Zimbabwe’s large-scale tobacco growers have been granted a 180-day foreign currency retention period, which is significantly higher than retention periods for the country’s other productive sectors.
Last month the Reserve Bank of Zimbabwe (RBZ) governor liberalised the US dollar exchange rate against Real Time Gross Settlement (RTGS) dollars and all currencies in the multi-currency basket.
In addition, the central bank also announced that retained export receipts should be utilised within 30 days, after which the underutilised export earnings will be offloaded into the market at the prevailing market exchange rate or critical imports and external payments.
The RBZ has also announced that small-scale tobacco farmers can hold onto their foreign currency earnings as free funds indefinitely.
“Large scale tobacco growers (growers with more than 2 hectares of tobacco crop), are entitled to retain sales proceeds in their Nostro FCA for a period of 180 days.
“After 180 days, the Nostro FCA balance shall be offloaded onto the market at the ruling interbank market exchange rate,” said RBZ governor Dr John Mangudya.
“Small-scale tobacco growers, (growers with 2 hectares and below of tobacco crop), are entitled to retain sales proceeds in their Nostro FCA for an indefinite period as free funds.”
Zimbabwe’s apex bank will this year allow tobacco growers to retain 50 per cent of their sales in United States dollars with the other part being credited into their RTGS$ accounts.
This is an increase from the initial 30 percent announced by the RBZ governor in the 2019 Monetary Policy Statement.