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RBZ, tobacco transporters strike forex deal

by Staff reporter
22 Mar 2021 at 06:13hrs | Views
The Reserve Bank of Zimbabwe (RBZ) has given the Tobacco Transporters Trust of Zimbabwe (TTTZ) a green light to charge for their services in United States dollars, a few weeks after logistics firms warned that a directive compelling them to bill farmers in the volatile domestic unit was driving them into bankruptcy.

TTTZ represents the interests of hundreds of logistics firms that ferry tobacco from thousands of farms across the country to the markets.

But until last week's agreement, the sustainability of these firms was under threat as their revenues were in Zimbabwe dollars while they had to raise foreign currency to pay for most of their overheads.

In a letter to the central bank requesting permission to charge in foreign currency, the TTTZ said transporters were importing spares in foreign currency accessed at high premiums on the parallel market.

After operating through rugged countryside terrain for many years to bring tobacco to the markets, these vehicles had aged and replacements were urgently required, the transporters said.

They said vehicle acquisitions and fuel also required foreign currency.

TTTZ said several services in Zimbabwe, including tolling fees on highways, were now being charged in foreign currency and directives compelling them to trade in Zimbabwe dollars would throw the sector out of business.

"We hope you find our request in order and you will assist as we are valuable members of this tobacco value chain," the tobacco transporters said in the letter to central bank governor John Mangudya.

The RBZ boss subsequently gave a nod to the TTTZ's request, but said those willing to continue billing in Zimbabwe dollars were free to do so.

"Tobacco growers are, therefore, free to pay for transportation services using either foreign currency or local currency, whichever is convenient to them," said Mangudya.

This year's tobacco marketing season will kick off in the first week of April, according to a statement released by the Tobacco Industry and Marketing Board (TIMB) last week.

Zimbabwe keenly awaits the tobacco marketing season because it gives the country an opportunity to access foreign currency to pay for several national requirements.

Tobacco is one of the country's biggest foreign currency earners.

Zimbabwe last year produced 190 million kg of tobacco.

TIMB says at least US$748 million was paid to tobacco farmers last year, but these farmers paid back US$400 million to the contracting companies for several services rendered to them including the provision of inputs, and ended up sharing the remaining US$350 million.

Source - newsday

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