RBZ introduces stringent tobacco regulations

The Reserve Bank of Zimbabwe has introduced regulations for the 2021 tobacco marketing season that will see contractors producing documentary proof of drawdowns from their offshore accounts and receipts of the loan proceeds into the country.

The companies are also required to produce schedules of the inputs advanced to tobacco growers and a letter from the TIMB confirming the level of support by the contractor among other requirements.

This comes as the TIMB last year introduced regulations for contractors to ensure the merchants act responsibly and account for their purported farmer support.

In a letter addressed to the TIMB, the RBZ outlined the tobacco marketing and payment arrangements for this season.

The RBZ said where a tobacco merchant financed tobacco production using offshore loans and intends to offset the amount against tobacco purchases, prior Exchange Control authority shall be required for the merchant to start effecting the offsets.

Only the cost price of inputs excluding interests and mark ups and cost of direct inputs into tobacco production shall be eligible for offsets.

“Exchange control shall thus be furnished with a documentary proof of drawdown from offshore and receipt of the loan proceeds into the country, documentary proof of compliance with Exchange Control Circular number 7 of 2020 where all import payments are supposed to be done from Zimbabwe. Bills of Entry (Import) and invoices shall be required.

“A schedule of the inputs advanced to tobacco growers listing by name of input and the prices thereof, list of tobacco growers contracted, indicating their contract telephone numbers and the number of hectares contracted per grower, a support letter from the TIMB confirming the level of support by the contractor,” said the RBZ.

It is a requirement that all purchases of green leaf tobacco be financed using funds drawn down from Exchange Control approved and or registered offshore lines of credit.

“Tobacco merchants shall therefore drawdown loan proceeds from offshore and deposit the proceeds into a Tobacco Buying Transitory Foreign Currency Account. For the purposes of efficiently administering the foreign currency entitlement to the tobacco growers, tobacco merchants may open Tobacco Buying Transitory Foreign Currency Accounts with more than one Authorised Foreign Exchange Dealer,” said the RBZ.

To buy tobacco, merchants are expected to drawdown a specified amount from the Tobacco Buying Transitory Foreign Currency Account and sell 40 percent of the proceeds to the RBZ prevailing foreign exchange auction rate on the day of the transaction.

The remaining 60 percent shall be retained by the tobacco merchant to pay the tobacco growers 60 percent foreign currency entitlements through transfers to the growers FCA.

“For tobacco that is purchased through the auction floors system, tobacco merchants shall put in place mechanisms to ensure that auction floors have the requisite foreign currency to expeditiously pay the tobacco growers 60 percent foreign currency entitlement.

Tobacco merchants who have failed to secure offshore lines of credit for buying tobacco from farmers shall apply to exchange control for authority to use locally sourced funds and proof of inability to secure off shore lines of credit would be required including a supporting letter from the TIMB.

Meanwhile TIMB has explained that it was not mandatory for stakeholders and staff working in the industry to get vaccinated.

TIMB Chief executive, Dr Andrew, Matibiri yesterday said vaccination was a voluntary exercise.

“Stakeholders and staff are classified as frontline workers and can voluntarily get vaccinated for Covid-19 ahead of the opening of the marketing season on April 7,” he said.-chronicle.co.zw