Three organizations have entered into a Memorandum of Understanding (MoU) which forms a basis of cooperation in funding Zimbabwean tobacco farmers.
The MoU by Tobacco Industry and Marketing Board (TIMB), the Zimbabwe Stock Exchange Limited (ZSE), and the Victoria Falls Stock Exchange Limited (VFEX) come at a time when Zimbabwe farmers are failing to fully benefit from the golden leaf due to funding challenges.
“The full implementation of this MOU is expected to result in increased productivity and smoother cash flows for small scale farmers and improved capacity for local Tobacco merchants,” reads a press announcement on the MoU.
Tobacco is the second-largest producer of foreign currency in Zimbabwe after gold, with the country managing to export the leaf worth $782m in 2020.
Currently, over 90% of funding for tobacco has been coming in from contract farming which has resulted in farmers losing money.
In contract farming, companies with an interest in tobacco offer growers inputs which are then paid back with interest by harvesting farmers.
Tobacco growers have however accused the funding companies of exorbitant interests in paying back inputs as well as for offering manipulative prices for those put under restrictive selling measures by the same companies.
Reports say farmers have been abandoning growing tobacco due to funding challenges and the contract farming model.
The government had earlier this year promised to come up with a strategy to fund tobacco using domestic resources as a way of maximizing revenue according to local media.
This strategy also focuses on combating deforestation, increasing value-addition and beneficiation to increase revenue, and the growing of alternative crops.
Meanwhile, the MoU entered by TIMB, ZSE, and VFEX also form a basis for cooperation in the funding raising for tobacco merchants; compilation and distribution of tobacco production and marketing data; the establishment of a tobacco derivatives market.