Local firms break into lucrative tobacco export sector
SEVERAL Zimbabwean-owned tobacco companies have made a breakthrough in tobacco exports, curtailing decades-long hegemony by big international merchants.
Previously, indigenous merchants have been largely condemned to trading as speculators on the auction floors, surrogate buying on behalf of the big merchants as well as management of contract growing schemes on behalf of the large merchants.
The returns from these activities were a pittance in relation to the returns that indigenous players could make in export markets as leaf merchants or cigarette manufacturers.
The indigenous merchants had challenges in penetrating this market due to formidable entry barriers, which some observers say were largely influenced by big companies.
“There are a number of companies that are now doing direct exports and it is a breakthrough for local merchants,” said an official with the Tobacco Industry and Marketing Board, who declined to be named because he is not authorised to talk to media.
Vodsale, Shasha and Sub-Sahara Tobacco are among the companies that are now doing direct export.
According to some analysts, there is a need for policymakers to formulate an effective indigenisation roadmap for the tobacco sector to address constraints relating to funding, markets and processing facilities. These include a focus on niche markets where local merchants leverage regulatory power in the creation of alternative tobacco processing facilities.
Tobacco is the country’s largest foreign currency earners after gold and is largely grown by small scale farmers, most of them, who benefited from the land reform programme.
Tobacco farming stands out as one of the biggest empowerment stories in the history of Zimbabwe.
Prior to the land reform programme tobacco farming was a preserve of large scale commercial farmers with negligible numbers of black farmers.
Smallholder black farmers were actively discouraged from producing tobacco as it was said to be too technically challenging for them.-ebsuinessweekly
