Vusumuzi Dube
Sunday News Reporter
Zimbabwe is Africa’s largest tobacco producer and among the top 10 in the world. Tobacco is one of the country’s main export commodities as the agriculture subsector contributes between 5 to 10 percent of national gross domestic product (GDP), between 14 and 20 percent of agricultural GDP and over 50 percent of agriculture export earnings.
According to Cabinet last month, Zimbabwe recorded the highest tobacco production in its 198 years of history, as the country’s tobacco output in the 2023 marketing season stood at 261 million kilogrammes, surpassing the previous record of 259 million kilogrammes.
As of July 10, 2023 the Tobacco Industry and Marketing Board (TIMB) in its latest figures said the tobacco output could reach 300 million kilogrammes this year, which will be a historic record.
“As at day 84 of the tobacco marketing season, farmers have sold 287,3 million kg, up 47 percent from 194,3 million kg over the same period last year. Farmers have accrued US$870 million, a 46 percent rise compared to US$592 million last year.”
The total of 287,3 million kg of the golden leaf was sold at an average of US$3 per kg by July 10, the auction floors had taken delivery of 19 million kg, while contractors had contributed 267 million kg. The highest price achieved as of 10 July was US$6,10 per kg, while the lowest was US$0,10 per kg.
This is on the backdrop of the fact that 85 percent of the tobacco is being produced by smallholder farmers, 60 percent of whom are beneficiaries of the Land Reform Programme.
However, as the subsector continues to grow in line with Government policies in the agriculture sector which are bearing fruit, cross-border smuggling of cigarettes remains a challenge in the country.
A number of consignments of Zimbabwean cigarettes have been intercepted in the process of being smuggled into neighbouring countries such as Botswana, Zambia and South Africa among others. The inceptions have been followed by a number of arrests being made.
A recent point in case was in April when the South African police intercepted a consignment of Zimbabwean cigarettes worth R1,4 million that was being smuggled into the neighbouring country through Botswana.
In May, a 45-year-old Zimbabwean man was jailed for an effective five years in South Africa for smuggling a contraband of cigarettes worth over R300 000.
Among other cases, in February South African police intensified their crackdown on the smuggling of cigarettes from Zimbabwe via Beitbridge and illegal crossing points along the Limpopo River, seizing five vehicles and cigarettes worth more than R400 000, arresting 11 of the suspected Zimbabwean smugglers.
The smuggling of cigarettes from Zimbabwe into South Africa through illegal crossing points along the Limpopo River is rife.
It is understood that 30 percent of cigarettes in South Africa are from Zimbabwe and these include Pacific, Remington Gold, Mega, Dullahs, Branson and Servilles brands.
South Africa’s tax watchdog, Tax-Justice SA founder, Mr Yusuf Abramjee recently called for border authorities between Zimbabwe and South Africa to double their efforts in fighting the smuggling of tobacco and related products between the two countries.
He said the latest study by independent market research giant Ipsos showed that shops in South Africa are still being flooded with illicit cigarettes.
Responding to questions from the Sunday News, TIMB acting chief executive officer (CEO), Mr Emmanuel Matsvaire said: “TIMB is working towards improved production methods and enhanced value addition and beneficiation towards a US$5 billion industry by 2025. As we press towards achieving that goal, we urge all key players including cigarette manufacturers operating in Zimbabwe to be transparent in their operations.”
In a telephone interview, the Financial Intelligence Unit (FIU) deputy director, Mr Tichafa Chigaba said in terms of smuggling cases, as FIU they come in to investigate any financial trail in support of law enforcement investigations.
“The law enforcement has the duty to investigate. As the FIU we are not directly involved in the investigations we only come into the picture when the law enforcement agents are investigating their case and they are pursuing a case of money laundering.
“Usually when they are investigating money laundering, they want to do what is called parallel financial investigations. For example, when they are pursuing a person whom they profiled and find out that the person is a prominent smuggler.
“When they want to go for money laundering, when they are now looking at what the person has acquired from the proceeds of crime with an ultimate aim of forfeiting proceeds of crime, that is when they engage the FIU to say we are investigating this person can you help us to get financial information through the banks and so forth. So that is where the FIU comes in to help them access financial information or financial intelligence,” he said.
He said as the FIU working together with the law enforcement community, as an apparatus that fights money laundering and terrorism financing, under the National Task Force they have carried out national risk assessments in 2015 and 2019.
Mr Chigaba said both of the national risk assessments have identified smuggling as one of the biggest crimes in Zimbabwe.
“Among the things that are smuggled out of Zimbabwe when we did the analysis were cigarettes, scrap metal including copper cables, cash, gold and precious metals among others.”
He said cigarettes were mainly smuggled to South Africa.
According to the Second Money Laundering and Terrorist Financing National Risk Assessment Key Findings released in February 2019, in 2015, Zimbabwe undertook and successfully completed its first National Risk Assessment, using local and acceptable international standards, and determined that about US$1, 8 billion was being lost, annually, through illicit activities.
“In line with the Financial Action Task Force (FATF) recommendations, to undertake such a process every five years, the country carried out another National Risk Assessment in 2019, which concluded that the figure lost through illicit transactions had dropped to US$0,9 billion.
“This is a pleasing development and the result was largely achieved through a conceived effort by stakeholders responsible for improvements in the legislative framework, effectiveness of the law enforcements, and, better collection, analysis and dissemination of information on suspicious activity,” read part of the report.
According to the latest statistics from the Reserve Bank of Zimbabwe (RBZ) the country exported about US$407 million worth of tobacco during the first four months of 2023.
Ranked number two in terms of exports after gold, tobacco shipments amounted to US$407,1 million as of April 30, 2023, the central bank figures show, compared to about US$308 million by April 13, 2022.
Last year, Zimbabwe’s tobacco exports totalled US$968 million from US$575 million during the same prior year period.
At its peak, the country produced 253 million kg, while under the Tobacco Value Chain Transformation strategy, the country seeks to increase tobacco output to 300 million kg by 2025, enhance value addition and beneficiation to around 30 percent through the production of cigarettes and grow the industry to US$5 billion by 2025.
According to the Tax Transparency in Africa 2023, Africa Initiative Progress Report Zimbabwe recently joined the Global Forum and the Africa Initiative now counts 37 members, while it remains open to all African countries.
The report said given the size of illicit financial flows from African countries, and recognising the potential of tax transparency and exchange of information to fight them and to raise resources for development, African countries members of the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) decided to create an African-focused programme in 2014: the Africa Initiative.
The objective was to unlock the potential of tax transparency and exchange of information for Africa by ensuring that African countries are equipped to exploit the improvements in global transparency to better tackle tax evasion.
The Africa Initiative has developed and expanded its capacity-building activities to ensure transparency and exchange of information (EOI) benefit African countries.
Zimbabwe is yet to schedule its compliance ratings against the exchange of information on request standard per African countries’ progress in implementing the tax transparency standards.
“This story was produced by Judith Phiri. It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.”
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