BANKS have agreed to waive some of the Know-Your-Customer (KYC) requirements for tobacco farmers in compliance with a Reserve Bank of Zimbabwe (RBZ) call for financial inclusion.
A snap survey done by businesdigest on Wednesday this week shows that the majority of farmers at Tobacco Sales Floor had opened accounts with various banks using only their national identity cards.
The RBZ and the Tobacco Industry Marketing Board (TIMB) jointly issued a statement compelling all proceeds from the sale of tobacco to be paid through banks.
“As part of KYC requirements, banks will only require tobacco farmers to furnish them with their national identity cards and tobacco grower’s numbers in order to open a bank account,” the statement said.
The central bank said the opening of bank accounts by farmers would allow convenience during transactions, prevent susceptibility to theft and assist in accessing loan financing.
The use of bank accounts for tobacco sales is expected to increase deposits and improve the country’s liquidity situation.
Traditionally, banks require extensive documentation and information under the KYC which includes proof of residence, proof of employment, identification number and passport sized photos.
The tobacco marketing season, which last year commenced on March 4, was this year delayed by three weeks as a result of late rains.
A Mt Darwin farmer Mark Khayekwa said he opened his bank account using only his national identification on Tuesday.
“I have never opened a bank account in my life. This was my first one. I don’t have a choice because I want to get paid for my tobacco,” he said.
A farmer from Mvurwi, Angeline Kadzungudzike said despite opening an account, she was skeptical this will work in her favour.
“Yes I opened an account yesterday (Tuesday), but I am afraid of the withdrawal restrictions that come along with it. I may need lump some money to pay my bills,” she said.
Martha Chokomoka, another Mt Darwin farmer, who had brought four bales for auction on Wednesday, said she was still hesitant to open the account for fear of the unknown.
Despite poor rains, the Zimbabwe Tobacco Association (ZTA) is confident this year’s tobacco will fetch better prices as compared to the two previous seasons.
The highest price offered at Tobacco Sales Floor on Wednesday was US$4,50 per kilogramme when businessdigest visited the auction floor.
“We are anticipating a better year in terms of prices. Farmers have been getting poor prices for the past two seasons that is why 21 000 farmers left the industry. We are a expecting a better average price this season,” ZTA CE Rodney Ambrose said.
During the 2014/2015 marketing season, the average tobacco price stood at US$2,93, down from US$3,17 the previous season.
TIMB statistics show the number of registered tobacco growers tumbled from 91 000 last year to 72 000 this season due to poor prices offer last year.
Consequently, this year’s tobacco output is projected to decline to 170 million kg, down from 199 million kg produced last year.
With Brazil, India and Tanzania having downsized their tobacco production this year, it is highly estimated that the global demand for the golden leaf will balloon thereby pushing up local prices.
TIMB chair Monica Chinamasa said to improve pricing transparency this season, electronic marketing will run side by side with conventional marketing at the auction floors.
Chinamasa said TIMB was committed to the welfare of farmers as well as improving productivity and the quality of tobacco in order to ensure a more predictable pricing and purchasing pattern that ensure viability to growers.
“The major concern for growers as the marketing season commences is the declining viability of tobacco cultivation.
There is need to put minds together and find ways of improving viability by minimising the costs and maximising the productivity,” Chinamasa said.
Tobacco Sales Floor, Boka Tobacco Floor and Premier Tobacco Floor were licensed together with 16 contract buyers this season.
TIMB also licensed 18 A class buyers.
Speaking at the official opening, Agriculture minister Joseph Made said TIMB in collaboration with the police will curb corruption and illegal tobacco sales that has destabilised the industry.