Zimbabwe has been on an upward course away from economic despondence drawing on all of the resources and strategic alliances it can forge; in this new phase of the southern African country’s development, Tobacco is playing a surprisingly important role.
Last year, local Zimbabwean companies expended funds in the neighbourhood of $29 million on tobacco imports, which was used to enhance the quality of the locally grown Virginia tobacco in order to make cigarettes. The total volume of tobacco equaled 8.1 million kilograms at an average price point of $3.64 per kilogram. Despite these significant figures, last year’s volume actually represented a 43% decline from the preceding year’s imported volume of 14.3 million kilograms costing a total of $51.7 million.
The bulk of the crop, about $21.4 million worth, is imported from Zambia while the rest are spread over India, Malawi, Mozambique and Bangladesh, in that order. Zimbabwe also imports from South Africa, Uganda, the United Kingdom and the United Arab Emirates.
Tobacco the new cash cow
After processing is done, the finished Virginia tobacco becomes a cash cow of some sort when exported to significant markets in China, Belgium, South Africa and Russia. Last year, the country grossed $722.5 million from exporting 135.5 million kilograms of the finished tobacco at the rate of $5.70 per kilogram, in the year before, this figure stood at $877.4 million.
An analysis into the Tobacco’s selling potential reveals that it’s a fairly inelastic product with respect to price. Because, it is highly addictive, its demand doesn’t always vary with economic change, which also means large tobacco conglomerates have little incentive to reduce their prices under any circumstance. Because of its relatively steady pricing, cigarette pricing is excluded from most inflation surveys.
Needless to say, Tobacco is Zimbabwe’s most valuable crop, and a top foreign currency earner, accounting for as much as 10.7 percent of the country’s Gross Domestic Product (GDP). Three variants of Tobacco readily found within the state include the Virginia flue-cured tobacco, the Burley tobacco and the Turkish variety.
Beyond being a top earner for the country, Tobacco is expected to contribute the most to the 9 percent growth in agriculture expected this year. This makes it a rather important element of the Zimbabwe Agenda for Sustainable Socioeconomic Transformation (ZIM-ASSET).
By Emmanuel Iruebo
