Zimbabwe: U.S.$65 Million Boost for Tobacco Industry

Source from:  The Herald 03/02/2012

MBCA Bank Limited has facilitated lines of credit worth US$65 million in support of the tobacco industry from its South African parent firm Nedbank Group and Afreximbank. Spokesperson Ms Dedrey Mutimutema said the lines of credit made MBCA one of the largest supporters of the golden leaf, Zimbabwe's single biggest foreign currency earning cash crop. Ms Mutimetema said the tenure of the facilities will be 12 months on a revolving basis while interest will be at "preferential rates". "These lines of credit have been structured in such a manner that they will fund the entire value chain in the production of green leaf tobacco," said Ms Mutimetema. The funds will cover input financing, grower financing, (tobacco) processing, export logistics as well as export debtors." MBCA Bank said working hand in hand with seasoned tobacco merchants would ensure inputs and working capital were readily available for farmers to avoid disrupting their programmes. Tobacco is currently Zimbabwe's biggest foreign currency earner, accounting for about 26 percent of the agriculture sector's contribution to total foreign export earnings. Development of the agriculture sector is critical for Zimbabwe as it provides income and employment to over 70 percent of the population and accounts for 30 percent of formal employment. The sector provides 60 percent of raw materials used by industry, while it consumes about 65 percent of outputs from the manufacturing sector. While mining has recently emerged as the driver of the economic resurgence, developing policies that support agriculture remains vital for sustainable economic recovery. Tobacco will contribute significantly to agriculture's 11,6 percent growth projected by Finance Minister Tendai Biti, who expects the economy to grow by 9,4 percent this year. Tobacco production has risen from an all-time low of 48,8 million kg in 2008 to 60 million kg in 2009 where it was buoyed by adoption of multiple currencies and favourable prices at the floors, 123 million kg in 2010 and 132,5 million kg last year. MBCA last year facilitated part of the funding for Schweppes Zimbabwe's new US$15 million production line to double its output and maintain the firm's competitiveness. The bank structured the deal, negotiated with the financiers, secured the funding (external and local) and acted as the liaison medium with all the regulatory authorities. The facilities funded core plant replacement, civil works and latest "fast bowler' technology. This will bring a number of economic benefits, including more jobs and export capacity. In recognition of its efforts, MBCA Bank has previously been awarded the Afreximbank Gold Award for the best performing bank in the area of trade finance, having excelled in facilitating lines of credit destined for the tobacco industry. Tobacco merchants have already begun drawing down on the funds made available by MBCA Bank Limited. Enditem