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Edgar Vhera Agriculture Specialist Writer
TRANSFORMATION of Zimbabwe’s raw leaf tobacco into finished high value products like cigarettes and the subsequent export of such is the shortest way to achieving a US$5 billion tobacco industry by 2025.
Tobacco Association of Zimbabwe president Mr George Seremwe said this yesterday when he commented on the 2022/23 tobacco season and its contributions to the Zimbabwean economy.
“Tobacco production is an important industry, as evidenced by the escalating number of growers from around 2 000 before 1991 to the current 120 000 or more, mostly smallholders. But while this points towards increasing productivity and production, the value addition thrust is the utmost initiative that the Government should prioritise and incentivise private sector players to embark on.
“Though some local tobacco companies are making some inroads in processing and threshing, their products are mainly for the local market,” said Mr Seremwe.
Statistics with the Tobacco Industry and Marketing Board (TIMB) for the period 1991-2021 indicate that the lowest and highest volumes exported by the country was 50 and 218 million kilogrammes in 2006 and 1999 respectively.
In value terms a high of US$934 million against a low of US$149 million was recorded in 2016 and 2006 respectively.
During the same period Zimbabwean tobacco fetched average prices ranging from US$2,03 per kilogramme to US$5,94, a result of limited tobacco value addition.
Over 90 percent of Zimbabwe’s tobacco foreign currency earnings are accounted for by raw leaf exports.
It is, however, encouraging to see that export of manufactured tobacco is gradually rising from about four to seven percent over the recent five-year period.
An analysis of Zimbabwe tobacco export destinations over the period 2010-2021 shows that in 2010 the EU was the largest Zimbabwean tobacco importer followed by the Far East.
The Far East overtook EU from 2011 to date as Zimbabwe’s largest consumer of tobacco. The EU was the second largest consumer up until 2014, hence from 2015 to date it has been relegated to number three after Africa took the second spot.
In percentage terms the share of EU tobacco imports from Zimbabwe declined from 35 percent in 2010 to 16 percent in 2021, while that of Far East increased from 26 percent in 2010 to 40 percent in 2021. Africa’s influence as a destination of choice for Zimbabwean tobacco increased from 18 percent in 2010 to 22 percent in 2021.
Most of Zimbabwe’s tobacco that has some form of value addition such as manufactured tobacco and cigars is exported within the African continent with Mozambique accounting for over 75 percent of such exports.
According to statistics from Trade Map Zimbabwe, United Arab Emirates’ trading relations are on an upward trajectory with the former’s tobacco product exports rising from US$8 000 in 2019 to over US$16 million in 2021.
However, on a worrying note, of these exports unprocessed tobacco and tobacco refuse accounts for 99,86 percent of the exports underscoring the need for value addition and the subsequent export of such highly price products.
Zimbabwe can take a cue from United Arab Emirates, which is an insignificant grower of tobacco, yet in 2019 imported tobacco worth US$1,2 billion, value-added it and then exported tobacco and manufactured tobacco substitutes worth US$4,65 billion (a 388 percent increase) and realised net earnings of US$3, 45 billion.
Zimbabwe can reap significant foreign currency from her leaf tobacco crop through value addition.
Though the country has come up with the tobacco value chain transformation plan (TVCTP) whose overall goal is to transform the tobacco value chain into a US$5 billion industry by 2025, the plan is premised on the localisation of tobacco funding, increased production and productivity and value addition and beneficiation.
All these efforts are meant to promote exports of highly valued products like cigarettes to contribute significantly to GDP growth, foreign currency generation, employment creation and household incomes in pursuit of Vision 2030 objectives.
Online Reporter