Tag: Zimbabwe

Pacific Cigarette Co. in Voluntary Business Rescue

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The Pacific Cigarette Company (PCC) was granted a request to be placed under voluntary business rescue following an assessment by revenue authorities that alleged tax violations and outstanding obligations, leaving the company facing liability in the amounts of USD19.3 million and USD79.8 billion, reports The Herald.
The tax liability also put the company in an insolvent position, according to the PCC, formerly Savanna Tobacco Company.
The PCC connects the financial issues to foreign currency challenges faced by Zimbabwe in 2005, when the PCC entered a partnership with the Reserve Bank of Zimbabwe (RBZ) and piloted toll manufacturing to survive the introduction of 50 percent foreign currency surrender requirements on exports.
“Through toll manufacturing, PCC and other businesses were able to source raw materials from their customers, ensuring their sustainability, while complying with the RBZ’s 50 percent foreign currency surrender requirements,” the company said.
“Then the Reserve Bank governor promoted toll manufacturing as a durable business model for companies facing similar foreign currency challenges.
“Since then, the toll manufacturing model has been our accepted raw material funding model, removing the need for PCC to finance the working capital for export raw materials.
“In June this year, without any notice, Zimra performed a spectacular U-turn that has undermined the stability of the business and deemed the raw materials funded by our customers as income, subject to VAT,” according to the PCC.
“They also levied an arbitrary markup and interest penalties on PCC for the tax assessment period 2018 to 2020, to which we have objected.
“The issued tax assessments against the company impose tax liabilities amounting to USD19.3 million and USD79.8 billion.” The PCC alleges that Zimra garnished all its bank accounts. “Next, Zimra took the unprecedented step of instructing our customers to pay Zimra any monies owed to PCC, effectively closing off all the company’s income streams.
“In an effort to get the garnish lifted, PCC submitted a payment plan proposal while awaiting the determination of the objection, which payment plan was rejected by the tax authority,” said the PCC.
“Zimra’s unprecedented actions on false tax violations have regrettably placed PCC in an insolvent position, forcing the company’s directors to place the business under voluntary business rescue to safeguard the interests of all creditors and stakeholders whilst the company continues to try and amicably resolve the matter with the tax authority.
“PCC applied to be placed under voluntary business rescue on Oct. 2, 2023, and the Master of the High Court Oct. 4, 2023, appointed Mr. Reuben Mukavhi of Rubaya-Chinuwo Law Chambers Legal Practitioners as the corporate business rescue practitioner,” according to the company.
“The Zimbabwe Revenue Authority is not in a position to comment in the public domain on the tax affairs of an individual taxpayer as the law through the preservation of secrecy protects clients’ right to confidentiality,” Zimra said.
The PCC is Africa’s second-largest indigenous tobacco company and Zimbabwe’s first locally owned cigarette company.
October 10, 2023
Zimbabwe: Seedbeds 16 Percent Larger

Photo: Juan
The size of the seedbed sown for Zimbabwe’s 2023-2024 tobacco crop is 15.5 percent larger than in the previous season, reports New Zimbabwe, citing the Tobacco Industry and Marketing Board (TIMB).
“Preparations for the 2023-2024 tobacco season are progressing well. Currently, a total of 98,217 hectares of seedbed area has been sown; this is in comparison to 84,985 hectares sown during the same period last year. The first of September marked the earliest date for planting irrigated tobacco,” the TIMB stated.
“Currently, growers are discing and preparing ridges for the transplanting of hardened seedlings.”
The TIMB has added shisha tobacco to the list of tobaccos to be grown. For the 2023/2024 season, 4,390 grams of shisha tobacco seed covering 549 hectares has been disbursed to growers. (Also see “Great Expectations,” Tobacco Reporter, May 2022.)
After a call encouraging registered growers to renew their grower numbers for the next season and a call for first-time growers to apply at the TIMB regional offices, 51,695 growers have registered for the 2023/2024 season.
“We have new contractors coming on board for the 2023/2024 season. Six contractors have been licensed to increase the number of tobacco financiers for this season,” said the TIMB.
Zimbabwe’s tobacco growers produced a record 291.1 million kg of tobacco worth $882.2 million this season. The country’s aim, formulated in the government’s Tobacco Value Chain Transformation Plan, is to reach 300 million kg of tobacco a season by 2025.
The regulator also announced measures to improve trade practices.
“TIMB has put in place some key strategies to tackle the issues of mis-invoicing and transfer pricing that have been negatively impacting the tobacco industry. Among the strategies is the Compliance Administrative Framework that was implemented in 2021 and the setting up of a new Compliance Administration Department,” the regulator said.
“Before contracting commences, all interested companies submit their commitment documents, which show their capacity to contract for the season, which includes proof of funding, unit cost of inputs to be given to farmers and the interest component to be charged.
“Such commitment documents are then vetted by our Compliance and Licensing Committee that will inspect all such, and if any is found in violation of the board’s compliance standards, such will be rejected, and no approval for contracting farmers will be given,” said the TIMB.
September 11, 2023
TIMB Raises Red Flag On ‘Bogus Association’

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Zimbabwe’s Tobacco Industry and Marketing Board (TIMB) has called out the Golden Leaf Advisory (GLA) as a suspected “bogus association” that is not mandated to represent farmers or the tobacco regulatory board, according to The Herald.
According to the TIMB chief executive, Emmanuel Matsvaire, “there is no relationship whatsoever” between his organization and the GLA. He urged farmers to avoid the entity.
“We have so many complaints from farmers who have been fleeced of their money by this organization purporting to represent tobacco growers,” said Matsvaire. “The organization has no mandate either from our Ministry (of Lands, Agriculture, Fisheries, Water and Rural Development) or from the TIMB to represent the farmers.
“It is a bogus institution that has been extorting money from farmers and other stakeholders.”
In April, the TIMB rejected a request from GLA to meet with farmer associations and contractors before loan disbursements. “We take note of your proposal and would like to inform you that it is regrettably rejected,” the TIMB informed the GLA. “GLA is not properly registered by either TIMB of the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development.”
September 6, 2023
TIMB Urges Sustainable Crop Growth

Photo: Taco Tuinstra
Zimbabwe is on track to export $1.5 billion worth of tobacco, according to Tobacco Industry & Marketing Board (TIMB) Acting CEO Emmanuel Matsvaire.
In an interview with The Zimbabwe Independent, Matsvaire shared his views on the challenges and opportunities facing the country’s tobacco sector.
To date, Zimbabwe has exported about 105 million kg of tobacco at an average of $5.04 per kg, compared to 93 million kg exported during the same period last year at an average price of $4.62 per kg.
The Far East remains the top destination for Zimbabwean tobacco, according to Matsvaire, making up about 41 percent of total exports. The region also has the highest average export price due to high quality tobacco that goes here.
Out of the 295.5 million kg of tobacco sold this season, the TIMB estimate that about 5 million kg have been side-marketed, which is less than 2 percent of the total crop.
The regulators has worked hard to fight the practice, according to Matsvaire. “We have brought in a new compliance framework. We have also established a new department that ensures that compliance is up to date. We also have an inspectorate department and field officers on the ground,” he told The Zimbabwe Independent.
Matsvaire stressed the importance of matching production to demand, and of adhering to proper production practices. “We need to ensure that there is a balance between price and what is produced, and quality as well as quantity,” he said. “We do not wish to increase volumes without good quality. We ensure that we are also growing sustainably using the right sources of energy and labor. We do not need to use children in growing tobacco. We also need to ensure that our environment is safe. Our growth has to be sustainable growth.”
September 4, 2023
Zimbabwe Crafting Funding Scheme

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The Tobacco Industry and Marketing Board (TIMB) and Zimbabwean banks are jointly working on a scheme to provide funding to farmers, reports The Sunday Mail, citing a senior official.
As part of its Tobacco Value Chain Transformation Plan, which seeks to retain more value from the industry in Zimbabwe, the government seeks to increase local funding for production of the crop.
Currently, about 90 percent of tobacco production is financed through offshore loans under contract schemes.
The offshore pre-financing arrangement means tobacco merchants bring into the country part of export proceeds in the form of inputs. After exports, the bulk of the proceeds are used to pay offshore loans. Critics have suggested the cost of inputs have been highly inflated in some cases.
Smallholder growers struggle to access finance because they lack security. The proposed model seeks to enable growers to access the loans even without collateral, TIMB acting chief executive Emmanuel Matsvaire said in an interview Aug. 31.
Last month, the Reserve Bank of Zimbabwe scrapped the requirement compelling merchants to source offshore financing to fund production and buying green leaf from farmers.
September 4, 2023
Zimbabwean Growers Poised to Start Planting

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Zimbabwean farmers will start planting next year’s tobacco crop starting early next month, reports The Herald.
Both irrigated and dryland tobacco farmers are preparing to transplant their seedlings from the seedbeds to the field.
The irrigation tobacco is set to begin transplanting Sept. 1, while the rain-fed crop will be transplanted mid-October.
“Preparations to plant irrigation tobacco are now at an advanced stage and farmers have enough equipment and water to ensure the success of the crop, said Tobacco Farmers Union Trust President Victor Mariranyika, who urged farmers to expand their hectarage.
Zimbabwean tobacco farmers sold 295 million kg for $895million this marketing season, compared to 206 million kg for $630 million last year.
The government aims to create a $5 billion tobacco industry by 2025 through its Tobacco Value Chain Transformation Plan, which calls for more leaf production, greater value addition and localized funding, among other objectives.
August 23, 2023
Zimbabwe Leaf Sales Touch $900 Million

Anxious Masuka | Photo: Taco Tuinstra
Zimbabwe has earned nearly $900 million from tobacco sales this season, reports New Zimbabwe, citing a government statement dated Aug. 21.
“Cabinet is pleased to advise that the total tobacco production now stands at a phenomenal 295,499,782 kg, valued at $895,114,791,” said Lands and Agriculture Minister Anxious Masuka.
“Of special note is the fact that 52 percent of the total production came from A1 and A2 farmers, confirming that the land reform program has been a success,” he said.
In the early 2000s, Zimbabwe confiscated large-scale and mostly white-owned tobacco farms and redistributed them among landless peasants.
The tobacco crop grew despite increased fertilizer prices caused by the war in Ukraine.
Tobacco in Zimbabwe has been on a rebound after production plummeted from a high of about 240 million kg in 1998 to less than 50 million kg a decade later.
Through the Tobacco Value Chain Transformation Plan, the southern African country has been working to make its tobacco industry more lucrative by manufacturing more cigarettes at home and limiting foreign funding of farmers.
August 22, 2023
Zimbabwe Moving Up Value Chain

Photo: Taco Tuinstra
Zimbabwe is making steady progress toward achieving the goals set out in the government’s Tobacco Value Chain Transformation Plan (TVCTP), reports The Herald.
Cigarette exports jumped to $47 million in the first half of this year, up 70 percent from the corresponding period in 2022, according to the Zimbabwe National Statistics Agency (ZimStats).
The country’s tobacco product export earnings rose 19 percent from $378 million over the period January to June 2022 to $450 million over the same period this year.
The country exports partly or wholly stemmed/stripped or not stemmed/stripped tobacco, tobacco refuse, cigars, cheroots and cigarillos tobacco, cigarettes and manufactured tobacco.
The portion of tobacco product exports accounted for by partly or wholly stemmed/stripped tobacco decreased from 91 percent in 2022 to 88 percent this year.
This was simultaneously accompanied by a three percent increase in the portion of export of cigarettes containing tobacco from seven percent last year to 10 this year.
Tobacco Farmers Union Trust President Victor Mariranyika welcomed the increase in value- added tobacco products export.
“We encourage exporters to increase value addition of our raw tobacco from the low figure of 2 percent until as a country we reach 30 percent,” he was quoted as saying. “Though this increase may not have an immediate impact on the farmer, it is a positive step in the right direction.”
Zimbabwe Tobacco Growers Association (ZTGA) Chairman George Seremwe said if the country maintains this trajectory, then the benefits will eventually improve farmers’ livelihoods and the economy at large.
The TVCTP aims to achieve a $5 billion tobacco industry by 2025.
August 17, 2023
Zim Drops Offshore Funding Requirement

Photo: Taco Tuinstra
Tobacco merchants operating in Zimbabwe will no longer have to source offshore the financing to support the production and buying of green leaf from contracted farmers, reports The Herald, citing an announcement by Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya.
The change is expected to boost funding of tobacco using local money and is in line with the Tobacco Value Chain Transformation Plan, which seeks to raise localization of tobacco funding to 70 percent by 2025 to keep more value in Zimbabwe.
Previously, merchants who failed to secure offshore financing were required to apply to the RBZ for authority to raise money on the local market.
Currently About 95 percent of Zimbabwean tobacco production is financed using offshore loans under contract farming. The offshore pre-financing arrangement means tobacco merchants bring into the country part of export proceeds in the form of inputs. After exports, the bulk of the export proceeds are used to pay offshore loans.
However, some stakeholders in the industry suspect the costs of inputs have in many cases been inflated, increasing foreign obligation and reducing export earnings.
Indigenous merchants welcomed the RZB move. “This makes life easier for local merchants,” an executive with a local tobacco company was quoted as saying. “Seeking a special dispensation from the central bank to source local funding created a regulatory impediment for local players to jump through.
Terrence Ngarwe, a Harare-based agriculture economist, said the new policy measure would see the country retaining more value from tobacco. “By having tobacco funded with local money, it means more money stays in the country,” said Ngarwe.
While Zimbabwe Farmers Union Executive Director Paul Zakariya applauded the new rules, he urged the industry to move away from contract farming and boost the domestic processing and manufacturing capacity.
“The financing mechanism through contract is not viable even if we are to fund tobacco using local money,” said Zakariya. “We need to alter the whole production environment to an extent that farmers can be self-financed and get loans from the banks and sell tobacco at the auction.”
Zimbabwe produced a record 295 million kg of tobacco this season, due to favorable weather conditions, improved agronomic practices and better funding packages by merchants, according to the Tobacco Industry and Marketing Board.
August 14, 2023
Seed Sales Hint at Record Hectarage

Photo: Taco Tuinstra
Zimbabwean seed sales suggest a record tobacco hectarage in the 2023-2024 growing season, reports The Herald.
Statistics released by the Tobacco Research Board (TRB) reveal that, by August 8, farmers had procured 847.21 kg of tobacco seed with potential to cover 169,442 ha.
The largest tobacco hectarage to date was recorded in 2019 when growers planted 146,000 ha. The final crop, livestock and fisheries assessment report shows that last year 131,656 ha were put under tobacco.
Zimbabwean tobacco growers had sold 294 million kg of tobacco worth $891 million by day 100 of the ongoing 2023 marketing season.
This is a 44 percent increase in volume and 43 percent rise in value compared to the same period last year.
The average yield this season has risen to over 2 tons per hectare from 1.7 tons per hectare the previous season.
As part of its Tobacco Value Chain Transformation Plan, Zimbabwe seeks to create a $5 billion tobacco industry by 2025 through localization of tobacco funding, increased production and productivity, value addition and beneficiation.
August 10, 2023