Zimbabwe says tobacco farmers to receive payment in U.S. dollars

Tobacco growers in Zimbabwe will continue to receive their tobacco proceeds in United States dollars even after government introduces bond notes to ease current cash shortages, a cabinet minister said on Tuesday.

The Reserve Bank of Zimbabwe has announced plans to introduce bond notes that will be backed by a 200 million U.S. dollar Afreximbank facility to ease current cash shortages and boost viability of exporters.

The announcement of the bond notes has been met with mixed feelings by Zimbabweans, with industry and retailers backing the notes while the majority of ordinary Zimbabweans are skeptical and view the move as a ploy by government to introduce the discredited Zimbabwe dollar through the back door.

Zimbabwe is currently using a basket of multi currencies but the U.S. dollar is the dominant among the currencies that include the euro, South African rand, British pound, Japanese yen, Indian rupee and Chinese yuan.

In the midst of uncertainty over the bond notes, Agriculture Minister Joseph Made was quoted by the state-run news agency New Ziana Tuesday as saying that tobacco growers will be paid in U.S. dollars.

"Growers will access all their proceeds from tobacco sales in United States Dollar. Until such times that the monetary authorities resolve the matter otherwise, for the tobacco farmers, it is the United States Dollar," Made said.

Zimbabwe is experiencing cash shortages due to depletion of bank nostro-balances, reduced exports and externalization.

Tobacco is Zimbabwe's single largest export earner, with the country producing 189 million kg worth 855 million dollars in 2015.

However, tobacco output is expected to fall by 15 percent this year to 160 million kg due to an El-Nino-induced drought.

Zimbabwe's tobacco leaf is famed for its good flavor as it is generally produced under good climatic conditions. Enditem