Oliver Kazunga, Senior Business Reporter
TOBACCO farmers will again this year be paid 50 percent of their deliveries in foreign currency, the Reserve Bank of Zimbabwe announced yesterday ahead of the 2020 marketing season, which begins today.

In recent weeks, the Reserve Bank and the tobacco farmers have been engaged in talks over this year’s payment mechanism.

Last year, farmers were paid 50 percent of their proceeds in their foreign currency accounts while the remainder was deposited into their local currency accounts at the interbank rate.

In a public notice on tobacco marketing and payment arrangement for the 2020 selling season, RBZ said: “In order to purchase green leaf tobacco, the tobacco merchant shall draw down a specified amount from the tobacco buying transitory foreign currency account and sell 50 percent of the proceeds to the RBZ at the prevailing bank exchange rate on the day of the transaction.

“The remaining 50 percent shall be retained by the tobacco merchant in order to pay the growers’ 50 percent foreign currency entitlement through transfers to the growers’ Foreign Currency Account (FCAs).”

The 50 percent foreign currency entitlement for the tobacco growers will be treated as free funds.

Holders of such funds are permitted to conduct inter-FCA transfers or effect foreign currency payments without restrictions.

“However, in cases where the funds are used to pay for commercial imports, authorised foreign currency dealers should ensure that the items paid for have been received into the country, through the acquittal of the relevant bills of entry (imports),” said the monetary authority.

It said requests for the United States dollar cash withdrawals from the tobacco growers FCA, shall be treated as per existing guidelines on cash withdrawals and authorised foreign exchange dealers shall apply the “Know Your Customer” and “Customer Due Dilligence” principles.

Traditionally, the marketing season starts in March but dates for this year’s selling season have been jeopardised by the Covid-19 outbreak.

In the last tobacco selling season, farmers encountered challenges in accessing their money, prompting them to request a simplified way of withdrawing their money.

“For clarity, in cases where a tobacco grower is also an exporter of other goods and/or services, the 50 percent foreign currency entitlement to the tobacco growers shall be held in separate FCA,” said RBZ.

“For the 50 percent portion that is paid to the grower’s local currency, tobacco growers are expected to use electronic modes of transactions.”

The Apex Bank said those tobacco growers who require cash to settle immediate essential requirements such as transport expenses and other incidentals, shall have access to cash, at a rate of $1,50 per kilogramme of green leaf sold, and up to a maximum of $2 000.

The growers are expected to access the required cash through their banks’ branch networks across the country after presenting the tobacco sales sheets.

“In this regard, authorised foreign exchange dealers are therefore, required to ensure that they have adequate local currency cash.

“For tobacco that is purchased through the auction floor system, tobacco merchants are required pre-fund the auction floors with the required US dollars to enable transfers into the growers FCAs on the day of the sale,” said RBZ.

“In this regard, tobacco merchants and the tobacco auction floors shall have separate operational arrangements on the administration of the pre-funding, with sound safeguards to avoid cases of abuse of fthe funds advanced by the tobacco merchants.” — @okazunga