Online Reporter
Martin Kadzere, [email protected]
A tobacco executive has called for urgent tax relief and a targeted expansion of processing infrastructure to unlock Zimbabwe’s tobacco value chain and protect local growers from worsening market distress.
Speaking at a recent industrial conference, Chevron Leaf Tobacco executive director, Mr Tapiwa Masedza, said that while Zimbabwe produced about 355 million kilogrammes of tobacco last season, the country’s three existing Green
Leaf Threshing (GLT) plants have a combined annual capacity of only 300 million kg.
This creates an unprocessed backlog of 50 million kg, forcing processing schedules to drag on.
The prolonged storage causes raw tobacco to become brittle and shatter into low-value fines, which sell for as little as US$0.70 per kg, compared with US$6 to US$7 for fully processed leaf lamina.
Mr Masedza argued that, although the Government’s Tobacco Value Chain Transformation Plan has pushed for production to reach nearly 400 million kilogrammes, it represents a misfit because it omitted the vital processing infrastructure and market mechanisms required to support that volume.
“If you look at the Tobacco Value Chain Transformation Plan, the Government has been pushing for production to reach nearly 400 million kilogrammes,” said Mr Masedza.
“However, it is a misfit because we left out the infrastructure and market mechanisms required to support that volume.”
To resolve the deficit and allow local merchants to process products without relying on direct competitors through tolling arrangements, Mr Masedza proposed establishing dedicated GLT and cigarette manufacturing plants within Special Economic Zones (SEZs).
He also suggested Government participation through the sovereign wealth fund, advocating for a fourth GLT plant anchored by a 10 percent strategic stake from the Mutapa Investment Fund, alongside private industry players.
“There is no way a key national commodity should exist without a sovereign wealth fund involved. We need a fourth GLT plant, anchored by the Mutapa Investment Fund (MIF), with a 10 percent strategic stake alongside private industry players,” Mr Masedza said.
In response to the proposal, representatives from the Industrial Development Corporation of Zimbabwe (IDCZ) — an investment arm under the Mutapa — invited industry stakeholders to formalise plans for establishing the proposed facility under an SEZ framework.
Growers faced a 23 to 25 percent drop in average prices during the current marketing season, a slump Mr Masedza attributed to a mismatch between production targets and market realities.
Limited active participation on auction floors severely restricted price discovery, while many indigenous merchants were unable to access bank credit lines because they lacked processing contracts with the existing threshing facilities.
The processing bottleneck extends downstream into cigarette manufacturing. While Zimbabwe possesses an installed manufacturing capacity of roughly 18 billion cigarette sticks per year, current national production sits at just 20 percent, or about 4 billion sticks.
To position Zimbabwe as a regional blending and manufacturing hub, Mr Masedza advocated for leaf diversification beyond traditional flue-cured Virginia tobacco.
He urged the promotion of alternative, low-carbon varieties that do not require firewood for curing, including Oriental tobacco — leveraging research conducted by the Tobacco Research Board in Masvingo during the 1990s—as well as burley tobacco in the Bema Valley and naturally cured Virginia varieties.
To incentivise farmers to adopt these environmentally friendly varieties, Mr Masedza urged the Ministry of Agriculture, Mechanisation and Water Resources Development and the Ministry of Finance, Economic Development and Investment Promotion to abolish the grower levy and afforestation levy for growers producing Oriental, burley and naturally cured tobaccos.
Additionally, he called for the immediate removal of Value Added Tax (VAT) on inter-merchant trading of processed lamina leaf.
He pointed out that value addition requires merchants to pool and aggregate leaf blends from different suppliers, but charging VAT on inter-merchant lamina trade ties up capital in tax refund delays of up to nine months.
He noted that green, unprocessed tobacco trade between merchants is already VAT-exempt, effectively penalising local value-adders while favouring raw commodity speculators.
