Tobacco farmers have mounted a fresh push for investments into cigarette production facilities on the domestic market, which must be implemented together with ceilings on raw exports.
This week’s push follows revelations by Tobacco Industry and Marketing Board (TIMB) chief executive officer, Andrew Matibiri last week that only 1% of Zimbabwe’s tobacco ended up being processed locally.
The rest is exported for processing to create downstream industries, jobs and tax revenues for importing countries, mostly in Asia.
But even if these low volumes are processed in Zimbabwe, there has been a growing list of foreign firms that have invested into cigarettes production compared to local enterprises
It is hoped that placing ceilings to discourage wholesale exports would unlock opportunities for assembling processing facilities in Zimbabwe, one of the world’s biggest tobacco exporters.
Zimbabwe last year produced 190 million kg of tobacco.
Matibiri said at least US$748 million was paid to farmers last year, but these farmers paid back US$400 million to the contracting companies for several services rendered to them including the provision of inputs.
He said only US$350 million ended up in farmers’ pockets.
“Government must stimulate cigarette production locally with some incentives,” said George Seremwe, president of the Tobacco Farmers Association.
“It must identify markets to off take and come up with a policy which allows a certain percentage of raw tobacco to be exported,” Seremwe said.
Economist, Takudzwa Chisango said there was need to deepen and widen the tobacco value chain through attracting meaningful private capital.
“One of the best ways in achieving this is through incentivising value chain investments in the tobacco industry,” said Chisango.
“This will also have a huge multiplier effect on the overall growth of the sector as it has massive potential to double its current economic contribution levels,” he told businessdigest.
Another leading economist, Victor Bhoroma said attracting investment into tobacco processing could be quickened by coming up with policies that reduce production costs.
“Raw tobacco exports should attract higher tariff and non-tariff barriers on a scaled model where processed tobacco attracts fewer tariffs. This should be implemented in a phased approach to give merchants enough time to invest and attract capital. Government should provide production subsidies for cigarette manufacturers who produce to export. Subsidies should reduce the cost of production and make cigarettes manufactured in Zimbabwe cheaper on the export market,” he noted.— Staff Writer.