Zimbabwe: Bank Avails U.S.$60 Million for Tobacco

Source from:  The Herald 08/11/2009

Tobacco small-scale farmers should benefit from the US$60 million facility that was availed by the African Export-Import Bank (Afreximbank) to finance tobacco production this season, Tobacco Industries and Marketing Board chief executive Dr Andrew Matibiri has said. The bank announced that it was finalising a US$60 million credit line scheme to boost flue-cured tobacco production ahead of the next season at the Zimbabwe Tobacco Association congress recently held in Harare. In an interview, Dr Matibiri said small-scale tobacco growers were in dire need of funding since they faced financial problems every season. He, however said he was still in the dark as to where the funds were and how they were going to be disbursed. "I am not sure how the funds are going to benefit the industry, whether they are going to be channelled to contractors or small-scale producers," said Dr Matibiri. Dr Matibiri felt the announcement was done prematurely before the formal modalities on how the funds were going to be disbursed were put in place. "We will seek clarification from the Ministry of Finance and we can influence those controlling the facility on how best farmers can benefit from the funds," Dr Matibiri said. "We should not forget that tobacco is among the top foreign currency earners and therefore requires special attention." Tobacco growers, most of them small-scale, have expressed concern on why the facility was unveiled to an association instead of the TIMB. The loan is expected to help farmers boost production to meet the targeted output of 75 million kilogrammes this year, up from 42 million kilogrammes last year. However, there are fears that the funds may be channelled towards commercial banks that usually do not lend funds to small-scale farmers. Commercial banks require collateral from farmers, which most small-scale farmers do not have. Moreover, these financial institutions do not recognise the 99-year lease documents as collateral, making it difficult for farmers to access loans. Afreximbank is a multilateral financial institution whose main objective is to facilitate, promote and expand intra- and extra-African trade. Tobacco production had been on the downfall over the past few years due to viability problems and shortages of inputs such as fertilizers and chemicals. However, the situation is expected to improve following the introduction of the 100 percent foreign currency retention scheme by the Government. The Government said it would continue to mobilise resources to finance increased production. Enditem