The Reserve Bank of Zimbabwe set a $300 daily cash payment ceiling for tobacco growers this season with balances paid electronically in a move expected to improve settlement efficiency. Last year, farmers were allowed to withdraw as much as $1 000 cash per day, but banks were unable to meet the demand.
This comes amid concern farmers spent days trying to withdraw cash for their tobacco deliveries, giving rise to unscrupulous transactions and side marketing. The delays also ate into the tobacco grower's margins.
"In order to ensure a smooth payment that is consistent with international best practice on daily cash withdrawal limits, growers shall be paid a maximum of $300 per day through banks stationed at the auction floors," Reserve Bank of Zimbabwe (RBZ) governor Dr John Mangudya said in a statement yesterday.
"This shall be disbursed at all banks stationed at the auction floors upon presentation of the sales statements by the tobacco growers. The balance shall be ransferred into the grower's bank account or mobile money wallet," Dr Mangudya added.
The move is meant to buttress support to the tobacco industry, one of the largest foreign currency earners, racking in $1,3 billion in the previous season according to the Tobacco Industry and Marketing Board (TIMB).
Already, Dr Mangudya said, the central bank has increased the tobacco finance facility to $70 million, up from $28 million in the 2017 planting season as part of efforts to ensure farmers access inputs at affordable prices. The export incentive for the tobacco growers was increased to 12.5 percent, from 5 percent and this amount will be paid through the respective grower's bank accounts or mobile money services on a monthly basis.
Government in May 2016 introduced bond notes which were paid as an export incentive to industry to boost exports and at the same time improving access to cash.
By the end of 2017, the RBZ had paid about $30 million as export incentives to tobacco growers. Zimbabwe's foreign currency situation, currently characterized by a huge backlog of foreign payments, is expected to improve once auction floors open.
Foreign currency is needed in the purchase of fuel, raw materials, and other commodities. In the 2017/18 season number of registered growers is 118 338 farmers, an increase of 44 percent from the 82 438 growers who had registered during the same period in 2017. The volume of tobacco deliveries this current season is expected to breach 200 million kgs.
In 2017 tobacco production stood at 186 million kgs.