No spot cash for tobacco farmers

TOBACOMartin 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.

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  • Economist-in-Chief

    Of course the government wants our cash in the banks, so it can then pressure the banks to buy Treasury Bills. That’s how government funds its endless deficits.

    This is a perfect system until the day government can no longer meet interest payments on and/or redemptions of the Treasury Bills.

    Fingers crossed the IMF will resume lending to government soon otherwise the banking system will collapse.

    • Team Amai President (Not G40)

      What do you mean it would collapse without IMF loans? We don’t need IMF money!

      Zimbabwe will never be slaves to the IMF and the conditions they want to impose on us, like compensation for the white farmers who stole our land! Traitors like Chinamasa and Mangudya may go around telling lies but we have not heard from the sole centre of power, the First Family. I know for a fact Cde Zhuwao said compensation to the imperialists would NEVER happen. I take his word over Chinamasa’s or Mangudya’s.

  • Takawira

    More consequences reflecting mounting government debt using all methods possible to sponge up US$ liquidity available, and side effects of recent closure of important Nostro accounts managed by German banks vital to maintaining dollar liquidity and the RTGS system in Zimbabwe’s banking circuit. Refusal by the People’s Bank of China to open affected dollar Nostro accounts citing sanctions by the US and Europe, together with President Xi Jinping’s clampdown on corruption with ongoing investigations of Chinese company dealings with Zimbabwe, also prevent opening Yuan Renminbi accounts to bypass liquidity challenges since even the Chinese now have no trust in Zimbabwe’s corrupt government regime.
    Until the Zimbabwe Government shows true commitment to combating corruption within its ranks, long term cash shortages are here to stay.

  • DarkChild

    To the RBZ Governor, I think “financial inclusion” is not by cohesion – it is through making banking more accessible, approachable, affordable, appealing and trustworthy to the banking populace. I’d bet you my last dollar that the farmers would prefer to have their money as EcoCash deposits as opposed to bank deposits! Then again, the problem is that our old leaders in government and institutions have one tool in their box – the hammer, so their approach is always to beat things down into happening. :-(

    • Sengamo

      Think you meant “coercion” but understood. Now if EcoCash dollar deposits were held safely in protected Eco accounts held outside the country, most people would feel a lot safer?

      • DarkChild

        Yes. It is “coercion”, not “cohesion”! Thank you for the correction my good sir! Chirungu chekunyora ma 1! On the second point…it is not really about where the money is stored but how easy it is to use EcoCash, how easy it is to access your money and the track record they have that has built trust with people. The fast and speedy uptake that EcoCash has seen was not due to “coercion”…people bought into it. Now I believe the banks need to be enterprising, innovative and move away from their 200 year old model of doing business and give something that people can buy into in this modern age.