Cautionary Tale Of Tax Incentives For Cigarette Makers From Zambia

Source from:  MENAFN.COM 06/25/2019

Tobacco companies are zeroing in on one of the last global markets still ripe for exploitation:the African continent.

Much of the tobacco leaf and some of the manufactured cigarettes produced on the continent are exported. These exports earn the foreign currency that's attractive to the finance ministries oftobacco producing countries . But increasing amounts of the continent's tobacco outputs remain in Africa, with tobacco companies taking advantage of countries with weak tobacco control measures and comparatively low consumption rates that they consider ripe for expansion.

While tobacco production is decreasing (slightly) in most of the rest of the world,it is increasing in Africa . In 2012 Africa accounted for just under 10% of all tobacco grown worldwide.

The major tobacco producing countries by tonnes grown in 2017 were (in order)Zimbabwe, Zambia, Tanzania, Mozambique and Malawi .Smoking ratesin most African countries are still low by global comparisons. They are, however, rising in several sub-Sarahan nations.

Economic benefits exaggerated

For the past several years our research team has been studying the political economy of trade, tobacco control, and tobacco farming in three African countries: Kenya ,Malawi,and Zambia .

We chose these countries because they represent different degrees of tobacco reliance and tobacco control, which allows us to make meaningful comparisons among them over time. Zambia and Malawi are major tobacco producers, whereas Kenya is not (though it has several concentrated areas of tobacco farming).

Zambia has ratified the World Health Organisation'sFramework Convention on Tobacco Controland has some tobacco control measures in place. Malawi has not ratified the Convention, has fewer tobacco control measures, and is more reliant on tobacco as a cash crop. Kenya has also ratified the Convention. But compared to the other two countries, it has much stronger tobacco control measures and is less economically dependent on tobacco.

There is, however, a common finding amongst all three countries. The economic importance of tobacco for government treasuries is often exaggerated while tobacco growing hasfailed to fulfil its promise of lifting farmers out of poverty . In fact, it's often been the reverse. Many smallholder tobacco farmers have been losing money or making so little they remain deeply impoverished or deeply in debt.  Enditem