RBZ backtracks on tobacco farmers forex retention

The Reserve Bank of Zimbabwe has made a dramatic U-Turn from the 50% tobacco farmers forex retention as previously announced by the central bank governor John Mangudya.

This publication has learnt that tobacco farmers will not be paid in US dollars as opposed to what they were previously told. This move is coming a day after the tobacco marketing season commenced yesterday .

“Merchant is going to get 100% RTGS$ to enable purchase of tobacco. The farmer will get 100%RTGS$ sales proceeds after deducting all other cost. The farmer will have to, if they require the foreign currency, buy back the 50% foreign currency component using the sale date exchange rates and the foreign currency will be credited in their local FCA Account with their bank.” stated a statement issued by the central bank.

Tobacco merchants will pay 100% RTGS$ to the farmers and the farmer shall buy US dollars from the RBZ at the prevailing rate.

In the statement released  by RBZ, farmers are not likely to get the 50% us dollars as they were made to believe . The Tobacco Industry Marketing Board now has been told to submit names of growers three days before the sale specifying whether the farmer wants to get 50% of their money in US dollars or in RTGS.

The statement further causes confusion to farmers who were last week ordered to open FCA Accounts by the RBZ or risk getting their money in RTGS$.

Tobacco farmers are crying foul since there is shortage of cash in the country. The exchange rate being given by the RBZ is not the same as the rate in the street where US dollars are easily accessible and this move will unnecessarily impoverish tobacco farmers who have been banking their hopes on the 50% US dollars that was promised to them.

Last year due to shortage of foreign currency, tobacco merchants ended up paying farmers in Bond notes as opposed to the foreign currency they were promised.

Once they are given their money in RTGS$ even at the prevailing rate there is high possibility that they will not be able to buy the US dollars from the interbank market.

Tobacco is the second largest foreign currency earner in Zimbabwe.