Chronicle Editor
Vuyisile Mlilo, Business Reporter
ZIMBABWE’S economy received a significant boost as the country’s tobacco product grouping export earnings surged by 19 percent in the first-half of this year, compared to the same period last year.
The tobacco industry plays a crucial role in the country’s agricultural sector and is one of the main sources of foreign exchange.
In a statement recently, the Reserve Bank of Zimbabwe (RBZ) said in its mid-term monetary policy review export earnings the tobacco product grouping increased from US$378 million in the first-half of 2022 to US$450 million in the corresponding period in 2023.
This growth could be attributed to the rise in tobacco cigarette exports, which generated an impressive US$46,66 million, marking a substantial 70 percent increase.
“The strong growth in the agricultural sector is driven mainly by projected growth in maize, tobacco, wheat, and cotton. Maize output is expected to be more than two million tonnes in 2023, up from 1,5 million tonnes in 2022. Tobacco output reached a record high of 295 million kilogrammes in 2023,” reads the statement.
RBZ further revealed that, driven by the increase in tobacco exports, the country’s agricultural exports rose by 15,9 percent.
“The country’s agricultural exports increased by 15,9 percent, from US$399,9 million in the first-half of 2022 to US$463,5 million in 2023, during the period under review, driven by tobacco exports.
“Horticultural exports were, however, subdued owing to lagged effects of higher input costs for fertiliser, chemicals, fuel, packaging, and labour, which increased significantly in 2022.
“Manufactured exports increased by 7,6 percent, from US$180,6 million recorded in the first-half of 2022 to US$193,84 million in the corresponding half in 2023, largely driven by rising tobacco cigarette exports.
“Low competitiveness, which emanated from high production and market development costs and antiquated machinery, however, continued to adversely affect manufactured exports,” reads the policy review.
The Central Bank also lifted all restrictions on the use of locally sourced funds to support the production of tobacco in the country.
“In terms of Section 4 of the Exchange Control (Tobacco Finance) Order, Statutory Instrument 61 of 2004, tobacco merchants are required to source offshore financing to produce and buyback green leaf tobacco. Tobacco merchants who fail to secure offshore financing are required to apply to the Bank for authority to raise funds on the local market.
“With immediate effect, there will be no restrictions on the use of locally sourced funds to support the production of tobacco in the country. Considering this development, the Exchange Control (Tobacco Finance) Order, Statutory Instrument 61 of 2004 shall be amended to take account of this change,” reads the review.
The positive performance of Zimbabwe’s tobacco exports is set to have a significant impact on the country’s economy. The increase in earnings will augment the country’s foreign currency reserves, helping to stabilise the exchange rate.
This will contribute to reducing inflation and improving overall macroeconomic indicators. The additional revenue generated from tobacco exports can also be utilised for essential imports, such as fuel, medical supplies, and machinery for the agriculture sector.
The RBZ’s statement affirms the resilience of Zimbabwe’s agricultural sector despite the challenges it has faced, such as climate change. It highlights the potential for growth and economic diversification through the cultivation and export of tobacco.
Online Reporter