The Sunday Mail
Business Reporter
THE Reserve Bank of Zimbabwe has secured US$13 million for small-scale tobacco merchants for use in the current marketing season.
The small-scale tobacco merchants — the majority of whom are unable to secure offshore funding, unlike the other 12 larger ones registered by the Tobacco Industry Marketing Board. Usually the money that is lent to merchants is recovered once they secure foreign buyers.
In recent years, major tobacco buyers have emerged from Asia, particularly China.
A recent notice from the RBZ said: “Research conducted by the Reserve Bank has established that small-scale tobacco merchants, that are mainly new market entrants, and wholly owned by Zimbabwean residents, have difficulties in securing offshore lines of credit.
“In light of the need to promote equity and in the interest of enhancing competition at the tobacco auction floors, the Reserve Bank has seen it necessary to accommodate deserving tobacco merchants, by allowing them to buy green leaf tobacco using funds sourced from the local market.
“Therefore, tobacco merchants who would have failed to secure offshore lines of credit shall be accommodated through a special dispensation granted by Exchange Control, on a submission and approval basis, to access local finance to purchase tobacco for the current marketing season.
“Tobacco finance accommodation for merchants who fail to access offshore finance shall be limited to a maximum of US$1 million per tobacco merchant, and shall be treated on a case by case basis.”
Tobacco merchants are expected to apply for the facility through their banks.
“The applications must be supported by proof that the respective tobacco merchants actually failed to secure offshore lines of credit.
“The individual application shall also be supported by
confirmed orders or an indication of the desire by foreign buyers to do business with the respective tobacco merchant,” said the RBZ.
It is understood that some banks have already secured credit lines from offshore sources, but they are expected to seek authority from the apex bank in order to get the green light to avail them to domestic tobacco merchants.
For the 2015 marketing season, 90 000 farmers have registered to sell the crop. Of that number, 6 679 are new growers.
The TIMB’s latest statistics show that tobacco worth US$775 997 had been auctioned by Wednesday last week. In the same period last year, 940 864kg worth US$2 279 561 had been sold.
The average price as of Friday was US$1,55 per kg, down from US$2,41 per kg during the same period last year.
