Martin Kadzere Senior Business Reporter
THERE will be no spot cash for tobacco farmers this season as payments will now be directly made into bank accounts, sources familiar with the development said last week.
In the previous seasons, farmers would cash in their cheques at the banks at the auction floors, but will now have to open bank accounts into which their cash will be deposited.
This year’s tobacco selling season will commence on March 30.
According to sources, the move is part of the Reserve Bank of Zimbabwe’s drive for financial inclusion. Last year, over 70 000 farmers, mostly small-scale registered to grow tobacco.
But most of them are unbanked.
“This is the position that the RBZ has taken and we now await formal communication,” one source said.
While players in the tobacco industry have welcomed the move by the central bank, they feel it should have adopted a phased approach.
“In our previous meetings, we had suggested that farmers receive a cash payment of 50 percent this year, then 25 percent next year while all the money would be deposited into bank accounts in the third year,” said a tobacco buyer.
“We all agreed that this was a noble idea. With banking history farmers will also be able to borrow from banks.
“But we feel the central bank should have adopted a phased approach between 2016 and 2018.”
Tobacco Industry and Marketing Board chief executive Dr Andrew Matibiri referred questions to the RBZ. Central bank governor Dr John Mangudya could not be reached.
He, however, said in the 2016 Monetary Policy Statement that financial inclusion gaps have been pronounced among some special groups which are currently under-served including micro, small and medium enterprises, small scale agricultural sector, women and youths.
Dr Mangudya said given the positive correlation between financial inclusion and economic developments, the RBZ would unveil policy interventions to promote financial inclusivity.
He said, inclusive financial system promotes financial sector development through a combination of depth, access and efficiency, and the level of activity of capital markets.
An inclusive financial system facilitates mobilisation of financial resources circulating in the informal sector, which positively impacts on liquidity in the economy.
Tobacco selling season will commence next week. TIMB has projected the crop size will decline 20 percent to 160 million kg, from nearly 200 million produced last season.
Zimbabwe earned $855 million from tobacco exports in 2015, about 11 percent higher than the previous year on higher prices and demand from China, according to the TIMB.
This makes tobacco the country’s single largest export commodity, ahead of gold and platinum.