free funds and maybe retained in their nostro accounts for an indefinite period.
Last season, tobacco farmers were entitled to 50% forex from their proceeds which was liquidated to local currency after three months an arrangement that disadvantaged farmers who ended up withdrawing their money in local currency.
“Tobacco growers who received loans in foreign currency shall repay them in foreign currency. The loans shall be payable and deducted from the proceeds of the sale of the tobacco.
“Thereafter 50% of the sale proceeds shall be paid in foreign currency and the other 50% will be converted at the applicable exchange rate on the day of sale and paid in local currency,” the statement highlighted.
“The 50% foreign currency portion shall be paid directly into the grower’s foreign currency bank accounts (FCAs) and the 50% local currency portion directly into the grower’s local currency bank accounts or e-wallets on the day of sale,” continued the statement.
Statistics show that the hectarage put under tobacco has dropped sharply from 42 000 hectares during the 2018/19 season to 35 998 in the 2019/20 season, a development which farmers attributed to the liquidation of their foreign currency earnings, complaining that the move by RBZ made tobacco farming unviable.
Statistics from TIMB show that as of November 30 of last year, 140 257 farmers had registered to grow the crop, down from 165 130 the previous year, a 15% drop.
The designation of the 50% farmer’s retention as free funds, hence is a positive development that would boost tobacco deliveries to the auction floors.
John Musoro, a tobacco farmer who spoke to this publication expressed his relief, highlighting that farmers can now stay in business as their investment will not be eroded.
“It is a welcome development by the RBZ especially on the foreign currency fund. This enables us to stay in business because we were facing challenges in that where you invest in forex and once your money is converted into local currency, you cannot re-invest in the next season.”
Zimbabwe is the largest tobacco grower in Africa and the world’s sixth largest tobacco grower and the crop is one of the top forex earners, raking in at least a US$1 billion annually.
