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Tag: value addition

  • Zimbabwe Eyes Tobacco SEZs to Boost Value Addition

    Zimbabwe Eyes Tobacco SEZs to Boost Value Addition

    Zimbabwe’s tobacco sector is reaching record production levels but declining returns are highlighting the need for greater local processing and value addition, according to local authorities. Tobacco sales reached 358.3 million kg this season, up 1% from 353.3 million kg in 2025, while farmer revenue fell 24% to $892.6 million as average prices dropped 25% to $2.49 per kg. Industry officials and economists warn that global cigarette consumption is declining and the shift toward slim and super-slim products is reducing leaf demand, limiting the value of further production increases.

    Industry experts are urging Zimbabwe to establish tobacco-specific special economic zones (SEZs) modeled on manufacturing hubs in the United Arab Emirates. Tapiwa Masedza, founder of Chevron Tobacco, said targeted fiscal incentives, streamlined regulations and improved logistics could encourage investment in cut-rag processing and cigarette manufacturing. Zimbabwe aims to increase tobacco industry revenue to as much as $7 billion by 2030, raise production to 500 million kg and increase local value addition from about 2% to 30%.

    Proposed SEZ incentives include a five-year zero corporate tax rate, duty-free imports of complementary foreign leaf for processing and re-export, deferred or zero-rated VAT on inter-merchant and export transactions, accelerated capital allowances, and excise-free exports. Zimbabwe has installed capacity to produce about 18 billion cigarettes annually but manufactures only around 4 billion, according to industry sources. Masedza said removing VAT on local grade exchanges and providing greater regulatory certainty would help merchants blend and process tobacco domestically, allowing Zimbabwe to capture more value from each kilogram of leaf rather than relying on raw exports.

  • TIMB Keeping Tobacco Money Home, Limiting Unregulated Sales

    TIMB Keeping Tobacco Money Home, Limiting Unregulated Sales

    With 67% local financing in place, Zimbabwe has nearly reached its goal of reducing reliance on offshore funding that limits domestic tobacco value retention, according to the Tobacco Industry and Marketing Board (TIMB). TIMB set the goal of 70% local financing, as officials estimate that under external financing models, for every U.S. dollar financed, only 12 cents remains in the country. Tobacco remains the country’s largest agricultural export and second-largest foreign currency earner after gold, generating about $1.2 billion last year.

    Tobacco output exceeded expectations last year, reaching 355 million kg against a 300 million kg target, with projections of around 400 million kg this year, with more than 90% of tobacco under contract arrangements. While production growth has been strong, value addition remains subdued at 10.78% against a 30% target.

    TIMB has also introduced tougher penalties and a biometric grower management system ahead of the new marketing season, significantly raising fines for regulatory breaches. Farmers caught engaging in side marketing will be fined $50 per bale, up from $20, while merchants purchasing such tobacco will pay $200 per bale. Illegal buying point operators, known as “Makoronyera,” risk fines of up to $2,000.

    TIMB confirmed that 48 contractors and 46 Class A buyers have been licensed for the 2026 season, with grading categories streamlined to enhance global competitiveness amid evolving climatic and market conditions. Five firms were barred over compliance issues.

  • Zimbabwe Pushing Tobacco Processing for Value Addition

    Zimbabwe Pushing Tobacco Processing for Value Addition

    Zimbabwe will intensify tobacco processing and value addition from 2026 as part of efforts to boost exports of finished tobacco products, a senior government official said. Lands, Agriculture, Fisheries, Water, and Rural Development permanent secretary Professor Obert Jiri said plans are underway to encourage the establishment of local processing plants, shifting the industry away from raw leaf exports toward higher-value products, including cigarettes.

    Zimbabwe produced a record 355 million kg of tobacco in 2025, generating about $1.2 billion in sales, and production has the potential rise to 500 million kg by 2030, Jiri said. He argued that converting locally grown tobacco into finished products could dramatically increase export earnings, estimating the potential value of more than $40 billion if current volumes were processed domestically.

    The industry has also undergone a structural shift, with more than 140,000 farmers—over 80% of them smallholders—now involved following land reform. The government says expanding beneficiation will help farmers capture more value and create jobs, building on recent investments such as a $100 million tobacco processing plant commissioned in Harare in November.