The Zimbabwe Stock Exchange (ZSE), its subsidiary the Victoria Falls Stock Exchange (VFEX) and the Tobacco Industry and Marketing Board (TIMB) have partnered to come up with various instruments to raise capital for small scale tobacco farmers and enhance marketing of the commodity.
The tobacco sector is projected to reach US$ 5 billion by 2025 but funding gaps pose threats to this target.
“Given the funding and marketing challenges faced by small scale Tobacco farmers, funding challenges faced by local Tobacco merchants and the limited hedging instruments for farmers in terms of price and weather risks, the Tobacco Industry and Marketing Board (TIMB), the Zimbabwe Stock Exchange Limited (ZSE), the Victoria Falls Stock Exchange Limited (VFEX) are pleased to announce the signing of a Memorandum of Understanding (MOU),” reads the joint statement.
The MOU forms a basis for cooperation in the following areas, “Fundraising for Tobacco farmers, fundraising for local Tobacco merchants, the compilation and distribution of tobacco production and marketing data, the establishment of a tobacco derivatives market.”
The full implementation of this MOU is expected to result in increased productivity and smoother cash flows for small scale farmers and improved capacity for local Tobacco merchants.
The country’s tobacco sector has been badly affected by inadequate funding and poor pricing –affecting growth of the industry.
Official figures reflect that over 90 percent of the country‘s tobacco is externally funded and a greater chunk of the profits is retained externally.
The development is part of ZSE’s vision of crafting innovative instruments that offer a diverse array of investment options.