Tobacco industry laud increase forex retention per...

Tobacco industry laud increase forex retention percentage

Zimbabwe's 2022 tobacco selling season starts - Global Times

Zim Now Writer

Zimbabwe Tobacco Association president Mutandwa Mutasa has commended the adjustments made by the Reserve Bank to 85% up from 75% foreign currency retention level.

The outstanding 15 percent will be paid in local currency at the prevailing interbank rate.

Mutasa said the development will sustain the operations and profitability of tobacco farmers and cushion them against overheads charged in forex.

“This is good news to farmers as they have been pleading with the Government to increase the foreign currency component. Many costs are now in US dollars and to cover such, you also need to realise more foreign currency from payments,” he said.

Golden Leaf Advisory chief executive officer Elias Maziwisa said the pleas of farmers to make adjustments demonstrates the government’s willingness to support the tobacco industry.

“Many tobacco farmers have been affected in terms of profitability by way of high operational costs as costs are now US dollar-denominated. It is a noble cause that the RBZ has seen it fit to raise the foreign currency retention ratio to 85 percent,” he said.

The Tobacco Industry and Marketing Board announced last month that this year’s tobacco marketing season will open earlier than last year as tobacco farmers are expected to produce a record output of the golden leaf.

Last year in March, the central bank reviewed forex retention levels to 75% from 60% the year before, but farmers said the review was not enough to meet the high cost of production which surpassed 80%.