Reprieve for tobacco farmers as RBZ relaxes forex retention period to 180 days

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By Alois Vinga

THE Reserve Bank of Zimbabwe (RBZ) has granted large scale tobacco farmers permission to retain foreign currency earned from the initial 30 to 180 days with authorities triggering the “use it or lose it” policy to liquidate the accounts at the prevailing bank rate beyond the period.

 In a statement the central bank governor, John Mangudya said small scale farmers are allowed to retail their hard currency earnings for an indefinite period.

“Large scale tobacco growers with more than two hectares of tobacco crop, are entitled to retain sales proceeds in their Nostro Foreign Currency Accounts (FCAs) for a period of 180 days. After 180 days, the Nostro FCA balance shall be offloaded onto the market at the ruling interbank market exchange rate,” Mangudya said in a statement.

Farmers who grow less than two hectares will be allowed to keep their money for an indefinite period according to the statement.

Tobacco growers who fail to access their cash entitlements on the day of the sale as a result of logistical bottlenecks, shall be allowed to access it within five working days from the date of the sale, added Mangudya.

He said growers will also be entitled to withdraw cash equivalent to RTGS$0.50per kg of tobacco sold, up to a maximum of RTGS$300.

The Apex Bank chief said tobacco growers who opt to have all their tobacco sale proceeds being paid into their RTGS$ bank accounts can be assisted without opening the Nostro FCA bank accounts.

The RBZ announced that growers will receive 50 percent payment after deduction of the United States Dollar loans in foreign currency and the proceeds shall be deposited in the grower’s Nostro FCA bank accounts while the remainder of the net sale proceeds will be transferred to grower’s RTGS$ bank account.

Mangudya’s announcement comes after Boka Tobacco managing director, Chido Nyakudya told the Parliamentary Portfolio Committee on Agriculture last week that the recently announced Monetary Policy Statement foreign currency retention measures will affect adversely the growers.

She urged authorities to consider a waiver of the two percent mobile transfer tax on all tobacco related transactions.

Most key economic sectors from industry and mining have since approached the RBZ over issues concerning foreign currency retention periods.