RBZ slams merchants not submitting export incentive details

27 Apr, 2018 - 00:04 0 Views
RBZ slams merchants not submitting export incentive details RBZ Governor Dr Mangudya

eBusiness Weekly

Business Writers
The Reserve Bank of Zimbabwe has launched an investigation into allegations that some indigenous merchants paying for tobacco using Real Time Gross Settlement (RTGS), are reportedly not submitting farmers’ details for payment of the 12,5 percent export incentives.

This comes as some of the firms are claiming that the farmers are not entitled to the incentives as they are already paid lucrative prices, which are above the average prices at auction floors.

Zimbabwe is the world’s fourth largest tobacco producer and the commodity is the country’s single largest foreign currency earner. RBZ governor Dr John Mangundya, confirmed the latest development saying the central bank was keen on finding out the situation on the ground. “My guys are investigating the matter,” he said.

The central bank will terminate the contracts of all firms caught offside.
Business Weekly has it on good authority that the practice is more prevalent in areas outside Harare such as Mashonaland West and Mashonaland Central provinces following the decentralization of the tobacco buying system recently.

This, insiders say, threatens to destroy the tobacco auction system as all farmers will end up selling their crop to contractors and merchants who promise better prices regardless of the fact that they miss out on the RBZ incentives.

Said Dr Mangudya: “The indigenous merchants under the dispensation were allowed to purchase the tobacco using RTGS funds. But when he/she exports the tobacco, 25 percent of the foreign currency comes to the RBZ. The tobacco merchants who were allowed to buy tobacco using the RTGS facility should not abuse the dispensation.

He said the central bank unveiled the support facility after realising local merchants without financial backup were failing to compete with some Chinese companies that were already dominating the market.

“The Chinese companies already have the market in China and if you are a start-up tobacco merchant, you are not known in the world, so no one buys from you before you have the product. So to enable the local merchants to be empowered, they can buy from the farmers, sell their tobacco and bring back the foreign currency, which is standard practice. We gave them this dispensation, then they start abusing it again. They should guard it jealously,” he said.

All companies that buy tobacco should give the information on grower’s yield to the Tobacco Industry and Marketing Board including their banks accounts to facilitate payment of the incentives.

“So what it means is those companies are not compiling that information and giving it to the TIMB. All tobacco producers are entitled to the incentives like any other producers. The maize farmers are heavily subsidized too. We will withdraw the dispensation…they know the penalty,” he said.

Some farmers gave mixed feelings on their dealings with the merchants.
“I delivered my tobacco last week, but information I am receiving now is that the company is not going to facilitate payment of the RBZ incentives. These companies have been encouraging us to sell our tobacco to them despite the factor that they did not contract us.

“Let me admit they are offering better prices than the auction system of up to $6 per kg for quality tobacco. However, the problem is we are being told there will be no incentives back pay. We need authorities to explain this,” said a Hurungwe farmer who preferred to be identified as Nzou.

Sales of Zimbabwe’s Virginia tobacco have declined by 7 percent to reach $124, 6 million for the first 22 days of the selling season down from $133, 8 million in the 2017 comparable period, industry regulator figures show.

The Tobacco Industry Marketing Board (TIMB)’s latest sales statistics show that mass sold so far also declined 10, 3 percent to 44, 6 million kilogrammes from 49, 8 million during the same period last year.

The reduced sales figures may be indicative of farmers holding out for higher prices at the auction floors.

Zimbabwe has three tobacco auction floors, namely Tobacco Sales Floor, Boka Tobacco Floors and Premier Tobacco Floors. Although contract tobacco farming largely dominates the sector growers who have not signed with any contractor sell their crop at the auction floors.

All things being equal sales should actually be higher insofar as there was a significant increase in the number of registered farmers from about 82 000 previously to around 118 000 for the current season.

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