Tobacco merchants draw down fraction of offshore funds, RBZ plans exchange control probe

Tobacco merchants draw down fraction of offshore funds, RBZ plans exchange control probe

HARARE, April 15 (The Source) – Zimbabwe’s tobacco merchants have drawn down $49,5 million out of the $832 million offshore funding secured by the industry for the current marketing season, as a central bank probe into possible exchange control breaches by buyers looms.

Tobacco, the country’s single largest foreign currency earner, has been on a recovery path having plunged to record low output following disturbances associated with the government’s land reform programme, with tens of thousands of small scale farmers replacing about 3,000 largely white commercial farmers as chief producers.

Central bank regulations require merchants to purchase the crop only using offshore funds, although small-scale local buyers have been given a special dispensation to purchase the crop for up to $1 million in local funds. The RBZ intends to investigate whether this dual purchasing dispensation is not being abused, the Bank’s chief inspector Onias Masiiwa said this week.

“I want to be invited by (Tobacco Industry and Marketing Board head Andrew) Mr. Matibiri to his office and have tea with him because his merchants who are buying tobacco, they must do so from money that comes from offshore, that is the law. We don’t want our tobacco to be bought using local funds,” Masiiwa said.

“Anyone who plays around and tries to buy tobacco with local funds, we will make them behave.”

Reserve Bank exchange control director Morris Mpofu this week told delegates attending a central bank organized workshop that the injection of the $832 million into the economy would help ease the country’s chronic liquidity challenges.

“Merchants have raised more than $832 million in offshore facilities. They have so far drawn down $49 million during this season and they have also purchased tobacco to the tune of $49,5 million which is split into contract sales and auction sales,” Mpofu said.