eBusiness Weekly
Africa Moyo
The Reserve Bank of Zimbabwe (RBZ) is setting up a staggering $85,3 million enhanced facility for lending to small-scale tobacco farmers, as it seeks to boost production and generate more foreign currency for the country.
The new fund, which joins several other tobacco facilities set up by the RBZ and other banks, comes at a time when tobacco deliveries hit a record 249 million kg worth $729 million.
Tobacco and gold have become the country’s major foreign earners since adoption of multiple currencies in 2009.
Zimbabwe is grappling with foreign currency shortages due to a spike in demand as the economy booms since last December, resulting in the RBZ drawing a priority list for the payment of raw materials, particularly for the manufacturing sector.
Boosting foreign exchange
RBZ Governor John Mangudya has been advocating for increased foreign currency generation to eliminate shortages, which have intermittently affected production.
Agribank chief executive officer Sam Malaba, confirmed this week that the central bank had established the new loan facility, which Agribank would be managing.
“The RBZ is setting up a new $85,3 million enhanced facility for lending to small scale farmers,” he said.
“The RBZ is offering the facility to TIMB (the Tobacco Industry and Marketing Board) through Agribank to finance procurement of inputs and working capital requirements to increase tobacco production,” he added.
“Of this facility about $66,2 million is towards procurement of inputs for the production of tobacco covering an area of 51 000ha, of which the inputs worth $15,3 million covering 11 000ha has already been purchased and are now being distributed.”
The remainder of the inputs are yet to be secured and would cover 40 000ha, benefiting the small-scale tobacco farmers, he said.
Malaba said the balance of $19,1 million is expected to fund the development and enhancement of tobacco infrastructure — curing and irrigation — by the eligible tobacco farmers.
The new tobacco facility joins another $28 million fund, again for lending to small-scale tobacco farmers through Agribank and the TIMB. The $28 million facility targeted 18 000 smallholder farmers who were to be capacitated with seed and fertilisers, motorbikes and technical services.
Deals for out-grower schemes
Agribank has concluded a number of deals with tobacco merchants for the financing of their out-grower schemes, a move that has also helped in foreign currency generation.
Statistics from TIMB show that 214 million kilogrammes worth $631 million were sold through the contract floors while 36 million kg worth $98 million was sold through the auction floors. A number of farmers said tobacco prices were generally fair this year, although some want the $4,99 per kilogramme price cap at the auction floors to be removed.
