Tobacco merchants secure $824m

Published: 07 June 2015

Tobacco merchants have mobilised $824 million from offshore sources, in compliance with the central bank Tobacco Finance Order (TFO), Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has said.

He said about 25 merchants have been registered by the Tobacco Industry and Marketing Board (TIMB), of which 12 large-scale ones have managed to secure offshore lines of credit.

"Research conducted by the Reserve Bank has established that small scale tobacco merchants, that are mainly new market entrants, and wholly-owned by Zimbabwean residents, have difficulties in securing offshore lines of credit," said the central bank chief in a statement.

He added that "in light of the need to promote equity and in the interest of enhancing competition at the tobacco auction floors, the RBZ has seen it necessary to accommodate deserving tobacco merchants, by allowing them to buy green leaf tobacco using funds sourced from the local market".

In terms of the TFO, Statutory Instrument 61 of 2004, all tobacco merchants are required to secure offshore lines of credit for the purpose of purchasing green leaf tobacco.

Tobacco finance accommodation for merchants who fail to access offshore finance was extended to a maximum of $1 million per merchant. The move would result in the participation of more tobacco buyers, leading to competitive and better prices being realised by farmers.

However, tobacco merchants who would have failed to secure offshore lines of credit shall be accommodated through a special dispensation granted by the Exchange Control - on a submission and approval basis - to access local finance to purchase tobacco for the current marketing season.
- dailynews

Tags: Tobacco,