Zambia’s Tobacco Exports Can Grow Five Times

Source from:  Zambia Business Times 08/30/2018

ZAMBIA’S tobacco production – and in effect exports – can grow five times the current production levels, says Roland Imperial Tobacco sales and marketing director Zabu Mwenda.

In an exclusive interview with the Zambian Business Times, Mwenda said that currently about two million people are directly and indirectly employed in the tobacco industry.

He said that RITCO wants to work with various stakeholders to grow the local industry and support the growth and cultivation of tobacco to higher levels in Zambia.

“Considering that our neighboring countries such as Zimbabwe do about 200 million tons per year, Malawi does about 150 million tons per year and Zambia only does about 30 million tons a year, there is room and an urgent need to put in place measures that will enable farmers grow more tobacco. It’s a cash crop that benefits the Zambian economy by bringing in the much needed forex through exports and boosts the economy in terms of revenue generation by local farmers.

RITCO, a member of the Sulmach Group of Companies, was incorporated in 2001. Its core activities are manufacturing and distribution of cigarettes and other tobacco related products. The company is effectively administered via two autonomous divisions: the Manufacturing Division and the Trading Division.

After its incorporation in 2001, RITCO started to manufacture and trade cigarettes and other tobacco related products. The company boasts of the important role it has played in reviving the local tobacco industry.

“We started creating local demand for tobacco for farmers by encouraging the local growth of tobacco in Zambia,” Mwenda told ZBT.

The company has also acted as an equalizer. As a local entity itself, it has been able to support and sustain the local industry considering that the tobacco industry in Zambia has been dominated by multi-international firms which have been importing their products into the Zambian tobacco industry rather than locally sourcing from farmers and locally manufacturing.

“We have developed a local tobacco industry in terms of manufacturing of cigarettes, creating demand for the farmers by encouraging the growth of the local cultivation farmers. We also look at the value chain by supporting the provision of inputs and going down to the cultivation of the crop”, Mwenda said.

He said that a primary processing plant was being developed which will basically entail that farmers will be able to get more value for their crop. RITCO will be able to buy raw tobacco, process it and bring value addition to the local farm produced tobacco, which will create additional jobs in the country as a whole.

Asked about the market share that RITCO commands, Mwenda said that the company has well over one-third (above 33%) of the local tobacco market share. The other big player is British American Tobacco (BAT). Currently RITCO has an investment license of US$80million – US$30 million going towards the cigarette manufacturing plant and balance of US$50 million going to the primary processing plant.

“If you compare with our competitor BAT who have invested only US$50million, RITCO is doing more. We had an initial investment of US$8million and within 5 years, the company managed to secure the additional investment which has now grown to US$80million,” he said.

Currently, the RITCO plant is located in Lusaka’s Makeni area, and the company is planning on moving to their new plant in the city’s south multi-facility economic zone before the end of 2018.

Mwenda disclosed that RITCO is engaging the Zambia National Farmers Union to partner in bettering the supply of inputs to tobacco farmers, the fertilizers used and crop varieties as well.

However, tobacco being an agro product has dependencies and yields are based on factors which are seasonal such as the rain fall patterns. RITCO will continue to strive to empower the farmers by giving them inputs and also encourage the setup of more out-grower schemes.

RITCO has partners such as Japan Tobacco International who are also buying raw tobacco from the farmers and supplying inputs.

When asked on RITCO’s current export participation, Mwenda said the company had focused on consolidating its position on the Zambian market which it has done so successfully so far. Plans are underway to start exporting to Malawi, Congo and Namibia.

“We are in the process of exploring the export market and we have engaged some agents who have shown interest and Zambia being surrounded by eight neighboring countries gives a very good platform for all manufacturing and industrial companies to export,” Mwenda said.

“Manufacturing goods here in Zambia gives a good platform to be able to sell at a higher value and create more forex for the local economy.”

Meanwhile, Mwenda expressed concern at the government’s seeming inability to support and effectively influence the local tobacco industry, saying that more needs to be done.

“This is an industry that has supported our fellow neighbors such as Malawi, Mozambique, Zimbabwe and Tanzania. The government needs to push for a little more influence and put in place policies that will support increased production and provide protection especially for local manufacturers when competing with imported brands,” he said.

Mwenda said that the local tobacco industry is not being adequately protected by the government  and there are a lot of elicit and smuggled cigarettes that are coming through the border at much cheaper prices which are not traced or taxed by the Zambia Revenue Authority.

This is adverse to local producers like RITCO which pay quite a substantial amount of tax to the government . Mwenda further called on the government to put more strict measures on the importation of tobacco and tobacco products and ensure guaranteed protection of the industry, saying the company is ready to work hand in hand with the government for the betterment of the industry.

Zambia has good location, suitable soils and weather patterns which could easily see the country’s tobacco production and export earnings rival its neighbors. The country needs to increase its current production five times to be able to join the list of top producers within the Southern Africa region. Zambia’s has been pursuing alternative agro diversification to bring down its current dependence and exposure to international copper prices which currently stand at over 70% for its total forex and export earnings.  Enditem