LIVINGSTONE MARUFU
Zimbabwe is courting local banks to spearhead tobacco funding amid indications that bulk of the money returns to merchants towards the repayment of offshore loans.
Contractors and tobacco merchants have been the major funders of tobacco farming in Zimbabwe with the government promising to inject US$60m to support tobacco farming.
In the Tobacco Value Chain Transformation Strategy document, Lands, Agriculture, Fisheries, Water and Rural Development Ministry outlined that Zimbabwe is getting a paltry 15% of the earnings with the balance going to merchants.
The Tobacco Industry and Marketing Board (TIMB) chairman Patrick Devenish told Business Times that the board is moving towards ensuring that tobacco growers retain value.
“What we want to make sure is that tobacco financing comes from commercial banks instead of having it from contractors,” Devenish, told Business Times. “We feel that the TIMB database is very strong and stop order is good enough to recoup funders’ money and what is needed under the new system is to eliminate side marketing using a biometric measurement system that ensures that farmers don’t side-market.”
Added Devenish: “The system will ensure that it gives estimates of each farmer’s output at any given stage up to the final stages and the farmer will be asked what he or she has done with the tobacco if there is a huge anomaly between the estimates and what was delivered.”
TIMB wanted a two pronged approach that involved local funding and offshore lending with most banks leading the process.
“The board aims to increase the local financing of tobacco production to 70% of total costs per hectare, through localisation initiatives, to accelerate value addition and beneficiation from the current 1% to 30% by 2025 and to champion sustainable tobacco production by ensuring that 50% of tobacco produced is being cured using the renewable energy by 2025.”
TIMB was intending to improve the credibility of the tobacco marketing system by ensuring 100% compliance to regulations by all players.
Zimbabwe Tobacco Association CEO Rodney Ambrose said the delay by the government in releasing the US$60m for local funding growers has affected farmers’ viability as they are left with nothing to count for their work.
Tobacco has been one of the leading foreign currency earners for the foreign currency-starved economy but the crop has dropped to fourth due to viability challenges.
It emerged that the contractors and merchants, who have extended lines of credit, are deducting their dues from the sales proceeds, a situation which has seen some tobacco farmers taking home negative balances as some debts are carried forward.
The dire situation has threatened farmers’ viability, a situation that has left most tobacco farmers living on the margins.
Farmers claim that the debt levels are now unsustainable with some having ballooned to critical levels.
