HARARE – Zimbabwe’s tobacco auction floors will open next month, with government hoping earnings from the crop will solve the country’s dollar crunch.
Tobacco is the country’s major foreign currency earner after it raked in nearly $1 billion last year in export receipts ahead of platinum and gold.
The Tobacco Industry and Marketing Board (TIMB) spokesperson, Isheunesu Moyo, told the businessdaily that this season’s dates had now been set, with the contract sales floors opening doors in March.
“Yes, the floors open on the 15th next month … the contract ones open the following day,” he said.
Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said he anticipated the crop to perform well this year so that the golden leaf could provide the much needed foreign exchange.
“The opening up of the tobacco floors during the first quarter of 2017 will boost the country’s foreign exchange earnings and this is expected to go a long way in ameliorating the liquidity challenges in the market,” he said in his 2017 monetary policy statement on Wednesday.
As motivation to encourage farmers to grow tobacco, the RBZ paid out $26,6 million of the $29,3 million five percent export incentive scheme introduced last year to tobacco farmers who delivered their crop in the 2016 marketing season.
In November last year, the apex bank disbursed $29,3 million as an export incentive to tobacco farmers that submitted their banking details through TIMB.
The five percent export incentive was being awarded to incentivise farmers so they increase the crop’s output as well as promote financial inclusion, as the country’s over-dependence on the crop’s earnings became more apparent.
During the 2016 tobacco marketing season, 65 829 growers who sold their crop worth $586,9 million and had bank accounts, were eligible for the five percent export incentive.
According to Mangudya, a balance of $2,7 million, representing 9,2 percent, has not yet been credited to the tobacco growers’ bank accounts.
However, market watchers have cautioned that government needs to have conservative projections for this year’s crop, following heavy rains feared to have affected the crop.
Zimbabwe depends on tobacco and earnings from its minerals for foreign exchange as industry collapse driven by economic deterioration has narrowed its export base.