Zim loses $6 billion tobacco revenue

via Zim loses $6 billion tobacco revenue 30 October 2014

ZIMBABWE lost no less than $6 billion through the selling of unprocessed tobacco to external markets last year alone, a policy analyst Butler Tambo has revealed.

Tambo told a workshop organised by lobby group Bulawayo Agenda in the country’s second largest city titled “Ideas Festival,” on Thursday that the country could have realised the same amount if its tobacco sold to Europe and Asia had been processed into cigarettes.

The analyst said Zimbabwe’s youths should be mentored in a way that allows them to venture into value addition and import substitution on which the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset) blueprint could be anchored.

“For instance while a kilogramme of unprocessed tobacco costs an average of  $3,66 per kilogramme at the auction floors, threshed tobacco costs around $7,30 per kilogramme while cigarettes cost around $30,50 per kilogramme,” he said.

“In monetary terms, from the 166 million kilogrammes of raw tobacco sold last year and exported to various countries around the world at a cost of $608 million, Zimbabwe could have realised as much as $6,08 billion from finished cigarettes,” Tambo said.

He said government needed to stop the idea of spoon-feeding youths with loans that are never repaid.
“Youths have gotten loans but there is a growing culture in Zimbabwe of treating loans like manna from heaven.

“They need to be empowered but cannot be troubled to pay back, we need a culture of good economics and it begins with the government itself,” he said.

Zimbabwe’s annual budget currently stands at $4 billon including over a $1 billion deficit. Tambo’s calculations mean tobacco alone can ensure the country has with a fiscal surplus.

The country which is endowed with rich mineral resources among them diamonds and platinum has been exporting these raw minerals to other countries.
Tambo provided another glimpse into the mining sector if beneficiation is considered.

“Another example is that a rough diamond costs about $40 per carat, a cut and polished diamond value increases to $400 per carat.

“The same stone fetches around $600 per carat when it reaches the consumer.  In addition, chrome ore costs around $210 per tonne while high-carbon ferrochrome and other alloys cost $870 per tonne.

“With Zimbabwe’s annual chrome output at 150 000 tonnes and revenues from export of raw chrome ore of $31,5 million against estimated revenues  from beneficiation of $130,5 million,” he said.

Zimbabwe is reeling under a more than decade-long economic and political crisis critics blame on President Robert Mugabe. The crisis worsened after Mugabe stormed to a controversial victory in elections held last July.

Tambo also argued that Zimbabwe needs to work on reducing its import bill through curtailing the importation of goods that can be produced locally including chicken products.

“Imagine, what Bulawayo industries will be like if they had gotten the injection of $400 million that we exported to other countries and created jobs for other nations. We should start exporting more as a country,” he said.
Mugabe last year described Bulawayo, the country’s former industrial hub, as a “scrapyard”.