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Fewer traders have taken up space at the tobacco auction floors which are no longer a hive of activity owing to a new payment system for farmers

Elita Chikwati Agriculture Reporter
The opening of the tobacco selling season has always been good news not only for farmers, but also for businesspeople across various sectors of the economy.

Tobacco farmers from different parts of Zimbabwe have in the past meant more cash and higher earnings for Harare’s businesspeople.

Car dealers, food vendors, commercial sex workers, agro-dealers and thieves have been the major beneficiaries.

Harare residents whose relatives are into tobacco farming would celebrate as the selling season gave them the opportunity to meet with relatives who would spoil them with cash and groceries.

Shops, beerhalls and lodges near auction floors also enjoyed brisk business.

Goods on sale included cars, blankets, clothes, ox-drawn farming implements, fertilisers, school uniforms, food, drinks and furniture.

Vending space used to be on high demand.

Sadly, these are now mere memories of a charming past.

The 2016 tobacco selling season has brought with it a new order of doing business.

As part of Government’s efforts to promote financial inclusion, a payment facility was introduced this year.

There are no more spot cash payments; instead, payments will be made into farmers’ bank accounts on the understanding that there will be no bank charges raised on such accounts.

The new payment model makes farmers bankable and able to access loans from banks, but the changes have left those in the informal sector crying.

This method of payment is safer for farmers.

For example, a farmer might sell 10 bales of high quality tobacco at $4 per kilogramme. Each bale weighs about 70kg and one may get about $280. Multiply that by 10 bales then one walks away with $2 800.

A survey by The Herald established that this year there are few traders at the auction floors. Some stands have not been occupied.

The informal traders said the move by Government for farmers to be paid through banks had negatively affected them.

Mrs Joyce Mhlanga, a food vendor, said her business was affected by the new payment system.

“Because of the system, sometimes farmers cannot buy food, even a plate of sadza.

“Long back the farmers would buy different goods soon after getting their cash but now they do not have cash. They should get their cash as before. Some would eat meals on credit and pay cash when they receive their money.

“We have many tables unoccupied this season. Last year all the tables were occupied and we registered meaningful business. This season some traders have not registered a single sale, 12 days after the opening of the season,” she said.

Ms Immaculate Nyamadzawo who sells furniture said there was a lot of window shopping going on.

Sadly, the farmers never returned.

“Some of the farmers do not come back after selling their crop as they go to town to get cash and make their transactions in town. In most cases when there is no cash at the floors they travel with their transporters and soon after getting their cash they go back home,” she said.

“Farmers are now at a greater risk of losing their money as there are more thieves in town than at the floors. Farmers come and seek assistance to access their money from banks as they may not be aware of the exact locations of the banks in town and this exposes them to harm. What if they approach thieves?”

Another trader, Mr Mudamaenda, said people who had been relying on tobacco farmers were now stranded.

“During the past seasons, we made huge profits from selling inputs such as fertilisers, scotch carts and furniture. This season there are few takers because farmers do not have cash.”

The traders said they could transact through bank transfers, but most farmers were not comfortable with this arrangement.

Mr Martin Magen’a who sells scotch carts said: “The system would have been friendlier if the banks had enough cash and allowed farmers to withdraw large amounts of money.”

Car dealers are not to be left out.

Clever Mudzengi of Harare quipped: “Farmers may get $500 or $200 from banks and cannot buy a car. Nowadays you can go for two days without anyone coming to enquire about the cars.

“This season is different from last season. During the past seasons we used to register high business. We are not able to sell cars through banks as most farmers still believe in cash transactions.”

Farmers are also bitter.

The new system, they said, forced them to travel to and from the central business district to get cash and this disturbs operations at the farm.

Tobacco Industry and Marketing Board chief executive Dr Andrew Matibiri said the new system required a farmer to have bank account.

He said a farmer only needs to furnish the bank with his or her identity document and growers number to open an account.

“Banks are offering accounts to tobacco growers at favourable conditions which include waving of charges for maintaining bank accounts. This move will protect farmers from unscrupulous dealers and traders who have in the previous seasons flooded the floors and fleeced tobacco farmers of their earnings.

“Farmers have generally welcomed this development although some were initially sceptical. Farmers will enjoy the convenience of transacting through payment platforms such as mobile banking and points of sale (POS).

“The use of the banking system by the farmers will go far in creating a track record which will in the future become handy when farmers approach banks seeking financial assistance for the production of tobacco. Financial inclusion will improve growers’ quality of life, improve farmers’ access to financial services as well as improve farm productivity in terms of increased average revenue for the grower as well as yield per hectare,” he said.

Finance and Economic Development Minister Cde Patrick Chinamasa said reliance on cash-based transactions exerted pressure on the financial system.

“It will be extremely difficult to address liquidity challenges for as long as the economy remains cash-based.

“People use cash to buy houses for more than $60 000, buy cars of around $15 000 in cash. They walk with cash in suitcases. We cannot have that habit of doing all business transactions in cash and large amounts of money outside the banking sector and still continue to have a stable economy. We are encouraging the use of plastic money,” he said.

Agriculture economist Mr Midway Bhunu said paying farmers through the bank should improve their bankability.

“It also means that more money will circulate in the formal market and it improves our economic standing as a nation.

“However, it is critical for Government through the responsible ministry to ensure that financial service delivery improves such that farmers get their money in time.

“At times policy makers come up with sound policies that make the targeted beneficiary worse off. It is caused by lack of a holistic approach to things. A policy may be good but it needs efficient and effective execution,” he said.

With the advent of plastic money, it is high time to change our banking culture and also embrace new ways of doing business, especially the use of plastic money for most transactions.

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