adminSince the beginning of the marketing season in mid-February, $428,6 million has been generated from 114,6 million kilogrammes of tobacco delivered at the auction floors.
This represents a 48 percent change from last year, where a total of 107,8 million kilogrammes worth $290,2 million was auctioned during the same period.
“We expect to see tobacco sales continuing to contribute to banking deposits.
“The local money market is presently hamstrung by liquidity constraints but some of the inflows to boost deposits in banks are expected from the sale of 150 million kilogrammes of tobacco this year,” said Mrs Wendy Mpofu, an economic analyst.
Stakeholders in the tobacco industry project that Zimbabwe’s tobacco output will rise from 132 million kilogrammes that generated $361 million in 2011 to 150 million kilogrammes this year.
Ms Mpofu said although she did not have tobacco sales statistics offhand, the crop’s output had this year been reported to be favourable compared to the previous marketing season.
“If the trend continues right up to the end of the selling season, we anticipate tobacco earnings to reach $500 million that will again contribute to inflows in the bank deposits,” she said.
Another economic commentator, Mr Peter Mhaka, said if tobacco prices continued firming more farmers were likely to become attracted to growing the crop this year and beyond.
The seasonal average price of tobacco at the auction floors this season was $3,74 a kilogramme compared to $2,69 a kilogramme during the same period last year.
In a commentary, Kingdom Financial Holdings Limited said since the beginning of the year total banking sector deposits rose by 21,2 percent to $4 billion.
“Tobacco sales provide some inflows in the local money market which is currently reeling from liquidity challenges. While the banking sector continues to witness significant growth in deposits, loans and advances declined by 3,45 percent as the sector had loaned out $2,8 billion by mid-May out of the total deposits from $2,9 billion as at 31 December 2011,” said the financial institution.
The institution said loan-to-deposit ratio declined to 70 percent from 87,4 percent in December last year in line with the 30 percent prudential liquidity ratio prescribed by the central bank Governor Dr Gideon Gono.
Prudential liquidity ratio is capital adequacy or free capital that monetary authorities and the financial institutions themselves monitor to ascertain their financial stability.
In February, the Reserve Bank increased prudential liquidity ratio from 25 percent to 27,5 percent by 31 March and 30 percent by end of May 2012.
KFHL said the gradual increase to 30 percent by end of May 2012 implies that the central bank wants the banks to reduce their loan- to-deposit ratio at most to 70 percent so as to better manage their liquidity.
However, an analysis of financial statements for banks as at 31 December 2011, show that locally owned banks had high loan-to-deposit ratios of around 85 percent when compared to the conservative lending approach by the international banks that had significant lower ratio of around 40 percent.
“Various banks are still facing liquidity gap and have created a huge asset and liability mismatch which ultimately creates a liquidity crunch,” said KFHL.
Online Reporter