Harare – Zimbabwe has ordered tobacco farmers in the country to open bank accounts, as payments for auction floor deliveries of the crop will not be paid for in cash starting this year.
The Zimbabwean tobacco auctioning season will start on March 31, a late opening that is reflective of late rains in the country.
“All proceeds from the sale of tobacco will be paid through bank accounts. In this regard, farmers are required to open accounts with banks of their choice to facilitate the payments,” the Tobacco Industry and Marketing board said in a joint statement with the central bank on Tuesday.
Banks in Zimbabwe will fund tobacco farming with about US$600m for this season, according to Finance Minister Patrick Chinamasa. He said contract farming will also be pivotal in ramping up output and quality, especially after tobacco quality for last year declined, leading to lower prices.
Contract farming for tobacco will amount to about $100m this year while the land earmarked for contract tobacco farming stands at about 72 000 hectares. The Reserve Bank of Zimbabwe is drumming up financial inclusion for the country and has sought to enforce usage of banking platforms in payment for tobacco farmers.
“The tobacco selling season will open on 30 March 2016 for the auction sales floors and on 31 March 2016 for contract sales floors. Banks have been engaged and are going to offer bank accounts to tobacco growers at favourable conditions which include waiving of charges for maintaining bank accounts,” said the central bank and the tobacco industry and marketing board.
The tobacco farmers would only need their identity documents and tobacco grower’s numbers to be able to open bank accounts. It is expected that other emerging banking platforms such as ATMs, internet banking and mobile banking will then be roped into the accounts opened by the tobacco farmers.
The RBZ is also hoping that the opening and payment for deliveries through bank accounts will be useful for the farmers in accessing loans and other financing schemes for inputs. Zimbabwe has been lagging behind in terms of having a credit reference bureau, while banks are grappling with high defaults for loans.
Tobacco has become a major export earner for Zimbabwe, which is battling severe liquidity shortages amid slowing economic activity. Other agricultural sectors such as livestock, cotton, maize and winter wheat are predicted to remain muzzled because of lengthy periods of drought.