HomeBusiness DigestTobacco Alone is Just not Enough

Tobacco Alone is Just not Enough

IT is just after daybreak and the morning winter chills are yet to break. Many people are still asleep in the comfort of their beds or are just waking up. However, deep in the heart of one of Harare’s industrial areas business has already begun in earnest.


By this time, farmers are anxiously following the auctioneer and his troop of buyers in neatly arranged rows of tobacco bales that the farmers would have brought to the floors. This process is the culmination of a year long struggle starting from the seed–bed preparations right through to the planting, nurturing and curing, bringing the bales to a standard condition fit for sale as prescribed by industry practice.  For the first time in a while, payments to the farmers actually count for something given that this year there is no foreign currency retention ratios. Caesar finally gets what is due to him.

Amidst all this excitement one can already see the genuine elation that finally, the farmers receive their toil’s worth. For some this means being able to meet school fees payments, for others realising that dream to add a bit of furniture to the household and yet for others the funds received are already being committed to next season’s preparations. While those who dared to venture into agricultural production are smiling all the way to the bank, should the rest of the country expect much of these benefits to have a profound difference in their lives?
This year by many standards, will perhaps go down as one of the worst in recent memory vis-à-vis the overall production in this sector. Initial estimates of tobacco sales this year were put at 42 million kgs. Give or take some bales from last year that could find their way to the auction floors this year, one could reasonably expect that figure to reach 50 million kgs. From a survey at one of the auction floors, the average price per kilogram so far is sitting at roughly US$3. This brings the total expected receipts to about US$150 million.
Even after taking into account the downstream benefits expected from multiplier effects, this is still a far cry from the billions of dollars that are often quoted as required for the turnaround to take root. Considering that for the last few years returns from farming were not what they should have been, one can anticipate a significant part of these funds to find their way out of the country somehow, just in case a sudden policy shift was to occur.
No one expects the tobacco to be the sole carrier of the burden to revive the economy. But, let’s face it, despite having a comparatively sound industrial base, Zimbabwe has always been an agro-based economy with tobacco being one of the main drivers. After all, every cent counts.
Perhaps it is on this background that the Prime Minister has taken it upon himself to rally up international financial support. Initial indications suggest that it will take a lot more on this country’s part to gain any meaningful injections. A comparison has been made where a football club in Europe spends more buying just one player than total commitments in aid to Zimbabwe.  The Deputy Prime Minister could not have put it better at the recent World Economic Forum when he suggested that what Zimbabwe needs is direct investment as opposed to aid. This is would be the only way out to create a sustainable economy.
A suggestion would be a shift in focus. Has anyone ever considered trying to lure African investors, in particular those outside South Africa, instead? There are a number opportunities available if one can present sound business models. It is also more likely that convincing such investors to come on board is easier given their proximity to Zimbabwe. It is amazing that a country like Gabon, where the long serving president recently died, has a GDP per capita close to those of some parts of Europe!
While some of these countries remain largely poor, pockets of wealthy individuals do exist and perhaps looking to Africa could pay dividends. Surely there are some with spare change for poor Zimbabwe.
The long and short of it is that the agricultural sector and tobacco in particular, will in its self require significant financial and human input to get back to past levels. Expecting tobacco alone and other such sectors to be the salvation will take much longer than initially anticipated. If the wealthy would much rather spend £80 million on a soccer player than investing in Zimbabwe, then maybe it is time Zimbabwe wakes up, smells the coffee and look for other alternatives.

BY TICH PASI

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